Credit Card Debt in Canada and What to Do about It

In our economically unstable times, credit card debt has become a serious factor in the lives of many Canadians. The problem is that Canadians rely on their plastic cards rather excessively and simply overuse them. According to the latest statistics, they spend over $300,000,000,000 on their credit cards per year, with the average Canadian spending per active card account $9,700 and owing around $8,600. Canadians also charge-off about $3,000,000,000 of credit card debt every year.  In total, Canadians carry about $80,000,000,000 of credit card debt, and 30 percent of surveyed Canadians confess that they do not pay their credit card balance off at the end of every month. This amounts to about $7 billion in interest payments per year.

These statistics are disturbing and should convince some people in Canada to reconsider their attitude to plastic cards. This is not to say that credit cards are necessarily evil. There is no need to agree with Bernie Sanders who once compared credit card companies to gangsters destroying people’s lives. But there is no denying that a credit card debt is a problem, and carrying about $80,000,000,000 of credit card debt in total for Canadians is frightening for them personally and for the Canadian economy in general.

Eliminate Credit Card Debt

Yet there is good news for those who feel buried in debt and interests. The burden of debt can be made slightly lighter, if people do financial managing in a smart way. If you have several credit cards that have different balances, different features, and different interest rates, you can consolidate your debt into one lump amount. Then, by making one payment to one bank, you will be able to start chipping away at the amount you owe. For this, you will need to obtain a personal loan from you bank but first check the best personal loan interest rates in Canada to make the most profitable deal. When you get a loan, you will not need to make separate payments to numerous separate companies. Instead, you will make one payment to the bank that gave you the loan. This means that you will only pay one interest rate. Consolidating one’s debts is a really great option, especially for people who carry different credit cards with different balances. Debt consolidation will reduce the amount of money you have going out in payments. The amount of interest you are paying will be reduced as well.

But before you go to your bank to ask for a bank loan, analyze your credit card debt in great detail. You need to make sure that you know what interest rates are in all the bank accounts that you have. It is essential to know exactly how much you owe in total, where the balances are, and what percentage of interest you are paying on each of them. To get a comprehensive picture of your credit card debt, it will be helpful to make a list. Write down all your credit card balances. Of course, if you own all kinds of credit cards with different balances and interest charges, it will be difficult for you to make such a list quickly. But remember the more organized you are before you come to your bank to ask for a loan, the better deal you will get.

If you do not plan to consolidate your debt, write down your accounts on a piece of paper anyway. This will help you see which of your accounts have the highest interest rates. It is advisable to concentrate on paying off such accounts first. The quicker you pay them off, the more money you ultimately save. This does not mean, however, that you need to ignore your accounts with lower interest rates. It is never wise to skip payments on any credit card account, even if debts on other accounts are more pressing. You need to make the minimum payment every month lest you hurt your credit and credit history.

Another option for you is to do balance transfer. You need to look for a credit card that offers a 0% APR on balance transfer for an extended period of time. By transferring your balance to such a card, you will not need to rack up more interest in addition to what you already pay. Yet make sure that you choose a good credit card. Carefully check all the fees associated with the card and the transfer itself. Some of these cards will let you make your balance transfer with no fees. If you are offered a card with a fee, think before you take it. Look at as many cards as you can so that you choose a card that will provide you with the best options to help you reduce your debts.

Do not feel defeated by your credit card debts. What you need to do is to plan the best way out of them. You need a good plan that would allow you not to pay for your debt decades from now. Bring your interest rates down and decrease your payments. If you do this, your financial situation will improve before you know it.