How to Consolidate Credit Cards in Canada

Credit cards make shopping easy--perhaps too easy. That shiny plastic card calls to the consumer from the confines of his wallet, "Let me out! Let me out!" As cute as that credit card is, however, it ultimately ends up causing a tremendous amount of grief to many consumers. The cards multiply in the wallet, the debt quietly grows, and before you know it you've got a cramp in your hand from all the checks you have to write each month. Canadians can solve the problem with credit card consolidation.

Instructions

Credit Card Consolidation

1

Assess your debts. You need to know the total amount of credit card debt in order to determine exactly how much money you need to borrow. Make a list of all other debts; once you choose your banking institution, the loan counselor will need this information as well. For each debt, credit card or otherwise, include the name of the institution to which you're indebted and the account numbers associated with that debt.

2

Educate yourself on the benefits and risks of credit card consolidation. Some of the benefits include:

One payment--easier processing and less risk of error.
Lower interest rate--most bank loans are offered at an interest rate that is lower than credit card interest rates, particularly if those credit cards are from department stores.
Protects your credit rating as all credit card debt will be cleared.

The risks, on the other hand, include the possibility of accruing more debt if credit card use is not curbed, and the risk of falling behind on the consolidation loan payments. Banks often are more likely to act quickly if you default on a debt.

3

Call three different Canada-based banks. Interest rates on loans vary from bank to bank, so it is wise to call several banks and get a quote on the interest rate before choosing a loan provider. However, too many credit inquiries can damage your credit rating, so you should limit your comparison shopping to three institutions. You'll also want to inquire about any additional fees associated with the process of credit card consolidation. For example, some banks charge a fee for opening your file.

4

Make an appointment to speak to a loan counselor at the bank you choose. Bring your lists of debt with you to your appointment. If you're granted the loan, many institutions will handle paying off your credit cards. They also might close your accounts after the debts are paid in order to prevent you from accruing more debt.