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Published September 8, 2021

7 Ways To Pay Off Credit Card Debt

Following a schedule, using automated withdrawals and paying more than the minimum can go a long way.

Paying off your credit card balance should be a straightforward process, but it’s not always so simple. Whether you’re in credit card debt or don’t like carrying a balance, there are a few tips and suggestions you can follow to ensure you stay on track.

Choose a way to pay

First things first, you need to know how to pay off your credit card. The most convenient way to pay your bills is via online banking. If your credit card is from the financial institution that you use for your day-to-day banking, you can simply transfer funds from your bank account directly to your credit card to pay off the balance.

Alternatively, if your credit card is from another bank, you can choose your financial institution’s “Pay Bills” option on your account page. If you go this route, you’ll need to add your credit card as a payee first. Begin by searching the name of your credit card, for example, Scotiabank Visa or Bank of Montreal Mastercard. Then select the most appropriate payee from the list and enter your credit card number. This is the way to go if your credit card is from another financial institution.

Paying in person at a branch is also possible. You can even pay your bills via telephone banking or through the mail with a cheque if you’re not digitally savvy.

Always review your statements

Most people will only look at the amount due when their credit card statement arrives, but it’s in your best interest to take a more detailed look. It’s recommended that you go through each and every transaction line-by-line to ensure all the purchases are correct. Unfortunately, thieves are getting smarter and there might be a suspicious transaction that shows up on your statement.

If you do spot a purchase that you don’t remember making, do some further investigating. If you’re convinced that you didn’t make the transaction, you’ll need to contact your credit card provider’s fraud department to open up an investigation. Don’t worry, if you didn’t make the purchase, you’ll get your money back. That said, fraud investigations can take weeks, so you should still pay for the transaction while you wait to hear back about the status of your case.

Come up with a payment schedule

Regardless of your balance, you need to come up with a payment schedule. Some people will pay their entire balance as soon as their bill arrives, while others may wait until the due date. There are even some people who like to pay off their balance every week. It doesn’t matter how often or when you pay your bill; you just need to make sure you do it because missing your payment date will result in substantial interest charges and possibly even late fees.

Plus, if you forget to pay your bills on more than one occasion, it could negatively affect your credit score.

» MORE: What is the best time to pay your credit card bill?

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Automate your payments

Just about every credit card provider will allow you to automate your payments. You can usually choose to pay the minimum amount, make a full monthly payment or even just pay a set amount. Since the money will be automatically withdrawn from your bank account, there’s no chance that you’ll miss a payment. Plus, your payments will always be withdrawn on the statement due date, so you can manage your bank account funds accordingly. Don’t worry; you’ll still get a monthly statement, so you can review things.

Make more than the minimum payment

When looking at your credit card statement, you’ll notice that there’s a minimum amount that needs to be paid. As long as you pay that amount on time, you haven’t missed your payment. While minimum payments may appear suitable for cash flow purposes, they’re going to cost you a lot in interest charges. Therefore, it’s always advisable to pay off your entire balance every month, so you’re not paying any additional fees.

Now let’s say you can’t pay off the entire balance due to a budget shortfall that month. You should still pay more than the minimum amount. It doesn’t matter if it’s another $5 or $50; every extra dollar you pay goes directly to your debt repayment. If you stick to the minimum payment, it might be decades before you wipe out your balance.

» MORE: Do you understand the different types of debt?

Consider switching to a low-interest credit card

If you constantly find yourself carrying a balance, you may want to consider switching to a low-interest credit card. As the name implies, a low-interest credit card will charge you a lower interest rate (8.99%-12.99%) compared to most credit cards that have an average interest rate of 19.99% – 21.99%. The lower rate can have a significant impact on your budget as you’ll be paying lower fees.

In addition, many low-interest and balance transfer credit cards allow you to port your balance from an existing card. Quite often, this option comes with a promotional rate that can save you even more money. For example, you might pay 3.99% interest for nine months. Once that promotional period ends, you’ll pay the regular low interest rate.

See if you qualify for a line of credit

Applying for a line of credit can help you reduce your debt since they have a lower interest rate than most other types of credit cards. If you’re approved, you would take the funds and immediately pay off your credit card balance. You would now only have to repay your line of credit.

The danger here is that a line of credit is another loan. If you abuse it, you’ll end up in more debt. That said, if you use it responsibly, you can quickly pay down anything that you owe.

Paying your credit card bill on time every month will ensure that your credit score remains in good standing. In an ideal world, you’ll pay off the entire balance, but at the very least, you need to make the minimum payment. If you ever find yourself struggling to meet your payments, see if another product, like a line of credit, can help you until you get back on your feet.

About the Author

Barry Choi

Barry Choi is a personal finance and travel expert. His website is one of Canada's most trusted sites when it comes to all things related to money and travel.

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