Do you know that at present time, there are more credit cards than there are people in Canada? TransUnion’s study says that 43 million credit cards are active in Canada and we only have a population of about 35 million. This means that the majority of people have credit card debt and multiple credit card debts mean a lot of money spent on paying for interest.
Additionally, the TransUnion study says that the average Canadian have an average of $4,094 in credit card debt with one or a few credit cards. It certainly looks like the average Canadian will benefit from consolidating credit card debt.
What is Credit Card Debt Consolidation?
Credit card debt consolidation means combining the balance of several high-interest credit cards to make payments easier to manage as well as save money on interest.
Options for Credit Card Debt Consolidation
Consolidating credit card debt can help you minimize your debt and eventually become debt-free in the future. Below are the popular credit card debt consolidation options.
Debt Consolidation Loan
A debt consolidation loan is an unsecured loan which may not be easy to qualify for just anyone because a high credit score is a foremost requirement. Another consideration is the value of the loan because financial institutions will not hand over a large amount of loan for an unsecured loan unless the borrower passed their strict screening process.
Debt Management Program (DMP)
A DMP will help you manage your loans, not just let you borrow a certain amount. With a DMP, you’ll work with a trained creditor counsellor to come up with a financial plan for you after assessing your financial situation. Each month, you’ll make payments to your credit counsellor who will pay to each credit card company you owe money to according to the terms you’ve agreed with together.
Credit Card Balance Transfer
A credit card balance transfer allows you to transfer several credit card balances to one card with a lower interest rate. The idea is that with a lower interest rate and with just a single card to pay, it will be easier and faster for you to pay off your debts.
A Home Equity Line of Credit allows you to tap your home equity to help consolidate debt if you’re a homeowner. Your home’s equity serves as collateral and the amount you can borrow is based on the value of home equity that you’ve built up. A Home equity line of credit usually has a lower interest rate compared to other credit card debt consolidation options.
Effectively Consolidate Your Credit Card Debt
All of the options for credit card debt consolidation mentioned above can help you effectively deal with your credit card balances. There are pros and cons for each depending on your financial situation and how much credit card debt you’ve accumulated. Contact us to talk to a debt consolidation expert or to apply for a home equity line of credit in Canada.