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How to Reduce Credit Card Debt (...and avoid it in the first place)

Gone are the days of getting overexcited by the fact that you can purchase an item on a piece of plastic today and worry about paying for it later. As your credit card experience (a.k.a. usage) grows, you’ll start to realize just how quickly credit card debt can mount up and how tough it can be to pay it off.

Here are a few best practices to help you manage your credit card debt.

Don’t Carry a Balance

Here’s a shocker - the number one rule to controlling credit card debt is to not carry credit card debt! If you under-pay your bill by even one cent, the interest is backdated to the last bill on everything you’ve purchased since then, even if you’ve technically paid most of the items off with a partial payment.

So when you make a purchase on your card, make sure you have the cash available to pay it off when your statement is issued. If don’t think you’ll have the cash available, consider an alternative solution to your cash flow issue. Take out a Line Of Credit, which will charge a much lower interest rate, and use that money to make your purchase or pay off your credit card in full.

Pay on Time

Interest on your credit card debt can add up quick, so it’s really important that you pay it off on time. At the very least you need to pay the minimum amount owing, BUT it’s a really bad idea to ONLY pay the minimum amount owing. You’ll end up paying loads in interest – and the last time we checked, the banks were doing okay for themselves, so avoid padding their bottom line with your money.

Find the Right Card for You

Not all credit cards are the same. There are loads of different cards on the market designed to meet the needs of a variety of consumers. In order to find the best credit card for you, first consider how you plan to use your credit card, when you plan and how much you plan to pay off each month and what your personal financial situation is. The answers to these questions will help you determine if your should have a Low Interest credit card, a Rewards credit card, a Secure credit card or perhaps and combination of these.

Avoid the Rate Ripoff

Don’t get sucked in (at least for too long anyway) by the steeply discounted “introductory” rates that some companies offer. These rates are typically around for the short term before jumping to much higher levels. While they may offer a great short term solution for reducing your debt levels, you want to make sure you can pay off your balance before the rate starts to climb.

Get Help When You Need it

If you do find yourself carrying a balance month after month, and can’t seem to figure out how to get out of the growing debt spiral on your own, it might be time to contact a credit counselor. There are people and services available to help you manage credit crad debt. You could look at consolidating your various debts into one with an overall lower interest rate, or even negotiate some grace periods and other breaks from the institutions you’re indebted to.


The RATESDOTCA editorial team are experienced writers focused on sharing stories and bringing you the latest news in insurance and personal finance. Our goal is to provide Canadians with the information and resources they need to make better insurance and financial decisions.

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