Getting Out — and Staying Out — of Credit Card Debt

In a perfect world, there would be no credit card debt. We’d all pay our balances every month, collect our rewards and sing and dance in celebration of our good fortune.

But in the complex, expensive world we actually live in, many of us end up carrying a credit card balance from one month to the next. In the third quarter of 2025, Canadians carried an average credit card balance of over $3,200, according to TransUnion.

A balance of that size can throttle your finances for years. If you can only afford a $100 payment each month, a $3,200 balance on a card with a 19.99% interest rate could take almost four years to pay off, and cost you over $1,400 in interest. And that’s if you stop using the card entirely and incur no additional fees.

Let’s see what you can do to get out of (or avoid) a situation like that.

For our purposes here, we’ll consider credit card debt the part of your balance you don’t pay off by the statement due date — the amount that can start accruing interest.

If you use a credit card more like a debit card, and pay off your purchases at the first opportunity, you’re only ever in debt temporarily. You’re probably not even paying interest. In most cases, if you pay your statement balance in full by the due date, you’ll avoid interest on purchases altogether.

If you have $1,000 in credit card debt today, but plan on paying it off two days from now, that’s hardly anything to worry about. But if that balance is still $800 after your due date, for example, that becomes a drag on your future earnings and cash flow.

When personal finance experts talk about Canadians’ debt problems, that’s generally what they have in mind: lingering debt that creates challenges. Not all credit card use is problematic, and not all credit card debt is created equal.

But if your balance isn’t going down month to month, that’s a sign it may be time to switch tactics.

Other signs that credit card debt is becoming problematic might include:

If you’re already carrying credit card debt, zeroing it out can be a bit of a journey. Here are a few things you can do to get on the right track.

Try proven debt payment strategies

Two common strategies to pay off larger amounts of high-interest debt are the snowball method and the avalanche method.

The “debt snowball” method

The “debt avalanche” method

Apply for a balance transfer credit card

A balance transfer credit card is designed to help you pay off your credit card debt at a lower interest rate.

After getting approved for a balance transfer card, you slide another card’s existing balance over and start paying it off. You’ll likely incur a modest transfer fee once the balance has been transferred.

The initial (often promotional) rate on your new card will usually end after a set period. The interest rate can increase significantly, so you’ll want to make a plan to pay the balance down before the promo ends.

Avoid making new purchases with the new card — unless there’s also a promotion on the purchase APR, those charges will start to accrue interest right away.

Get a debt consolidation loan

If you have debt spread across multiple credit cards and are feeling overwhelmed, a debt consolidation loan can simplify your situation.

Your loan, which would ideally have a much lower interest rate, would be used to pay off all of your outstanding debts, leaving you with a single payment to manage each month.

But because this is a loan, you’ll be expected to make a pre-determined payment every month.

Use a line of credit

Your bank likely offers lines of credit at a significantly lower interest rate than what you pay on your credit card. You could use an unsecured line of credit to pay off your credit card and then pay down your line of credit instead.

Just be careful not to get into a minimum payment trap with a line of credit. The plan should still be to pay down as much of your debt as possible each month, even if the interest rate is low.

Talk to a credit specialist

If your debt has become unmanageable, consider speaking to someone trained to provide solutions, like a credit counsellor or licensed insolvency trustee.

Talking to an insolvency trustee is usually a serious decision, as it could lead to a consumer proposal or declaring bankruptcy, which are generally considered last resorts. But if you just need some advice, or a debt management plan, reach out to a credit counsellor.

The simplest answer is “pay cash for everything,” but that’s not realistic. Many of us don’t have the cash available to cover every expense upfront, and some purchases can only be made by card. So how can you avoid credit card debt if you can’t avoid credit card use?

Pay off as much of your balance as possible each month

Your credit card statement likely says you only need to make a minimum payment each month. Making the minimum payment can provide breathing room, but you’ll just wind up paying interest on the unpaid amount, which could make paying next month’s balance more difficult.

Kicking the can down the road is the first step to accumulating too much debt. At some point, you might kick it and find that it doesn’t move.

Whenever possible, strive to pay the total balance, or wipe out as much of it as you can. If you have the cash available, you don’t gain anything by waiting.

Watch out for impulse purchases

Using a credit card is easy — some might say too easy — especially when it’s connected to a digital wallet or an online shopping account. An expensive impulse purchase that takes you months to pay off might only take seconds to complete.

If credit card debt is a concern, it’s important to understand your shopping triggers. Do you shop more when you’re happy or sad — or when you’re bored? Are there certain sites or social media platforms that have influenced your spending more than others?

Knowing your trigger can help you pause, rethink the purchase, and wait until you have the cash to pay it off in full.

Be careful when chasing rewards

We all love collecting a good signup bonus or watching our credit card rewards accumulate. But in order to reap these benefits, you may have to use your card quite a bit; maybe even more than you normally would.

If you wind up paying interest on your credit card balance every month, there’s a chance that the interest costs can outweigh whatever points or cash back you earned. If some of your credit card use is done in the name of points-chasing, you’re really only benefiting if you can pay off your balance in full.

Opt for a no-frills card with a low interest rate

If you’re relatively sure that you’ll be carrying a balance, consider choosing a low-interest credit card.

Because they generally offer few rewards, low-interest cards aren’t the most thrilling choice. But a 12.99% interest rate and a tiny annual fee might sound pretty appealing for someone dedicated to avoiding credit card debt.

Talk to your credit card issuer (or bank) early

If you feel like you’re falling behind on your debt obligations, call your credit card issuer before you miss a payment (or several). They may be able to offer temporary relief, like a modified payment plan, a temporarily lower rate, or a hardship program.

And if not, at least you’ll be aware of your options before late fees or a higher interest rate make things worse.

By lowering your credit score

Having credit card debt can negatively affect your credit score.

Let’s say you regularly carry a balance of $3,000 and have a limit of $5,000. That means your credit utilization ratio is 60%, which is quite high. How much credit you’re accessing relative to what you have available is one factor the credit bureaus use to determine your credit score. Many experts recommend keeping utilization below 30% (and lower is often better).

Carrying a balance might also increase the risk of missing a credit card payment entirely, which can also hurt your credit score.

By increasing your debt service ratios

It’s also in your best interest to limit credit card debt if you plan on buying a home in the future.

When determining how much they should lend you, lenders typically look at your total debt service (TDS) ratio. Your TDS ratio includes all your housing costs, plus any outstanding debt. So if you’re carrying a lot of credit card debt, it will directly affect how much mortgage you can afford.

By affecting your relationships

Credit card debt can affect your family in a variety of ways that you may not be aware of.

Let’s say you’ve ignored your bills and your credit card provider has sold off your debt to a collection agency. Many collection agencies can be highly aggressive and call your home or even work to get you to pay. While your debt doesn’t directly involve your family, collections may contact family members in an attempt to get you to pay.

There’s another scenario where your debt could directly affect your family. If you’re a joint credit cardholder and rack up a bunch of credit card debt, the primary cardholder would be responsible for paying off the balance.

This also applies to co-applicant credit cards. If you had a family member co-sign for you when you applied for your card, they’d be equally responsible for any outstanding debt.

There’s also the impact everyday financial stress can have on your relationships. Credit card debt is stressful, and that stress can manifest itself in ways we can’t always control.

“Control” might seem like a strange word to use when discussing credit card debt, but that’s really what we’re all aiming for: regular credit card use that doesn’t drag down our finances. If that feels like an unattainable goal, break it down into smaller, achievable steps: