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Credit Card Debt Advice

Credit card debts are among the most difficult to contend with — which is, in many ways, completely by design. These portable, convenient and always available pieces of plastic have become the go-to financial tool for splurge, emergency or impulse purchases. And with extremely high interest rates, balances can go from non-existent to completely unmanageable in a matter of months. Not to mention the lenders — who always seem to be willing to raise limits and overextend customers, despite knowing the stress and anguish that will inevitably ensue when cardholders fail to pay their balance in full each month.

Credit card debt reduction isn’t easy, and it won’t happen overnight. But with some patience — and the help of some useful skills and resources — it is certainly possible. To help you on your journey, we’ve compiled some of our best credit card debt advice which you can begin using straight away to begin managing your credit card debt and hopefully eliminate it for good.

Tips for Managing Credit Card Debt

Step one in eliminating your credit card debt is getting it under control. That means stopping credit card use as soon as you notice the problem (e.g. making only minimum payments each month); taking stock of the situation; and settling on a clear, effective and efficient repayment plan.

Consider the following tips when building your own strategy:

Prioritize Your Debts

Prioritization is key when addressing multiple credit card debts. If you attempt to reduce all your balances at once, progress will likely be slow and difficult to measure — and chances are you’ll quickly feel discouraged and want to give up.

There are two commonly accepted methods for prioritizing credit card debt, each with notable benefits and drawbacks.


The snowball method begins with ranking each of your credit card debts from highest to lowest balance. Each month, you will make the minimum payment on each card, except for the one with the lowest amount owing — which you will contribute the remainder of your monthly debt repayment budget.

You’ll do this every month until you’ve paid off the lowest balance card, then repeat this process for the next lowest balance card, and the next… until you’ve eliminated your credit card debt.

The major benefit of the snowball method immediate positive feedback. You’ll be able to see clear and immediate progress as your balance drops and you rapidly achieve a zero balance on one card after another. The potential drawback is you may end up paying slightly more over the long term if your lowest balance cards do not also have the lowest interest rates.


The avalanche method also begins with ranking each of your credit card debts; however, this time it will be from highest to lowest interest rate. Each month, you will make the minimum payment on each card, except for the one with the highest interest rate — which you will contribute the remainder of your monthly debt repayment budget.

You’ll do this every month until you’ve paid off the highest interest rate card, then repeat this process for the next highest interest rate card, and the next… until you’ve eliminated your credit card debt.

The major benefit of the avalanche method is cost savings. By tackling the cards with the highest interest rates, you effectively reduce the amount you’ll be paying to credit card providers over the lifespan of your debt repayment — sometimes significantly. The potential drawback is it may be difficult to visualize your progress and stay motivated if your highest rate cards also have the highest balance.

Free Up Some Cash

First thing’s first, if you don’t have a budget, it’s time to create one. This is the best way to find money you can set aside to repay credit card debt — and it will make the process considerably faster and easier. It will also help you deploy the following strategies and accelerate your timeline to becoming debt free.

Necessary vs Luxury Costs

Comb through your budget to find any excessive or unnecessary expenses. Consider things like monthly subscriptions you don’t need or use (e.g. gym membership, Spotify, Netflix, Dollar Shave Club, etc.), retail spending, dining out and entertainment costs.

Sell Stuff

Sort through your possessions to find any excessive or unnecessary items you no longer need. Could you sell any of these for a quick cashflow injection? Post old clothes, furniture, electronics, toys, tools and media on online marketplaces (e.g. eBay, Kijiji, Facebook, etc.). Or, host a yard / garage sale.

Secondary Income

Side hustles are having a moment right now and they have never been more lucrative. There are dozens of options to make some extra income — requiring as much or as little of your time and effort as you want.

There’s the time-tested part time job. You could freelance your professional skills. You can also lean-in to numerous online services to make some additional income, including:

  • Driving for a ridesharing or meal delivery service (e.g. Uber / Skip the Dishes)
  • Completing odd jobs on TaskRabbit
  • Renting out your home or vehicle (e.g. AirBnB, VRBO, Turo)

Set a Personal Goal and Timeline

If you’re struggling with credit card debt, it’s understandable that your ultimate dream is to become debt free. But that, it itself, is not a goal you can act upon. To really move things forward, it’s important to bring structure, specificity and urgency to your intention.

Rather than simply saying ‘I want to pay off my credit card debt’, a SMART goal breaks that dream down into multiple specific, measurable, achievable, realistic and time-bound chunks. For example, if you currently have $8,000 in credit card debt spread over four different credit cards, you might frame your goal like this:

‘I will use the snowball method to pay off my two lowest value credit cards, totaling $3,000 (specific), in one year (time-bound). I will do this by reducing my restaurant budget by $250 per month and redirecting that money toward my debt (realistic). And I will record my progress in a spreadsheet (measurable).”

Does this sound achievable to you? If so, you have a smart goal! Once you complete that one, you can use the same process to set the next one, and the next, until you eventually reach the broader dream of becoming debt free.

Consider a Consumer Proposal or Debt Management Plan

If you’ve tried the tips above and your credit card debt still seems insurmountable, it’s likely time to consider a more structured professional solution, such as a Consumer Proposal or Debt Management Plan.

Consumer Proposal

A Consumer Proposal is a federally legislated process under the Bankruptcy and Insolvency Act of Canada which allows you to settle your debts, usually in a shorter timeframe and for less than the total amount you currently owe.

During a Free Confidential Consultation, a Licensed Insolvency Trustee will review your financial situation and determine whether you qualify. If so, they will calculate a fair and affordable settlement value which you can afford — either via a single lump sum payment or monthly payments made over a period of up to five years — and present that offer to your creditors. Once a majority (by dollar value) agrees to the figure and terms, the Consumer Proposal becomes legally binding on all your creditors. From this point forward, you would make one single monthly payment to the Licensed Insolvency Trustee and they would distribute it on a priority basis.

Benefits of a Consumer Proposal include:

  • Potentially reducing the total value of your outstanding debts
  • Consolidating your debts into one affordable monthly or lump sum payment
  • Halting current collections action, court judgements and wage garnishments
  • Avoiding liquidating assets in Bankruptcy

Debt Management Plan

Like a Consumer Proposal, a Debt Management Plan (DMP) involves making a settlement offer to your creditors. It offers several of the same features, including consolidating numerous credit card bills into one affordable monthly payment, reducing the timeline of your debt repayment and the total amount owing.

However, this process does not fall under federal bankruptcy legislation and instead is administered by a credit counselor. Moreover, your creditors have no obligation to either accept the settlement offer, nor to honour the terms of the settlement over the lifetime of the DMP. Also, a DMP will not necessarily stop interest from accruing, halt current collections action or prevent your creditors from initiating future collections action against you — and it will still appear on your credit report.

Often, debtors enter a DMP either because they did not qualify for a Consumer Proposal or were unable to reach a settlement agreement with a majority of their creditors. But despite the drawbacks, this can still be a valuable and useful tool to pay off unsustainable credit card debt.

Credit Cards to Rebuild Credit

Poor credit can rule you out of numerous opportunities from jobs to apartment rental and loans. Especially you’ve previously cancelled your credit cards to help with your debt repayment efforts or had to surrender them in a Bankruptcy or Consumer Proposal, you likely understand the difficulty of convincing lender to take another chance on you.

Ironically, as destructive as credit cards can be when not used responsibly, they can also be an effective tool to rebuild your credit after you get your debt situation back under control.

Secured Credit Card

A secured credit card works just like a regular credit card: You have a set spending limit and must make regular monthly payments based on a percentage of your outstanding balance. However, there is one big difference:

Credit Card Debt AdviceRather than basing your spending limit based on your credit report and income level, the credit card provider will require a cash deposit as collateral. This is usually anywhere from $500 to $2,000 which you pay up front. If you consistently fail to make your monthly payments, the issuer will close the account and keep however much of the deposit to pay off the remaining balance.

The more responsible you are with your secured credit card (i.e. keep your balance within 30 percent of your total limit, make all your payments on time and in full, etc.), the greater improvements you will see in your credit report and score. It may take several months — or years, depending on the severity of your debt problems and the route you took to become debt free — but most lenders will eventually offer to return the deposit and convert a secured credit card back into a normal credit card.

Secured credit cards are one of the most effective ways to rebuild credit. They are also a great option for people who don’t trust themselves with credit or want the peace of mind they will never become stuck with an unsustainable debt they can’t afford to repay.

Bringing it Home

If you’re feeling the mounting stress of credit card debt, you’re not alone. While it may feel like your situation is impossible now, understand there are many thousands of Canadians just like you who are also on the difficult journey to become debt free — and countless thousands more who have succeeded.

The first step is recognizing the problem and stopping it from getting worse. Either cut up your credit cards, freeze your accounts or put them somewhere you won’t feel the temptation to use them. Choose how you’ll prioritize your debt repayment and create a strategy to either snowball or avalanche your debts to zero. If necessary, consult with a Licensed Insolvency Trustee or Credit Counselor to learn whether a Consumer Proposal or Debt Management Program could work for you.

Once you’re ready to begin rebuilding your credit and finances, do some research to learn whether a secured credit card is right for you. But remember the lessons you learned along the way — whether you have a fall-back plan or not, keep your balances low and never put more on credit than you can afford to pay off at the end of the month.

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