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How To Pay Off Credit Card Debt When You Have No Idea Where to Start!

“A credit card sometimes adds to the high cost of living but more often to the cost of high living.”

 – Bob Phillips

A credit card can be a bit tricky sometimes. As the quote above says it increases the cost of living by increasing your style of living. A lot of time we get distracted by credit cards and spend money on things that we do not necessarily need. And that’s when the issue of maxing out credit cards arises and in many cases not being able to pay off your debt can impact your credit score. So what to do to pay off credit card debt when you feel that you don’t have any way out? Well, this post is exclusive for you. 

Credit cards are quite prevalent in Canada with 79.6 million credit cards existing only in the year 2019. It suggests how people have tied their lives to using a credit card. Sometimes that leads to higher debt. Out of all the Canadian debt, 30 percent is accountable to credit card debt. If you are facing the same issue the below ways will help you come out of the situation with flying colors. It would take time but remember that slow and steady steps lead to success!

Methods to Pay Off Credit Card Debt

Pay Higher Interest Rate Debt First 

It is not necessary that all the credit cards that you have, would have the same interest. It is better that you start by paying the higher interest rate credit card debt first because that will also reduce your installment amount. This is also called the avalanche method. 

It helps you to minimize your credit card debt by reducing the size and motivating you to pay the higher interest debt first. If you have patience and determination and can go away without any motivation of paying debt fast, then you should opt for this method.

Take a Lower Interest Rate Debt First 

I know I just said to pay a higher interest credit card bill first but if you find it difficult and need a little motivation start with paying smaller amounts and gradually increase the same. The important part is that you pay your credit card debt. It can depend on your preference for whether you want to pay for a credit card debt with higher interest or lower interest – but just pay it on time. 

In this method, you will pay a lower installment every month. This method is also called the snowball method. Though one of the downsides of this method is that you are definitely getting motivated to pay debt quicker but in this way, you are letting the higher interest rate debt as it is for a long time and that may create a hole in your pocket in the long run. If you want to see a faster result, you should use this method.

Example of both methods.

Suppose you have the following credit card debt pending. 

IndexCredit Card Debt AmountInterest Rate 

In the first method – Avalanche – you would pay the credit card debt number 3 the first, followed by debt number 2, 4, and 1. 

While in the second method – Snowball – you pay the card debt number 1 the first, followed by debt number 4, 2, and 3. 

Read: How To Buy A Home & Get A Mortgage With Bad Credit?

Use the Credit Card Balance Transfer 

A lot of credit card companies allow you to transfer the current credit card debt balance to a lower interest rate credit card. This is called credit card balance transfer. For this, you may require a good credit score. For example- Suppose you have $1000 debt on your credit card that has an interest rate of 5 percent. Now you also have a credit card that charges an interest rate of just 1 percent. 

If your credit card company accommodates, you can transfer the pending balance to the lower interest credit card. It will save you paying money for your debt. And once you improve your credit situation, it would eventually improve your credit score as well. This is one of the best ways to pay off credit card debt.  

Opt for a Loan 

Now, this might sound a little tricky but it is one of the ways that can help you pay off the credit card debt. It is also called consolidation or refinancing of debt. In this method, you get a loan at a lower interest rate and pay off the credit card dues or any other dues if you have. In this way, you will only have to pay one instalment instead of multiple. If you don’t have any kind of money left or have very little left, you can choose this method. 

There are two ways in which you can do this. 

Personal Loan: A personal loan can be availed from any financial institution or your bank. If you can get a personal loan with a lower interest rate compared to credit card debts, it will be a win-win situation for you. 

Home Equity Loan: In this method, you are putting your home on credit with a financial institution or bank and on that, you are taking an equity loan. This is a little bit risky because you are putting your house on a line of credit. I do not recommend this method until and unless you really have to.

Read: What Does Your Credit Score Range Really Mean?

Credit Card Debt Management Program

There are various methods through which you can manage your credit card debt. 

1. Talk to Your Credit Card Company: The first one is talking to a credit card company. Having a conversation with your credit card company can provide you with some benefits because as much as you want to get rid of your debt, the credit card company also wants to get the money back. If you talk about your situation, there are chances that you can negotiate your terms and payment modes. You might get favorable terms then you are getting at present. 

2. Declaring Bankruptcy: While I do not recommend this method if you do not have any other way left you may declare bankruptcy. Though you should remember that this is going to show on your credit score and such details stay for a while on your ranking which can make it difficult for you to borrow money in the future.

3. Consumer Proposal Program: Now this is something that can come in handy to you. Such a program is looked after by a Licensed Insolvency Trustee. They help people refinancing their debt and reducing it by being on a strict budget. You can opt for it and eventually can reduce your credit card debts.

Some Bonus Tips to Pay Off Credit Card Debt 

  • Make a budget and stick to it.
  • Do not apply for any more credit cards.
  • Pay your credit card debt as much as you can every month. 
  • Have at least a 30 percent spending limit left. 
  • Use a debit card instead of a credit card.
  • Implement strict financial discipline.

Remember that, a credit card is no doubt a boon, but it is a boon in disguise. It is like a gun you should use it only when in dire need. If you treat your finances well, it will treat you better. So be disciplined, save money, invest it, and enjoy the benefits of compounding. All the best!

Read: How Much Money Do You Need to Save for Retirement in Canada?

Devanshee Dave

Devanshee is a staff writer at She is a finance enthusiast and has completed her Master’s degree in Mass Communication & Journalism. She has worked as a journalist in a local business newspaper, multiple start-ups as well as finance and economy-related online media houses.

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