5 Ways to Get Out of Credit Card Debt
Updated: Oct. 04, 2018
Avoiding credit card debt and letting your bills pile up will only make the issue worse. The good news is, there are several steps you can take to save money on interest charges and get out of credit card debt a whole lot faster.
1. Balance Transfer Credit Cards
Instead of paying 19% or more on your credit card debt, take an interest holiday and pay 0% for a year or more. Sound too good to be true? All you have to do is get one of Canada’s low balance transfer offers, and transfer your credit card balance from your high interest rate credit cards to your low interest balance transfer card. You’ll want to look for a credit card with no annual fee, the lowest interest rate, longest promotional term and lowest balance transfer fee (usually around 1%).
2. Line of Credit
Another strategy for getting out of credit card debt is to take out a home equity line of credit. While not as good as a 0% balance transfer card, it’s generally the second lowest rate you can get. Because a home equity line of credit is secured by your home, the interest rates are much lower than most other types of unsecured consumer debt. You just have to make sure you’re able to pay it back. If you can’t, the lender will have the right to seize your home.
3. Low Interest Credit Cards
Some of the best low interest credit cards in Canada offer fixed rates as low as 9.99% with no annual fee. You can transfer your high interest credit card balances to the low rate card, and be confident that so long as you continue to make your payments on time, your low interest rate will never expire—unlike a balance transfer offer. With no annual fee, it’s best to get these cards before you actually need them—which is also when you’re more likely to get approved.
4. Installment Loan
An installment loan gives you the ability to replace all of your outstanding credit card debts with one fixed monthly payment for a specific term, at a lower interest rate than you’re currently paying. Take care, however: Many Canadian lenders play fast and loose with hidden origination fees and pre-payment penalties. Make sure you calculate all interest charges and fees when comparing one personal loan to another.
5. Negotiate
Don’t be afraid to negotiate with your credit card company. Many are quite willing to lower your interest rate if you ask, and the worst that could happen is that they say “No.” Some banks offer a lower rate for a fixed fee; others will simply cut your interest to ensure you keep your balance with them. The trick is to be prepared and let your current credit card company know you’ve received a 0% balance transfer offer from another bank.
Marc Felgar is a credit card expert & insider. He is the CEO and founder of GreedyRates.ca, which helps Canadians find the best credit card through online comparison tools, filters, credit card reviews and the latest deals and offers in the marketplace.
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