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How to get rid of Credit Card Debt
Is credit card debt weighing you down? Do you often file away or trash your credit card statement without paying off the balance? Do you wonder about the best ways to pay off your credit card debt? If so, you’re not alone. Nearly half of all Canadian credit card holders (46%) are carrying credit card debt, and one in three don’t pay off their credit card bill every month.
Over half (52%) use their credit cards to make the majority of their purchases, and yet one third don’t actually keep track of their credit card charges until they receive their bill at the end of the month. One quarter or 26% are stuck in a vicious cycle where they pay off their credit card bill with all their available funds, then rack up additional debt paying for other expenses.
Growing consumer debt, paying for child care or post-secondary education and saving for retirement are just a handful of the things that are stressing out Canadian families, but how to pay it off isn’t always so straightforward. If you have multiple credit cards and multiple debts, where do you start?
Debt “stacking” is an incredibly popular method of debt repayment. With this strategy you would pay off the balance of the debt with the highest interest rate first, paying only the minimum payment on your other debts. Once the highest interest rate debt is fully repaid, move on to the one with the next highest interest rate and so on.
The “snowball” method for debt repayment involves paying off the debt with the smallest balance first, and again paying just the minimum payment on everything else. Once you’ve paid off the card with the lowest balance, you can cut it up and move on to the next one.
Either of these two ways will allow you to see progress by wiping out one credit card debt at a time. They are also good methods for developing good budgeting habits going forward. Although there are pros and cons to each method, in the end the best method is often the one that works best for you. As the popular financial author Dave Ramsey has said, “Personal finances are 80% behavior and only 20% knowledge.”
If you are struggling with paying off your debts on your own, you could seek out professional help from a counseling service, financial advisor or even a bankruptcy trustee. Most professionals have a free initial consultation and being that most people do not want to talk to their friends or family about their finances, am initial consultation is a good place to start.
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