Most people have a love/hate relationship with credit cards. But they are often a necessary for many Canadians when they want to start building their credit. Attractive options like credit cards with cash back or travel rewards can be excellent tools if you know how to use them properly but if you have poor money management skills you’re likely to find yourself facing an ever growing mountain of debt.

On April 4 this year a study on household debt was released by Statistics Canada. From 1999 to 2016 the average household homeowner non-mortgage debt was $18,100. In addition, homeowner households who had positive expectations for the future held $6,800 more debt than other families with neutral or negative outlooks. The conclusion was that families with positive expectations for the future had higher debt-to-income ratios and were more likely to increase their debt load prior to an expected climb in income.


People may be familiar with the phrase “don’t count your chickens before they’re hatched” but it doesn’t mean we’ve all learned the lesson. It’s normal to get amped up for a promised raised but until you have the money in your hot little hands, don’t go and spend it. The safest and smartest choice is to wait. If it’s already too late for that and you’re facing a mounting burden of debt your next best choice is debt consolidation.

How it works

Consumer debt can be accumulated in many ways, but the most common is in the form of credit cards. These can be wonderfully helpful tools but without proper diligence can turn around and bite you. If you’ve found yourself nursing a wound delivered at the hand of your credit card(s) the first thing you need to do is sit down and take a good look at the problem. How much debt is there? What are your payments? How much interest are you paying? How long before you’re out of debt? Discovering the answers to these questions may be painful but it’s the only way you’re going to be able to tackle the problem effectively.

You could continue making the required payments with high interest rates averaging 19.99% and pay off your debt in several months or, more likely, years. Or you could transfer all of your debt to one low interest loan. This is done with a line of credit, a low interest credit card, a balance transfer credit card, or a HELOC (home equity line of credit.) These products are known to have very low interest rates and often have promotional rates as low as 0% for a short time period (3-10 months). If you’re serious about getting out of debt quickly, consolidation is the choice for you.

Once you’ve consolidated your consumer debt you’ll be able to make one low interest monthly payment rather than trying to juggle multiple high interest payments. A low interest rate means more of your payment will eat away at the balance of your debt rather than the accumulating interest. In addition, any extra payments you make will chop down your debt even quicker. Keep in mind that if your low interest rate is a temporary offer you’ll want to pay off as much debt as possible before the offer ends. Make sure you factor in how much interest you’ll be paying afterward.

Stay on track

Debt consolidation can help save you a lot of interest if you’ve accumulated a lot of high interest debt. You’ll be able to pay off your faster but there is the temptation to rack up your credit cards again once they’ve been cleared. To avoid this problem you should lower your credit limit or cancel your card(s) completely. If you really want to stay on track, write up your debt payment plan and put it up somewhere you’ll see it every day. This will keep your goals at the forefront of your mind and you’ll be able to see your progress month by month. Watching your gradual success will give you a boost of confidence and help keep you focused.

Putting together a plan to get out of debt is only the first half of the solution. The next half is figuring out why you got into debt in the first place. Was it an accident? Were you a victim of unexpected circumstances? Whatever the case, unless you get to the root of the issue you’re bound to find yourself in this same predicament time and again.

If credit card debt consolidation is for you give us a call to find out what low interest rates are available for you today!