If you have credit card debt, you know how difficult it can be to manage. With high interest rates, late payment fees, and ATM fees, debt can mount up quickly.
The good news is that there are several ways to eliminate credit card debt in Canada. Here are 10 steps you can take to bring your credit card balance to zero.
Bring your credit card balance to zero
1). Pay off high-interest debt first
The first thing to do is to go after the credit cards with the highest interest rates.
Some credit cards have interest rates as high as 29.99%. So if you have a balance of $2,000, that debt could be costing you up to $595 a year. Pay off your high-interest cards first, and you’ll be in a better position to manage your other credit cards.
2). Set up automatic payments on your credit card
A great way to pay off your credit cards is to set up automatic payments. This will reduce your credit card debt each month.
Setting up automatic payments will require you to budget to ensure that your checking account has the money to cover monthly payments. Your bank should allow you to set up automatic payments to your credit card account.
3). Transfer the balance to a low-interest credit card
Voici un moyen rapide de réduire votre taux d’intérêt : transférez le solde de vos cartes de crédit à haut taux d’intérêt vers une carte de crédit à faible taux d’intérêt. Certaines cartes de crédit peuvent offrir un taux de lancement de 0 %.
Vous pouvez profiter de cette occasion pour rembourser votre dette de carte de crédit sans devoir payer de taux d’intérêt élevés. Ces cartes à taux de lancement de 0 % peuvent vous facturer des frais de transfert de solde. Veillez donc à vérifier les détails du contrat de la carte de crédit.
4). Paying more than the minimum payment due
If you only pay the minimum payment on your credit card, you will barely be able to pay off the principal on your card. Therefore, you should look to pay more than the minimum. Try to pay at least double the minimum. This will allow you to reduce the principal of your debt and pay it off faster.
Another approach to paying more than your minimum payment is to gradually increase the amount you pay each month. For example, you can pay 25% more than the minimum one month and pay 50% more than the minimum the next month. Increase the amount you can pay to eliminate your debt faster.
5). Avoiding late fees
Late fees can be very high when it comes to credit card debt. So you need to make sure you can avoid late fees as often as possible. You can easily avoid late fees by automatically paying your bill at least five to ten days before it is due.
Be sure to check your credit card relevé to see when your bill is due. Sometimes the payment due date may change. Therefore, you must ensure that you allow sufficient time for your automatic payment to be processed by the credit card company.
6). Establish a long-term plan
One of the best ways to stick to a budget or achieve a financial goal is to plan and budget. When you create a budget, you look at all aspects of your finances. This includes your income, expenses and debts.
Don’t forget to look at the amount you owe on your credit cards and calculate how long it will take to pay off your debt. This will give you a better roadmap for achieving your debt reduction goals.
7). Limit the use of credit cards
If you don’t use your credit card often, you are less likely to accumulate debt.
First, only use your credit card if you already have money in your checking account. Why pay for something and be charged interest when you already have the money in the bank? Try to use your credit card as a “last resort” only if you don’t have money in the bank and have a major purchase to make, such as gas or food.
Good credit card management can help you control your debt easily.
8). Negotiate a lower interest rate
It doesn’t hurt to call your credit card company and negotiate a lower interest rate on your card.
When you call customer service, be sure to mention how long you have been a customer and your payment history. If the credit card company does not reduce your interest rate, you can threaten to close your account. This may allow you to get a lower interest rate that will help you better pay off your debt.
9). Consider a personal loan
Another way to pay off your credit card debt quickly is to consider a personal loan.
A personal loan is a loan that allows you to do whatever you want with the money. Be sure to check if the interest rate on the personal loan is lower than the interest rate on the credit card. If you can get an interest rate that is at least 5% lower on the personal loan than on the credit card, it may be worth getting the loan.
10). Consider a debt consolidation loan
You can also consider a debt consolidation loan.
A debt counseling loan is a loan where a lender pays off all of your debts, then you pay the debt consolidation loan. Sometimes a debt consolidation loan will allow you to pay a lower interest rate.
You may want to consider a debt consolidation loan if you have debt from several high-interest credit cards.
Controlling credit card debt
Don’ t let your life be dominated by your credit card debt.
You can control this debt by following one of the steps mentioned above. With proper planning, you can create a plan that will get you out of credit card debt.