How Soon Should I Use A Credit Card After Paying Off Debt?

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“How soon should I use a credit card after paying off debt?” This is a question I’ve received lately after speaking with a few individuals about my personal debt payoff journey. While the debt I paid off covered both student loans and credit cards, it was the latter that was the bigger pill to swallow. Not only did it encapsulate the free-spending ways I had taken on in my college years, it was also the most shaming.

That being said, credit cards are a major part of our society and can be challenging to live without. You may find that you never plan on using credit cards again, but for those who aren’t ready to make that commitment, consider some of the following points before making your first post-debt credit card purchase.

Take A Moment to Breathe

This is likely the most important step to your post-debt life. You want to step back and assess your new debt-free way of life. You want to look at things like:

  • What should I do with my extra money each month?
  • How am I going to make my money work for me now?
  • How am I going to keep myself financially accountable?

These are all things you likely started to consider as you were in the middle of paying off debt, though if not, should be considered now. The key is to make sure you’ve broken the debt cycle for good and are ready to move on financially.

There is No Set Timeframe

There is no set timeframe when it comes to using a credit card after paying off debt. This will depend on your personal situation and the particulars related to your debt payoff plan. In my instance, I consolidated my credit cards, so I had to take out a secured credit card at first.

Beyond a situation like mine, there is no real set timeframe – especially if you still have access to credit cards. Simply put, you need to do what’s right for you and your given situation. Of course, this has to be taken in light of whether or not using credit cards again will cause you to be tempted to overspend.

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Start With A Plan

Regardless of when you start using credit again, you want to have a plan. This can be a part of your overall budget, or it can be unrelated. However, you will want to have a spending plan in place once you do start using credit cards. There are two main reasons for this:

  • It helps you develop a discipline for spending
  • It helps keep you accountable to not overspending

Personally speaking, I started out by allowing myself one small budgeted purchase per month. One became two and so forth until I began to build confidence in my credit card usage. Don’t be ashamed either in asking someone to keep you accountable to your credit card usage. If it helps keep you on track and grow in your spending discipline, then it’s well worth having someone ask you challenging questions to make sure you’re staying on track.

Take the Long-Term View

You may be tempted to cancel your credit card after becoming debt-free. While understandable, this may also come back to hurt you from a credit score perspective. This can impact you in a variety of ways – from future loan rates to a potential job.

In light of that, don’t act rashly but take the long-term view when looking at your credit usage. It very well be that you don’t plan on using credit again, but make sure it’s a balanced decision. Though, if you do plan on using credit again you, do so with your long-term interests in mind.

Using credit after paying off debt isn’t always an easy decision but with a little thoughtfulness you can do so confidently.

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