Credit Card Debt Consolidation 101

Get Credit Cards Under Control With Smart Debt and Repayment Tips

We’ve all been there, staring at a growing pile of credit card bills. We scan the documents, take in the shock of what we are paying in interest every month, promise ourselves that we will make changes, and then hash out a new plan for monthly payments, all on top of our other debts.

It’s not easy. Thankfully, it doesn’t have to be that way!

Life is expensive, but it shouldn’t be a shell game of debt where numerous bills are serviced individually instead of the total debt becoming a line item on your monthly expense list.

Debt consolidation sounds complicated, but it actually simplifies how to handle debts while maintaining a comfortable lifestyle.

How Quickly Should I Pay Off My Debts?

Everyone’s situation is different. Some people are single, some have families, some spend more money than they have, and some are just trying to stay afloat.

Your lifestyle ultimately depends on how you balance your reality with your total debt load. The Government of Canada has a Credit Card Payment Calculator that lets you compare different payment scenarios and what each means for your monthly budget.

There are three general strategies at your disposal when you are deciding how to pay credit card debt:

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  • The Snowflake Method – Not recommended by most financial advisors, this option allows cardholders to pay the bare minimum, usually somewhere around 1-2% of the total monthly bill. But the interest you pay over the following months and years means you are often paying triple the amount you actually spent. Still, at least you are paying something. The more important area of concern for an individual forced to use The Snowflake Method is his/her spending habits.
  • The Snowball Effect – Instead of paying the minimum, cardholders pay a set amount each month that eclipses the minimum amount but is still manageable within their budget. By maintaining a set payment structure each month, cardholders can significantly reduce their interest payments, and pay off the principle years before they would if they had continued to just pay the minimum required amount.
  • The Avalanche Effect – This method of payment is used to describe paying back the minimum on multiple credit card bills, and any payments over and above the minimum are applied to the card with the highest interest rate. This method can seriously reduce payments in the long term and is known to boost the confidence of cardholders who sometimes need to experience the small success of eliminating one debt before tackling additional debts.


Beyond crafting a method of payment that works for you, servicing your debts also relies heavily on how you are managing your finances overall. This means you need a monthly budget to help you traverse your debt consolidation strategy.

How Should I Get Started?

A good starting point is to take a good look at your budget and find where you are overspending. Without properly examining your spending habits you are most likely to pile on more debt. Your inflows and outflows are playing tug of war, and one side always wins. If your inflows remain consistent, you have to chip away at your outflows.

Once you begin spending less than you make each month a new set of opportunities emerges. You can now develop a strategy for debt consolidation, and for a more secure future.

What Is Debt Consolidation?

Debt consolidation services help you strategize how to pay all of your creditors at once, turning multiple debts into one debt. By merging your debts into one payment you can save money and not feel bogged down by multiple creditors. Moreover, lenders often offer better interest rates, allowing you to service your debt consolidation loan with less financial turbulence.

Debt consolidation is especially ideal for people with outstanding credit card bills due to the high interest rates. Financial institutions offer a rate that will provide immediate monthly savings while eliminating your debt at a quicker pace.

Are There Any Other Options Besides Debt Consolidation?

Some individuals choose other ways to service their debt load. It is not uncommon for people to refinance their mortgage, if they happen to own a home, and streamline their debt payments using their equity.

Others undertake what’s called a consumer proposal. Administered by a Licensed Insolvency Trustee, consumer proposals allow people to construct a plan to pay creditors a percentage of the original debts. Some are successful at extending the due date of the debt as well.

But don’t forget, everyone has a different set of circumstances and responsibilities. What we have in common is an instinct for control and hope for a decent life. Finding the right agency can help navigate your debts, bringing you closer to stabilizing your future.