CREDIT CARDS CANADA

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Now that you know more about Money Wave and their many services including, credit cards, insurance, loans, mortgages, bank accounts and more; let’s talk about the best ways to manage your credit card debt. If you're struggling with credit card debt, there are many options available to help you. From paying more than the minimum to using balance transfer credit cards, there are several ways you can tackle your debt. The key is to be proactive and work with your creditors. Depending on your situation, they may lower your interest rate or change your payment due date.

1. Make a Spending Plan

The first step in overcoming credit card debt is to create and follow a spending plan. This will help you avoid overspending and relying on credit cards between pay checks. Paying just the minimum payment on your credit card may seem like a good idea, but it will only take longer to pay off your balance and cost you more in interest. A better option is to use the debt snowball or debt avalanche method. Both methods focus on paying off your smallest debts first, which can motivate you to keep going.

2. Review Your Credit Report

Your credit report provides a detailed account of your financial history. Lenders review this information before granting loans and credit cards to help assess risk. Paying your debts on time is critical to your credit score. Keeping balances low is also important to avoid raising your credit utilization, which can hurt your score. Credit card issuers may be willing to offer you payment holidays, waive fees or lower interest rates if you're making timely payments and not breaching your limit.

3. Pay More Than the Minimum

Getting into the habit of paying more than the minimum helps chip away at your credit card balance and improves your credit utilization ratio. It also keeps you from paying late fees and dinging your credit score. Minimum payments usually include all interest charges and fees accrued during the statement period, plus a small percentage of the principal balance. It can take a long time to pay off your balance with these payments, but paying more than the minimum is better for your credit.

4. Ask for a Lower Interest Rate

Credit card companies are required to review your interest rate and can lower it if you ask for it. The process might take 15 to 20 minutes on the phone, but it can save you money over time. If you’re making minimum payments, this is an ideal time to try to lower your rate so that you can pay off the balance faster. Be prepared to share information about your credit score, debt-to-income ratio and payment history with the company.

5. Get an Emergency Fund

Having an emergency fund helps you manage credit card debt by covering surprise expenses that would otherwise be put on your credit card. Ideally, your emergency savings account should be held in an account that's separate from your checking and any other savings you have. If you're struggling to build an emergency fund, consider applying for a credit card that offers a 0% introductory APR on balance transfers. These cards are best for people who have a decent credit score and can make the minimum payments on time.

6. Create a Budget

A budget can help you stay on track with your credit card payments and keep your balances low. It can also encourage you to change your spending habits, such as eating out less or shopping second hand. Another way to cut down on unnecessary spending is by creating a savings account that you can use for emergency expenses. This can prevent you from relying on credit cards between pay checks and save you money in interest charges. The debt snowball and the debt avalanche methods are two debt payoff strategies that can speed up the time it takes to pay off your credit cards.

7. Use Cash or a Debit Card

Using cash or a debit card for purchases is an effective way to limit debt, as the money is taken out of your checking account immediately. It also helps you learn healthier spending habits. Credit cards can offer many benefits, including rewards, as long as you pay off the balance in full each month. However, credit card debt can accumulate quickly if you’re not careful. The best ways to manage credit card debt depend on your individual needs.

8. Use the Avalanche Method

The debt avalanche method prioritizes debt repayment by interest rate and can help you save money. However, it’s important to keep in mind that it requires a lot of discipline and isn’t always the most effective approach. You can also try the debt snowball method, which prioritizes debts based on their size and gives you a sense of accomplishment as each balance is paid off. It’s not as math-friendly but may be easier to stay on track. Now that you know more about the best ways to manage your credit card debt, it’s time to go back to the website of Money Wave to find out more about credit cards in Canada and so much more!