How can I pay down my credit card debt?

RBC Royal Bank of Canada


There may be times in your life when your credit card debt becomes overwhelming and seems to either be staying the same, or increasing. If now is one of those times, you have already made the first step towards making a positive change, and we're here to help.

Simple steps to pay down your debt

There are some simple ways to start paying down your credit card debt, and help ease your mind... and your pocketbook.

As a first step, it's a good idea to create a monthly budget and keep track of your spending. Don't use your credit card to pay for things that are not in your budget; use your card wisely and be careful not to use it to cover gaps in your finances.

Next, pay more than your minimum payment. When you just pay the minimum, you're only paying the interest, so you'll never get ahead of your credit card debt. With help from your monthly budget, determine how much money you can pay towards your credit card balance and stick to that commitment.

Then take a look at all of your credit cards, and compare their interest rates. Pay more to the one with the highest interest rate first, while continuing to pay at least the minimum monthly payment on the others. This will reduce your overall interest costs.

Lower your interest costs

Another good way to lower your interest costs is to consolidate your balances to one card by taking advantage of a low-rate balance transfer offer, or by moving your balances to a low rate credit card. With all of your debt in one place, it will be easier to track your total balance. This makes it easier to manage and pay off, especially with just one bill to pay at the end of the month.

The importance of making your payments

Managing your credit wisely, including making at least your minimum payments on time every month, will help you build a healthy credit rating over time. So if you're planning to buy a house or a car in the future, using your credit card responsibly now will help you qualify for larger loans down the road.

And when you do pay off your credit card debt, make sure you keep up the good spending and payment habits that helped you get to this state. Pay as much of your bill as you can on time every month, and use your credit card to pay for purchases that are within your budget.

Your credit card is a safe, convenient, and often rewarding way to pay, and can help you budget, track expenses and manage your cash flow. So use your credit card, but use it wisely.