Saturday, May 28, 2016

Some reasons to pay off or pay down your credit card debt

If, like many Canadians, you find yourself with credit card debt and wonder if there’s a way out, you may feel like you’re on a debt ferris wheel that you can’t get off. While we may dream of winning the lottery to pay off debt and move to the sunny shores of the Caribbean, here are the Top 5 reasons you should pay off your credit cards today!

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. 

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