If your budget only comfortably allows you to make a minimum credit card payment of $219 on your $10,000 balance, how would you accommodate a 5% minimum payment of $500? Could you do it?
A recent CBC article states the average Canadian is carrying $22,000 of credit card, line of credit and loan debt.
Your $10,000 owing on credit cards doesn’t seem so bad, compared to $22,000. Your current minimum payment is manageable and you never miss it. So far, so good.
Now, take a close look at your credit card statement. At 24.99% interest and your payment of $219 (int. + $10), it will take you about 83 years to clear your debt!
New credit card payment rules just came into effect in Quebec that are aimed at reducing the length of time it takes to repay debt and the total amount of interest paid. As of August 1, 2019, the minimum credit card payment must be 2%. This will increase by 1% each year until it reaches 5%.
Overall, this is good for Quebec consumers carrying credit card debt. It means that, at a 5% minimum repayment of $500, you would be finished paying a $10,000 debt in about 12 years and save an incredible amount on interest.
We don’t know yet if Ontario and the other provinces will adopt a similar policy but, this would be a great time to sit down and review your income, expenses and debt.
Can you start reducing the balances on your credit cards by making above the minimum required? The key to this is not to re-use the paid down funds.
Do you know there are other options available to help you get out of debt and possibly stop or lower interest charges?
Resolve Credit & Financial Counselling Services can help you examine your situation and explain how we might be able to assist you in clearing your debts in a timely manner, with reduced costs.