Reason 5 - High Interest Payments
Perhaps the most compelling argument for paying off your credit card is the money you’ll save on interest charges. Consider that the average annual credit card interest rate is 19.9%. On a balance of $10,000, that’s almost $2,000 in interest in one year! If you pay only the minimum, it’ll take years to pay off and you’ll end up paying thousands in interest.
Reason 4 – Get Your Interest-Free Grace Period Back
Did you know that when you carry a balance on your credit card, you no longer get an interest-free grace period on your purchases? If you don’t pay your card off in full at the end of the month, you’ll pay interest on every single transaction you put on your card from the day you made it.
Starbucks coffee on your card? Today’s lunch from the food court? You’re paying interest on all of it. Once you pay off your credit card, you get that grace period back.
Reason 3 – Be Happy!
Neuroscience has shown that just making a decision can help you feel in control, and reduces worry and anxiety. So wear that badge of pride knowing that you made a smart decision toward paying off your credit card debt with a term loan.
Reason 2 – Improve Your Credit Score
Paying off your credit card debt will lower your debt utilization rate – a key factor in determining your borrowing ability and your interest rate. You’ll be taking your first steps to improving your score and getting access to better and cheaper credit options.
Reason 1 – It’s Never Been So Easy
Technology is changing banking for the better. Canadians have new options to pay off credit cards easily. By borrowing at a lower interest rate, you’ll save thousands of dollars and years in debt.