3 Ways to Beat Blue Monday Debt

3 Ways to Beat Blue Monday Debt

Feeling a little, well, blah these days? You’re not alone; mid-January is proven to be the most depressing time of year. Known as Blue Monday, Canadians are most likely to feel down in the dumps between the 18th to the 25th, thanks to a mix of fading holiday cheer, weak sunshine, failed resolutions and – gulp – your post-holiday credit card bill.

And we’re not talking about a little over-spending guilt here. According to some recent numbers from short-term loan provider Borrowell, one in 10 Canadians feel “very” to “extremely” ashamed of their credit card debt. In fact, 52 per cent of Canadians say they’d rather share their weight or salary over their credit card debt – and 14 per cent even hide it from their spouse!

But there’s reason to cheer up – conquering that lingering credit card balance is definitely doable. The key is to shift your debt from a high-interest payment plan to something more manageable.

Here are a few ways to pay that debt down before the warm weather months.

Also read: 12 Months to Being Debt-Free>

Option 1: Try a Short-Term Loan Provider

Have decent credit, but just can’t shake a stubborn credit card balance? You could be a candidate for an online installment loan, like the three-and-five-year options provided by Borrowell, which offer a much more competitive interest rate based on your credit score.

Applying for these short-term loans online is becoming a popular practice in Canada, as millennial banking customers eschew traditional branch meetings for streamlined convenience. Traditionally, applying for a consolidation loan or line of credit required visiting – sometimes more than once – with a financial advisor.

Moving your credit card debt to an installment loan also has a two-fold, positive impact:

  • The high-risk (credit card) account will appear to have been paid off
  • Your score will benefit from the regular payoff of an installment loan

“These are designed for people with good credit. They’re just carrying too much of it,” says Borrowell co-founder and CEO Andrew Graham. “We know there’s about $82 billion dollars of credit card debt in Canada, and much of that is held at rates of 20 per cent interest and above. And many people who are carrying that really don’t deserve to be paying that much interest.”

Also read: How to Tackle High-Risk Debt>

Option 2: Take Advantage of a Promo rate

It’s no secret that the average credit card carries one of the highest interest rates available – 20 per cent or more in some cases – and that can make paying it off extra challenging. If you’ve found yourself in a debt hole, an effective first step is to reduce what you’re paying each month in interest.

Low balance transfer credit cards, which offer a very competitive interest rate for a limited time, provide the opportunity to aggressively pay down your principal balance. Simply indicate that you wish to transfer an existing balance from another during the application process, and begin your payments at your new ultra-low interest rate.

Once you’ve moved your balance though, it’s best to keep your card out of your wallet. That’s because any new purchases made on it will be often charged the full, non-promotional interest rate, with no grace period.

Our Best of Finance pick: The mbna Platinum Plus® MasterCard® credit card is ranked as the top low balance transfer in Canada because it offers ZERO – that’s right, nothing! – interest for a full 12 months.

You could save $390.88 in interest*. Click here to learn more>

Also check out:

Option 3: Explore a Low Interest Option

Surely you’ve been told to abide by the golden credit card rule – thou shalt not carry a balance – but let’s get real here; Canadians carry a total of $84 billion in credit card debt, according to the Bank of Canada. So if you are carrying a balance month to month, try a credit card with an overall low interest rate.

Our Best of Finance pick: The mbna TrueLine® MasterCard Credit Card tops the market with zero annual fees, and a low annual purchase rate of 9.99 per cent – the lowest non-promotional rate available.

You could save: $370.94 in interest**. Click here to learn more>

Also check out:

Have you paid off your holiday spending in full? Tell us in a comment, or visit us on Facebook and Twitter.

*Interest savings were calculated based on the following:

  • Assuming the cardholder is carrying the average Canadian credit card balance of $2,627*
  • The cardholder is paying off the balance in full over a 12-year period with monthly installments of $218.92
  • Total Interest Paid is compared to that of a credit card with a 19.99% APR over a 12-month period

**Interest savings were calculated based on the following:

  • Assuming the cardholder is carrying the average Canadian credit card balance of $2,627*
  • The cardholder is making the minimum payment + $10 monthly
  • Total Interest Paid compared to that of a credit card with a 19.99% APR over a 24-month period

Related Topics

Credit Card Debt / Credit Card News / Credit Cards / Debt Repayment / Personal Finance / Personal Finance News / Your Credit Score

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