There are many ways to go about and deal away with credit card debt by Christmas. From debt consolidation and balance transfers to cutting non-essential spending, it is possible to reduce debt and eliminate sky-high balances.
Step 1 – Add up All Debts
The first step to reduce your credit card debt is to find out how much you owe. What you can do is add up all your debts, including card balances, mortgages, vacation loans, vehicle, home equity, and personal loans, lines of credit, and so on. Add up all balances to find out the total debt amount. Then make a list of your sources of income, including wages, salary, child support, alimony, real estate investments, and others. This is a good way to figure out how much you make and how much you owe. If you make less than you owe, you are in serious trouble and it’s time to rethink your finances now that the Christmas season is behind the corner.
Step 2 – Balance Transfers: Get a Zero Interest Credit Card
Transferring balances is a good option for high interest cards and allows borrowers to take advantage of a zero or very low rate over a promo period of 6 – 12 months. In this way, you will be paying more toward the outstanding balance and less toward interest charges. An additional benefit is that borrowers are free to choose from different cards with attractive terms and add-ons. Examples include events and concert tickets, deals and discounts, complimentary bonuses, points, and more. On the downside, there is always a risk to end up paying a higher interest rate if you don’t meet the eligibility criteria. It is also a good idea to inquire about the balance transfer fee because it can cost more than interest on your current account.
A balance transfer can be a good option to save on bank fees and interest rates, but make sure you check all details with your financial institution. There are plenty of credit cards with low interest rates of 10 – 12 percent and low or no annual fees. Ask about penalty charges, the grace period, cash advance fees, foreign transaction and balance transfer fees, late and over the limit fees, etc. Some cards also go with replacement, credit limit increase, and processing or application fees. These are less common but it is always good to be on the safe side. Some financial institutions also charge returned check fees, expedited payment fees, and monthly fees.
Step 3 – Consolidate Your Debt
Debt consolidation is a good choice for people who pay multiple card balances. If you have two or more cards with high interest rates, then consolidation is a solution to look into. Apart from balance transfers, there are other options to consolidate your debt, including a line of credit, home equity loan, and unsecured personal loan. The choice of financial solution depends on factors such as available cash, credit rating, types of debt, total debt amount, and others.
Step 4 – Join a Credit Union
Try to join a credit union if you are not a member already. Credit unions usually offer cards and loans with lower rates and competitive terms. Unions are non-for-profit entities that cater to their members and pass through profits in the form of benefits such as low interest rates, low annual rates, etc. Many unions offer credit cards with interest rates that can be as low as 6 percent. What you can do is try to pay the balance in full and keep your current card. Then you can apply with your local credit union to benefit from the rate they offer. Alternatively, you can transfer the existing balance the same way you would do at a traditional bank.
Step 5 – Cut Unnecessary Spending
Splurging and non-essential spending are the main culprits for piling debt, and this is especially true for low-income persons and households. If you tend to splurge and overspend, it is time to have a good look at your expenses. There are basic necessities to cover, including food, electricity, gas, water, etc. Routine expenses also count toward essential expenses. Examples include appliance replacement and repair, deductibles, medical costs and medications, car repairs, emergencies, and so on. Discretionary spending, on the other hand, includes things like parties, baby showers, birthdays, anniversaries, and holidays. If you have a piling credit card debt, then you may want to look at your budget and identify the things you can go without. They are destroying your budget. Non-essential expenses include vacations, luxury clothing, dry cleaning, going to the gym, going on outings or to the pub, and others. If you have a huge debt load to pay off and are living paycheck to paycheck, it is important to cut unnecessary spending. Then if you have a seasonal or part-time job and your income is very low, you may want to cut utility expenses as well (like opt for a basic internet plan).
There are other ways to reduce your credit card debt by Christmas, and one is to ask your financial institution for a lower interest rate. If you are a regular customer, your bank may be willing to slash the rate. If you have a very good or spotless credit score, you are likely to get a lower interest rate. If you use multiple cards, one way to reduce your debt is to pay off one card at a time. It is easier to start with the lowest balance first. If your goal is to improve your credit rating, however, you may want to start with the card that has the highest utilization rate. A third option is to apply for a loan through a peer to peer network to pay off existing credit card balances. Peer to peer lenders offer affordable loans with rates that are significantly lower compared to standard cards. A spotless or very good credit score and a steady job is all you need to qualify.
When it comes to exports, it looks that Canadian exporters have adopted successful strategies to remain competitive and adapt to appreciation. These include enhanced efficiency and productivity, the use of imported raw materials to reduce production costs, and expansion to new markets. Imported raw materials and other inputs, for example, help boost productivity and offset the negative effects of foreign exchange exposure. Export diversification is another successful strategy to adapt when the Canadian dollar is strong. In 2003, for example, many companies began to export goods and services to new markets. While in 2002 some 70 percent of exports went to the U.S., a year later this figure fell by whooping 14 percent. This means that the percentage of goods and services exports to emerging markets rose substantially and actually doubled. As a result of diversification strategies, exports to the European Union, the Middle East, and Asia rose in proportion. The reason why this strategy turned out successful is that the loonie does not appreciate equally against the Euro and other major currencies. Thus businesses enjoy better profit margins through diversification. Another strategy that Canadian exporters use is to establish sales and distribution offices when expanding to new markets. This is less expensive than maintaining production facilities abroad and fosters cooperation with new partners to increase after-sales. Many are working on joint projects as well. Finally, buying imported goods and services is another strategy to offset the negative effect of a strong loonie. This helps boost the purchasing power of manufacturers, and the reason is that imported components, parts, and raw materials are cheaper and help cut production costs. This strategy works well by increasing productivity through investments in advanced technology to reduce production and operational costs and eliminate waste.
Higher rates mean higher costs for Canadian financial institutions. Many worry that interest rate hikes will affect mortgage payments but this is not the case. With a rate increase from 1.7 percent to 1.9 percent on a $500,000 mortgage, borrowers pay about $40 more a month. A subsequent hike in interest rates is expected to have a similar effect. Even in this case, borrowers have the option to lock in their rates and opt for a fixed-rate mortgage loan. This is what many choose to do when interest rates rise. However, experts point out that a fixed-rate mortgage is a better option only if rates go up by 0.69 percent or more during the next couple of years. What we have seen so far is interest rates going up to 1 percent and then dropped by 0.5 percent over a 5-year period. With this in mind, a variable-rate mortgage with a low interest rate (i.e. 1.9 percent) makes more sense than a fixed-rate mortgage with a rate of about 2.6 percent. And according to Bank of Canada experts, subsequent rate hikes, if any, will be gradually implemented.
MBNA offers a travel credit card with a welcome bonus of 10,000 points after the first purchase or transaction. Customers earn 2 points per each $1 they spend for an annual fee of $89. The points you accumulate have no expiration date, and there is no limit on the points you can earn. You can redeem them in different ways, including electronics and featured items and merchandise such as sunglasses, necklaces, pizza sets, flatware, electric shavers, microwaves, cordless gas trimmers, and a lot more. There are added incentives such as travel coverage, including legal and lost luggage assistance and lost ticket and document replacement. Customers with a combined household income of $150,000 qualify (or personal income of $80,000).
This Visa card by RBC also offers great travel benefits such as comprehensive insurance coverage, including rental car insurance, hotel, trip, and emergency medical coverage, and trip cancellation. In addition to extensive coverage, customers also benefit from the fact that there are no seat restrictions, whether traveling during low season or peak season. RBC also guarantees that there are no blackouts and features a generous rewards program whereby $1 spent on the card equals 1 bonus point. Travel purchases bring an extra 25 percent. A generous welcome bonus of 15,000 points is an added incentive to start collecting points.
Offered by Capital One, this rewards card also tops the list of travel products with extensive insurance coverage, including trip cancellation, flight delay, and emergency medical coverage. In addition to travel assistance, cardholders are also offered car rental collision and baggage delay insurance. The card also goes with baggage loss and flight delay insurance as well as trip interruption coverage. There are added benefits such as the option to add an authorized user free of charge. Each dollar in purchases earns 2 bonus points. The welcome bonus of 400,000 is offered to customers who charge $1,000 on the card during the first three months. This equals $400 that can go toward travel or other purchases. There are no restrictions or limits on the points you can accumulate. Customers with spotless credit qualify provided that they can show proof of household income of at least $150,000 or personal income of at least $80,000. If you meet the eligibility criteria, you also enjoy concierge services such as tickets for exclusive events, special privileges, dining reservations, and plenty more.
This rewards card offered by American Express is also worth a quick look when it comes to travel benefits. Amex offers a welcome bonus of 25,000 travel points on the first $1,500 charged during a 3-month period. While it is a charge card, you collect 2 rewards points per each dollar spent on purchases, including travel expenses such as cruise and flight travel, grocery and gas, etc. The annual fee for primary cardholders is $150. Extensive insurance is offered, including lost baggage and trip interruption coverage.
CIBC also has a great specialty card on offer, available to customers with a household income of at least $200,000. The Aerogold Visa Infinite Privilege Card features comprehensive insurance benefits such as trip cancellation and emergency medical coverage for out-of-province travel. Air Canada benefits are also offered, including first checked bag, priority boarding, etc. Each dollar you spend earns a total of 1.25 rewards points on regular purchases and 1.5 points on purchases at aircanada.com as well as drugstore and grocery store purchases and gas. Customers are offered bonus rewards points at select online and other retailers. Cardholders with a diamond, black, and silver status benefit from additional privileges and need fewer points for flight bookings. When you book an Air Canada-operated flight, you are entitled to a discount companion Business Class ticket (50 percent off). What is more, you are free to cancel and book flights at any time and up to 120 minutes before departure. Additional benefits for cardholders include luxury hotel benefits, access to live music events, attractive ski offers, and plenty more. The list of added incentives includes priority access to fast lanes, discounts on valet services and parking, as well as limo and taxi services. Priority Pass allows cardholders to take advantage of lounge visits up to 6 times a year at more than 850 airport lounges around the world.
A yet another 
