Getting out of credit card debt in Canada

A typical minimum is the greater of $10 or 2%–3% of the balance. On a $10,000 balance at 20.99%, paying only the minimum takes over 30 years and costs more in interest than the original debt.

Adding even $100 a month to that payment usually cuts the payoff time by more than half. The debt payoff calculator shows the exact crossover for your balance and rate.

The avalanche method pays the highest interest rate first and always costs the least. The snowball method clears the smallest balance first and wins on motivation. If the difference in total interest is small, take the method you will actually finish.

Whichever you choose, stop new spending on the card being attacked, and make payments weekly rather than monthly — interest accrues daily, so timing alone shaves a little off the total.

An unsecured personal line of credit typically runs prime plus 3–7 points, a secured home equity line of credit closer to prime plus 0.5. Moving a 21% balance to a 9% line of credit is a genuine saving — but only if the card is then left at zero.

Balance transfer promotions of 0%–3% for six to twelve months work if you can clear the balance inside the promotional window; the transfer fee is typically 1%–3%, and the promotional rate ends abruptly.

If total unsecured debt exceeds roughly a year of take-home pay, speak to a Licensed Insolvency Trustee before borrowing more. The first consultation is free, and a consumer proposal is a regulated option, unlike most advertised 'debt relief' services.