Consolidating credit card debt can be a great first step, as this type of debt is the most expensive loan a consumer can have.
Consolidating Credit Cards
5 ways to Consolidate Credit Card Debt
Consolidate and reduce high credit card debt by:
- reduce the number of credit cards you own
- leave the credit card at home, use your debit card
- pay more than the minimum payment
- consider a consolidation loan
- consider a consumer proposal
Where you have credit card debt, it must be paid off as soon as possible.
With interest rates and penalties you could be paying over 20% interest, which could be hundreds of dollars per year.
Use only one credit card
Most people do not need multiple credit cards and when you only have one card:
- the card is easier to manage
- you’re less likely to over spend than with multiple cards
- there will be less fees
Reduce the number of credit cards you have by:
- canceling store and gas credit cards
- use only one Visa or Mastercard
- these cards are accepted worldwide
The points and dividends you earn on store and gas cards maybe worthless compared to fees you may incur on them.
Most Visa or Mastercard credit cards now have incentives and dividends for paying the balance monthly, and are accepted throughout the world.
Leave the Credit Card at Home
Credit card companies want you to carry a balance, that’s how they make money.
This is one of the reasons credit cards are initially so easy to obtain.
Credit card companies want you to spend, use credit and carry an outstanding balance. Then they make money…
The only way credit card companies make money is if you are unable to pay your balance each month. People who pay the balance owing actually make money from credit card companies.
When the balance is paid on time each month, you actually make money by:
- your cash earns interest in a bank account
- you earn points or dividends on the card
★★★★★ I owed thousands on my credit card and a consolidation loan just wasn’t going to work. I called YanchDey and they got me on a consumer proposal saving 22,000 in credit debt. I will be debt free in 4 years!!! Many thanks to Kelli and Brenda, your the best!! David R. Oshawa
Don’t Carry a Balance on Credit Cards
You have to pay more than the minimum balance.
If you’re just paying the minimum each month it will take years to get out of debt. The card will be constantly incurring interest and late payment fees.
Credit card fees and payments can add up to thousands of dollars over the years.
Consolidation loans can be a great way to stop or reduce credit card debt.
Arranging a consolidation loan usually requires that you go to your bank, and meet with the loans officer.
The loans officer will want to know,
- what will the loan be used for
- how long you need to pay it
- how much is your debt
The loans officer will look at your finances to see if you qualify for a loan. Where you’re considering a consolidation loan try to ensure the bank loan has a term for 5 years or less.
When consolidating credit card debt, take action to ensure you do not start using the credit cards again in the same manner.
Where you have a consolidation loan and there is continued use of credit card, you may find yourself financially worst in a year or so.
You might consider a consumer proposal as actually cutting your debt and consolidating the balance.
When you file a proposal you agree to pay unsecured creditors a percentage of what you owe them, over a period of three to five years in exchange for the debt being forgiven.
The payments you make in a proposal are a negotiation based on:
- your income,
- what you can afford to pay and
- the amount owing to creditors.
What you pay is determined by the trustee, acting as a proposal administrator. The administrator reviews your financial situation to determine:
- the amount you should pay,
- over a time period of usually 5 years
Debt can be reduced up to seventy percent, (or 30 cents on the dollar), but each proposal is different depending upon your income and assets.
Consumer Proposal Advantages
Filing a Consumer proposal is an appealing credit card solution because:
- credit card debt is reduced up to 70%
- (sometimes even more)
- no further interest can be added
The debt is repaid in 3 to 5 years, with no added interest payments resulting in dramatic savings over the original amount owned.
Many people with overwhelming debt find that a consumer proposal solves their credit card problem.
When to use credit cards
As you start to re-establish your credit, make some rules for yourself, such as:
- only have one credit card
- credit cards are for ONLY for things that cannot be paid with a debit card,
- e.g gas, car rentals, hotel rooms etc
- credit cards must be paid off each month
- if you cannot pay it off in one month,
- you have to pay them as soon as possible
- if you cannot pay it off in one month,
Most of us have bought something on credit that we really didn’t need, impulse or luxury item, try keeping the credit card at home and use your debit cards where possible.
Make the First Step to Financial Health Today
If you could have done it alone, you would have done it by now. Call and get the free help to learn about consolidating and reducing your credit card debt.
There are alternatives to debt consolidation and huge monthly payments with a consumer proposal.
Make an appointment today to speak with an insolvency expert.
We offer a free opportunity to go over your options, and give you clear and honest advice on what’s best for you.
Call us now at 905-721-7506.
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This site is for information only and is not meant to replace qualified legal advice by a licensed insolvency trustee, the writers shall not be held responsible for any information that may be incorrect or out of date. The owners of this website recommend that anyone wishing to learn about getting out of debt and reducing credit card debt contact our office for qualified advice from a bankruptcy trustee.