Freedom from Debt – Settling All Credit Card Obligations

Freedom from Debt: Settling All Credit Card Obligations

Credit card debt in Canada has reached very high levels in recent years, with the total amount of debt for all Canadians exceeding $100 billion in 2019. When the COVID-19 pandemic occurred in 2020, causing lockdowns and business closures that resulted in many people losing their jobs. This has made it difficult for many people to pay down their credit card debt.

Indeed, the pandemic has had a financial impact on many Canadians, with some struggling to make ends meet and falling behind on their bills. While some have been able to catch up on their debt payments and increase their savings, others are still struggling.

Luckily, there are a couple of things that people may do to get out of their credit card debt quickly.

First of All, How Do Credit Card Debts Even Build Up So Quickly?

Credit cards allow people to borrow money from a lender and then pay that money back over time, usually with interest. A person may use their credit card to make purchases anywhere that accepts credit cards as payment. When they make a purchase, the credit card company pays the vendor for them and then they owe the credit card company the amount of the purchase, plus any interest and fees that may apply. This means that, for some people, the cost of interest can be quite high.

Some factors that may bring about credit card debt build-up may include:

• Unemployment can lead people to use their credit cards more often in order to cover their expenses. This can cause them to accrue debt and have difficulty making payments.
• When an introductory offer period ends, the interest rate on the account will change. This may cause some monthly payments to increase.
• A person may accidentally miss a bill if they go through a major life change. This could include getting married, divorced, having a new child, or experiencing a death or injury in the family.
• A major life change that affects a person’s ability to earn income can cause them to rely more heavily on credit. This may be due to losing a partner, taking maternity or paternity leave, or becoming ill.
• An unplanned or unexpected expense, often related to medical care or home repairs.

The truth is that credit cards with high interest rates can make it difficult for people to pay off their debt. The higher the interest rate, the more debt they will accumulate. This can make it harder for them to pay off, even if they have a small balance.

Some Helpful Tips to Get Out of Credit Card Debt

1. Focus On One Debt at a Time

The term “snowball” is used to describe the strategy of paying off debts from the smallest balance to the largest balance, while the term “avalanche” is used to describe the strategy of paying off debts from the highest interest rate to the lowest interest rate.

The snowball method is a debt payoff method where a person may pay off their debts with the smallest balances first, regardless of interest rate. This can help them stay motivated in paying off their financial obligations. On the other hand, the avalanche method is a debt repayment strategy where a person must first focus on paying off their debts with the highest interest rates. This method is usually better in the long term since it minimizes the total amount they spend on interest.

2. Use a Debt Consolidation Loan

If a person has a good credit score, they may be able to get a debt consolidation loan to help pay off their credit card debt. This could be a great option if they prefer to get out of debt fast.

To get a debt consolidation loan, people usually apply for a loan at a bank or other lender. The loan is used to pay off all of the person’s debts.

Debt consolidation can be helpful if a person struggles to keep up with multiple monthly debt payments. By consolidating their debts into one loan with a lower interest rate, they may be able to save money and pay off their debt more quickly.

3. Sign Up for a Debt Consolidation Program

A Debt Consolidation Program is a method of paying off credit card debt by working with a credit counselling agency. The agency will work with a person’s creditors to come up with a payment plan that fits their budget and will also help them negotiate lower interest rates and monthly payments. Once they’ve enrolled in a program, they’ll make one monthly payment to the agency, which will then distribute the funds to their creditors.

A Debt Consolidation Program can be a great way to control a person’s debt, but it’s important for them to do their research and make sure they are choosing a reputable agency. There are a lot of scams out there, so everyone must work with an agency that’s surely going to help them get out of debt, not further into it.

Conclusion

Overall, it is important to be aware of the options available for settling credit card debt. There are a few key points to keep in mind when considering these options. First, consider the pros and cons of each option. Second, make sure to research and understand the terms and conditions of any agreement before signing. And finally, remember that settling all debts is not a quick fix – it will take time and effort to improve one’s financial situation.

If you are hoping to settle all your credit card debts in Canada, look no further than our expert advice here at Debt Helpers. We offer a range of consulting services and debt solutions designed to help you reach your goal of becoming debt free. Call us today, and let us discuss all your viable debt-free solutions.