Five ideas to implement after paying off a credit card

Congratulations! You paid off your credit card. After working towards your goal for so long, you might be wondering, “What now?” Don’t worry. We have five ideas to help you stay on track with your finances.

Create a budget

Once you’re out of credit card debt, you’ll be eager to stay there. Creating a budget is one helpful tool to ensure that you don’t fall back into bad habits. Your budget should show the complete picture of your monthly expenses, including bills, groceries, entertainment and savings.

Evaluate your spending habits

Your budget will make evaluating how you spend money much easier. Consider what expenses you can cut back on to continue living within your means. You likely had to make some sacrifices to pay off your credit card. A few purchases you skipped then may be good ones to skip now, too.

Build an emergency fund

Now that you’re no longer paying interest on your credit card, it may be a good time to start building or strengthening your emergency fund. Saving three to six months’ worth of living expenses is a good base, but you may decide you need more or less depending on your needs.

If the unexpected happens, your cash will be safe in a Consumers savings account. With multiple options, you can rest easy knowing you found the best fit for your funds.

Consider your long-term financial goals

With a paid off credit card, you have more of an opportunity to start focusing on other financial goals. Do you need to invest more in retirement or save for a house? Maybe you want to finally start that business. Take some time to create actionable steps to get you closer to your target.

Use your credit card interest-free

Some people may choose to close their credit cards, but it’s possible to keep your credit card open and not incur interest charges. Simply make purchases that are within your budget so you can pay off your balance in full each month. Plus, you can earn points or cash back, along with other member perks, from your Consumers credit card.

Still on the fence about leaving your card open? Keep in mind that your credit score may decrease because of your lowered credit limit and average account age.

Conversely, a proven way to increase your credit score is to consistently pay off your monthly balance. A higher score means higher credit limits and lower interest rates, helping you reach your new financial goals.

Consumers provides banking services for well over 132,000 members. If you have banking questions, call us at 800-991-2221. We make it easy to bank how you want, when you want.

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