1. What is the average credit card debt for Canadians?

The average credit card debt usually changes based on the condition of the economy and spending habits. But it is reported to be $4,265 by the third quarter of 2023 while owed on credit cards also climbed to a new high of $113.4 billion likewise. This number helps us understand how much debt is common among Canadian credit card users.

2. How does credit card interest work and how is it calculated?

Credit card interest is the extra money you pay for borrowing money on your credit card. It’s usually a percentage of what you owe. To find out how much interest you’ll pay each month, you will divide the APR by 12 (for the months in a year) and multiply it by the amount you owe. If you don’t pay your full balance each month, the interest will add up and your debt becomes more expensive.

3. What are the consequences of only making minimum payments on credit card debt?

Making only the minimum payment on your credit card means you’re paying the smallest amount you’re allowed to pay to keep your account in good standing. However, when you do this, it takes much longer to pay off your debt because most of your payment will go to interest, not the principal. This means you could end up paying a lot more money over time.

4. Are there any strategies to effectively manage and reduce credit card debt?

Yes! One common method is the “debt snowball” where you pay off your smallest debts first, while still making minimum payments on others. Another is the “debt avalanche,” which focuses on paying off debts with the highest interest rates first. You can also consider debt consolidation or a consumer proposal.

5. Can I consolidate credit card debts?

Yes, you can. It means you will take out one big loan to pay off the several smaller debts. This can make your payments easier to manage because you only have one payment to make each month instead of many. But make sure you don’t start using your credit cards heavily again after consolidating, so you don’t go back to square one.

6. What impact does credit card debt have on my credit score?

Having credit card debt can affect your credit score, especially if your debt is high compared to your credit limit. If you use a high percentage of your available credit, it can lower your score. Making payments on time can help increase your score, but when you have too much debt for a long time, it can affect your credit score.

7. What are the options if I’m unable to make my credit card payments?

Consider seeking advice from our debt experts at EmpireOne Credit. This can help you manage your debt and you may even get a debt reduction of up to 80%. Other options include debt consolidation loans or, in more severe cases, bankruptcy. The sooner you address the issue, the more options you’ll have.

8. How does declaring bankruptcy affect credit card debt?

Declaring bankruptcy can eliminate or reduce your credit card debt, but it has consequences. Bankruptcy stays on your credit report for up to 6 years, making it hard to get new credit, a mortgage, or even some jobs. This is why bankruptcy is considered a last option. 

9. How can I avoid accumulating credit card debt in the future?

If you want to avoid accumulating credit card debt in the future, you need to create and stick to a budget that includes your income, expenses, and savings. Use credit cards by only charging what you can afford to pay off in full each month. This will help you avoid interest charges. You will also need to build an emergency fund, so you don’t need to rely on credit cards for unexpected expenses. Also, ensure you review your credit card statements to keep track of your spending. You may even see where you can cut back. Lastly, consider using debit cards or cash for daily expenses to maintain better control over your spending.

10. What are the rights and protections for consumers facing credit card debt collection?

Even if you have the highest credit card debt on earth, you still have rights under Canadian law. Collectors must follow rules. They can’t use threatening or abusive language. They can not contact you at unreasonable times, and they must not mislead you about the debt. You have the right to request written proof of the debt and to dispute any inaccuracies. If you feel a collector has violated your rights, you can file a complaint with your provincial or territorial consumer protection office. It’s important to know these rights to ensure fair treatment and to protect yourself from unfair collection practices.

Bottom Line 

Having multiple or overwhelming debts is one of the challenges of life, and for every problem, there is a solution. Speak with one of our debt experts at EmpireOne Credit to get a way out of debt. Your debt can be reduced by up to 80%, and interest will stop immediately. Call us at (416) 900-2324 to schedule a free consultation with us. Being debt-free feels good!