Stressed out over your finances (or lack thereof)? Debt troubles are becoming a prominent trend in Canada – the consumer debt load recently clocked in at $1.4 trillion! And credit card debt leads the pack as a stress source – the average Canadian carries a balance of $3,277.33. It’s no wonder that 46.6 per cent of Canadians rate low interest as a top credit card feature.
So, what can you do if you’re carrying a hefty balance? The good news is there are ways to effectively stop a credit card debt spiral.
Step 1: Switch To A Kinder Interest Rate
Credit cards carry some of the highest interest rates around, with most charging between 19 and 21 per cent for purchases extending beyond the grace period. It’s these interest payments that morph a medium-sized debt load into an ever-growing beast that’s impossible to pay down.
Credit cards with low balance transfer features help break the debt-inducing pattern by offering a much lower interest rate for a limited time. This gives cardholders the chance to pay down their principal debt faster, and take control of their credit card balance.
Penelope’s Pick: MBNA Platinum Plus® MasterCard® credit card
Imagine – a whole year without earning credit card interest! It’s possible with this low balance transfer option, which provides 12 months interest free on balances moved from another card. Taking advantage of this interest break is a great way to gain control of credit card debt and focus on paying the principal amount. All with no annual fee.
Interest Saved: $951.30*
The Best Low Balance Transfer Card In Canada! This credit card took top spot as the best Balance Transfer Option in Canada! Check out RateSupermarket.ca’s Best of Finance Awards* to learn more.
Step 2: Set Up Automatic Payments
Setting up automatic bill payments is a surefire way to make debt repayment a priority, and will help you stick to your debt reducing timeline. If you’re taking advantage of a low balance transfer offer (like the 0% annual interest rate† (AIR) on balance transfers*) divide the balance that you’re transferring by the time of the offer – by the end, you’ll have cleared your credit card balance.
Step 3: Plan Around Your Spending Habits
Not sure what kind of credit card features you need? Look to your spending habits to judge whether you need a little extra help in the debt repayment department. For example, if you’re prone to carrying a balance you may want to consider switching to a lower interest option, rather than plush (but pricey) travel rewards.
However, if you find the temptation is just too great and that you’re racking up a balance on your everyday purchases, there’s the tried and true method of leaving your credit card at home.
Your Credit Card Debt Questions Answers… Plus WIN Sweet Prizes
Join the #CanadaDebt conversation! Tune in to our Twitter party on Friday, February 21 with @ratesupermarket. Money Wise editor Penelope will be on hand to answer your pressing debt questions, and will be handing out PRIZES to our lucky attendees.