Credit cards can be a very valuable financial tool when used correctly but as with any borrowing service, they can easily become problematic and get out of hand if used excessively.
According to a report by the Financial Post, the average credit card balance of Canadians is set to increase to $4,465 in 2020, a rise from $4,240 in 2019, but while having a manageable amount of credit card debt is ok, it can all too easily rise to less manageable levels if you start to overspend.
So here are some tips to help you handle your credit card debt.
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Tips to handle credit card debt
Payback your balance as quickly as possible
It can be tempting to only pay your minimum credit payment each month, but this not only keeps you in debt for longer but will ultimately increase the amount of interest that you end up having to pay back.
If you can, aim to try and pay back your credit cards as quickly as possible by putting extra money in each month to help decrease your debt more quickly.
Prioritize your spending
If you’re trying to get a handle on your credit card debt, then you need to be prepared to cut back your expenses and to prioritize your spending.
Look at your monthly budget and try to cut back on any unnecessary expenses and then funnel this spare cash towards paying off your credit cards more quickly.
Set yourself goals
Paying off a large credit card debt or smaller balances on multiple credit cards is often a long game and it can be hard to stay motivated.
To keep you on track, try setting yourself a series of SMART goals and allow yourself a small reward when you hit them.
Pay off credit cards strategically
If you have more than one credit card that you are trying to pay off then it’s time to get strategic with where your money goes.
Compare the interest rates of all of your credit cards and work to pay off the one with the highest interest rate first, this will save you the most money.
If you have to, pay only the minimum amounts on your other credit cards until the balance of the worst offending credit card is cleared.
Talk to your creditors
Lastly, if you’re struggling to make your repayments or feel as though you are drowning in interest, then try talking with your creditors.
If you explain your situation clearly, then your creditors may be able to offer you a reduced interest rate or could offer you a more manageable repayment plan.
Unsure where to start?
If you’re worried about your credit card debt but are unsure of where to begin, then let us help.
Here at Bankruptcy Canada, we have helped hundreds of people to manage their credit card debts and can connect you with a Licenced Local Trustee who will be able to assess your credit card situation and then suggest the best course of action.
To find out more about what we do and how we can help you to handle your credit card debt, then call us today on (877) 879-4770 or fill out our online form.