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Credit Card Consolidation in Canada

If managing multiple credit cards and their accumulated debts turns out to be a financial problem for you, you might want to consider credit card consolidation loan. With credit cards becoming a norm, improving your spending power and making payment for products and services so much easier, it is also easy to neglect the downside of deferred payments – debt. Some credit cards have notoriously high interest rates that accumulate if you are late on your monthly payments. With the help of Loans Geeks, you can make a credit card consolidation that will allow you to combine all of your high interest credit card debts into one loan, at a much lower monthly rate.

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What is Credit Card Consolidation?

When several of your high-interest credit cards each carry balances, you can combine (or consolidate) all those balances into one payment that is easier to manage and more affordable. That process is called credit card debt consolidation. There are several ways you can make credit card consolidation in Canada.

Credit Card Consolidation Options in Canada

If you decide to use Loans Geeks to help you consolidate your credit card debt, we will present you with a range of options, each having its pros and cons, but all of which helping you to get back on track and regain control of your financial situation.

Credit Card Debt Consolidation Loan in Canada

One of the most frequent ways of credit card debt consolidation in Canada is by applying for an unsecured personal loan. Depending on the amount you owe, you can apply for an unsecured loan that will enable you to pay off your credit cards’ balances. However, if you have a bad credit score or if you owe a larger amount, this option is probably not the right one for you. When you opt for a credit card debt consolidation loan in Canada, one of the most important things to consider is that the new loan has lower interest rate so that your future payments actually go towards paying off your debt instead on interest rates.

The fact is, to be able to apply for an unsecured credit card consolidation loan and get lower interest rate, you need to have a very good credit score. When you use Loans Geeks to apply for a credit card consolidation loan, bear in mind that you will get matched against up to five top-rated loan lenders in Canada with most competitive offers that you can get with your current financial situation. However, use your common sense and calculate if the offered rates really present a solution or might bring you even more financial troubles.

Credit Card Consolidation in Canada with Home Equity Loan

If you have accumulated a lot of high interest credit card debts, yet another loan might sound like a last option you’d want to consider, yet it can actually be a very wise one, depending on your particular situation. If you own a home equity, you can put it up as a collateral when applying for a credit card consolidation loan via Loans Geeks. It will give you an access to larger amounts of money and you will have better chances of getting your application approved at much lower interest rates.

So basically, you will be borrowing funds from a low-interest lender in Canada that we will match you with via Loans Geeks, to pay off your high-interest credit card debts. So you will clear up those multiple credit card debts and only be left with one, lower-interest loan that is much easier to track.

Benefits of Credit Card Consolidation in Canada with Home Equity Loan

The major benefit why you would want to consider consolidating credit card debt is that you will get out of debt faster and you will pay less interest in the process.

To give you an example, if your credit card debt is $10,000 with an interest rate of 18,5% per year and you’re paying off only the monthly minimum ($200), only $46 of that payment will actually go toward paying the debt, while the remaining $154 will be for the interest charge. So over eight years, for how long you’ll need to pay off everything (and assuming you don’t indebt that card ever again), you will end up paying interest charge of $9261.

On the other hand, if you use Loans Geeks for Credit Card Consolidation against a home equity, you can secure a $10000 loan at interest rate of only 9,5%. You can then use the loan to completely pay off your credit card debt. You would remain with the same $200 monthly payments, only you would be debt-free in five years, while paying only $2700 for interest.

Of course, you should always consider the consequences and worst-case scenarios of putting your own home as a collateral against a consumer debt.

Other options for Credit Card Consolidation in Canada

Debt Management Program (DMP) in Canada

Depending on your situation, you may want to opt for a Credit Card Debt Management Program in Canada, a good solution for people with large amounts of credit card debt for consolidation. The goal of credit card debt management program is to combine all of your eligible debts into an affordable, single monthly payment. Depending on the Debt Management Program, you will be assigned a counsellor who will assess all the specifics of your financial situation and provide a personalized financial plan, tailored for you. You might want to negotiate with providers of your credit cards and see if you can get any accumulated penalties eliminated and/or your interest rates lowered.
If you opt for credit card debt management program in Canada, you will be making monthly payments to your selected credit counsellor, who will pay to appropriate credit card companies on your behalf, depending on the agreements you managed to make and on the amounts you owe.

Credit Card Consolidation in Canada with Credit Card Balance Transfer

You also have an option to transfer all the balances from the credit cards that you own to a new credit card that has lower interest rate – that option is called credit card balance transfer. This will enable you to pay off your debt sooner and also save on interest rate charges. However, before you opt for a credit card consolidation with balance transfer, there are a few things you need to consider.

  • Your new credit card needs to have the lowest interest rate when compared to all other credit cards in your possession. If you transfer the balances to a card that has the same interest rate, the only thing you’ll achieve is to pay one monthly charge instead of several.
  • Be aware of the fees related to balance transfers. Each credit card charges balance transfers with a specific fee, usually a certain percentage of the balance that you are transferring.

With some smart shopping, it is possible to make most of this option and get credit card consolidation with balance transfer at a very low cost. There are credit cards companies in Canada that offer extremely low fees and even introductory periods that are interest-free for new clients. If you manage to pay off most of your debt during this introductory period, you could save a lot of funds that would otherwise go on interest charges. Most credit card companies offer interest free periods of 6 months, but you should keep an eye of current offers as it sometimes happens that specific cards offer a full year of interest-free period.

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Yes, debt that you accumulate with your credit cards will affect your credit score, and it is also one of the major metrics in its calculation. Paying on time will positively affect your credit score, rising it, while failing to pay on time will negatively affect your credit score, making it drop very fast. Be mindful of this, as low credit score can make it more difficult for you to borrow money in the future.

Use whatever extra money you have left in your budget to pay off as much of your accumulated debt as possible. Normally, you should always give priority to outstanding balances with higher interest rates, like credit card ones. They should have priority over payment loans that are fixed.

On contrary, credit card consolidation in Canada will help you improve your overall credit score over time. However, there is a danger of accumulating new balances on those same cards that have been consolidated. The best solution is to put away those credit cards and stop using them altogether.

Penalty APR is the annual percentage rate that is applied to your account if you miss or are late on making a payment. It is usually higher than your normal interest rate and is typically applied for 6 months.

Loans Geeks offer one of the best ways to apply for a credit card consolidation loan in Canada. From the comfort of your home you will be able to fill in an online application form and get matched against up to five top rated, reputable loan lenders in Canada and choose among most competitive offers.

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