Credit cards. Maybe they make you cringe. Maybe they make your eyes light up. Either way, they can be an effective tool for Canadians looking to build their credit. With perks like travels rewards and cash back, credit cards are an attractive option. However, if you have the tendency to spend your money before you have it you run the risk of building a greater and greater amount of debt.

Two months ago Statistics Canada released information on a study they performed on household debt. Between the years of 1999 and 2016 the average homeowner had household non-mortgage debt was $18,100. Additionally, those households which held a positive expectation for the future had an extra $6,800 of consumer debt compared to families that held a negative or neutral outlook for the future. The obvious conclusion is that families that expected a pay raise in the very near future were more likely to start spending more money or increasing their debt-to-income ratios.


The temptation to count your chickens before they’re hatched may be tempting, but it is risky. The danger in spending money you haven’t yet receive is that there’s no guarantee that it will eventually land in your bank account. The best choice is to wait. However, if you’ve already found yourself facing a growing pile of debt, keep reading to find out how to make a growing problem turn into a shrinking one.

How to

Consumer debt comes in a variety of shapes and sizes, but the most common is credit card debt. This kind of debt is tricky because it is revolving (you can pay it off and use it over and over again) and usually has a high interest rate. Consumer debt tools can be useful but also run the risk of becoming a quickly growing problem. Before you can tackle the issue you need to sit down and really take a good look at what you’re dealing with. It might be painful but unless you deal with it now it’s only going to get worse.

Once you know what you’re dealing with you might realise you’re spending quite a bit of each paycheck on debt. You could continue to try and deal with each payment you’re forking over and hope that you’ll be ok, or you can consider consolidating your debt. This means taking all of your consumer debt and transferring it to one lump sum with one monthly payment at (usually) a much lower interest rate. You can do this using a line of credit, a HELOC (home equity line of credit), a balance transfer credit card, or a low interest credit card.

Once you’ve chosen the consolidation tool of your preference you’ll be able to start making one simple payment every month and stop worrying about which debt to prioritize first. You’ll also have the flexibility to make extra payments without a penalty, thereby paying off your debt faster.

Most credit cards have a high interest rate of 19.99%. A line of credit has a much lower interest rate (about 5%) and a balance transfer credit card has a temporary low interest rate sometimes as low as 0%! If you’re paying low or no interest you’ll be able to focus your payments on paying off the balance rather than the interest and get out of debt quicker.

Stick it out

The great thing about debt consolidation is that it gives you the chance to pay little or no interest and make focused payments on your debt. However, the temptation is to make only minimum payments and continue taking on more debt. If you know you’re likely to get into this habit you can downsize your credit limit or cancel your card (or line of credit) altogether. This doesn’t make the debt go away but it stops you from being able to use the available balance.

If you’re really serious about getting out of debt fast, print out your payment plan, put it up somewhere you’ll see it daily and track it with each and every payment. This will keep your progress at the front of your mind and help to keep you on task. The reminder will help you to avoid temptation and stay on target.

Making dedicated steps to paying off your debt is only the first step of the solution. The next step is to get to the root of the problem and find out why you’re overspending. Take a sincere look at your spending habits and figure out how and why you got to this place. If you don’t, you’re likely to end up back in debt again very soon.

To get started with the best consolidation tool for you, contact us today!