Canada Credit Card Consolidation Ideas

The average Canadian adult had more than CDN $40,000 in household credit by the end of the third quarter of 2009, according to Bankruptcy Canada. The household credit includes credit cards, bank loans, and mortgages. Bankruptcy Canada pointed out that in the year 2000, each Canadian had approximately CDN $20,000 in debt, so the amount has doubled in less than a decade. If you are among those Canadians who are carrying a high amount of debt, and you have them spread out in different credit cards, you may want to consider consolidating your debt in order to save on interest payments and to help you manage your finances better (Reference 5).

Debt Consolidation Loan

This is a personal loan that allows you to consolidate all your credit card debt into one loan so you only pay one financial institution instead of making multiple payments. The debt consolidation loan may have an interest rate that is lower than that charged by your credit card companies, so it will help you reduce your interest payments and allow you to pay off your debts faster. Compare the interest rates offered by several financial institutions such as banks, Caisses populaires and credit unions before you choose a consolidation loan. To qualify, you must have an acceptable credit rating and sufficient income (Reference 1 and 2).

Home Equity Loans

You can use the equity in your home to secure a credit line at a lower interest rate. You can apply for this product at financial institutions, and once approved, you can write a check against your credit line to pay off all your credit card debts. This line of credit will, however, require you to pledge your property or home as security, which may endanger your home if you fail to pay your loan (see Reference 3).

3)Credit Card with Low Balance Transfer Rate

Some credit card companies offer a low-interest rate if you transfer your credit card debts to them. The catch, however, is that these balance transfers usually are only for a short period of time, sometimes just a few months, so you may be stuck with a higher rate if you can't pay in that time. But if you think you can pay off your debts during the introductory offer period, you will be able to save on interest payments. But before jumping the gun on the first offer, shop around for the balance transfer credit card that will best suit your financial situation (Reference 4).

Debt Management Program

You can take advantage of a debt management program being offered by a not-for-profit organization or a private company. If you decide to use one of these services, you have to authorize a counselor to negotiate with your credit card companies on your behalf. The organization will make special arrangements with them regarding your payments. Usually, you will have to make one regular payment to the organization, which in turn will divide the amounts among your creditors (Reference 2). Before choosing your credit counselor, call the Better Business Bureau to find out if there are complaints against the person or organization you plan to deal with (see Resources).