With their super easy payment capabilities, it’s easier than ever to rely on credit cards to pay for things, especially during challenging times. According to credit monitoring agency Equifax,* Canadian credit card debt hit an all-time high in the second quarter of 2023. If you are still carrying a large balance month to month, it will be hard to get ahead.

Why pay down your credit card?

It’s important to tackle credit card debt for one huge reason: the interest. If you were to chip away at a $1,000 credit card balance (with a 19.99% interest rate) by only making the minimum monthly payment, it would take over ten years (!) to pay off the balance. Why? The interest compounding on the balance owed makes it the biggest thing you end up paying, rather than the original purchase itself.

So make today the day you start tackling the debt with these tips:

• Kick start your new payment strategy by making a payment right now, even if it's only $10, $50 or $100.
• Get into the habit of paying more than the minimum amount due, so you pay down the balance, rather than just the interest.
• Consider bundling your outstanding credit card debt into a consolidation loan. The benefits:
  • You only have one monthly payment
  • The loan tends to have a lower interest rate
  • You can also look at transferring your credit card balance to a lower rate card. Make sure to check whether you’re only getting an introductory rate, or if there are any additional fees for transferring over. 

When it comes to overcoming credit card debt, prepare for small setbacks along the way or a few growing pains as your try new things. But also awaiting you is that deep breath of relief you'll take when you see your outstanding total become lower and lower.

*Canadian credit card debt hit all-time high: Equifax | CTV News