Best Ways To Pay Credit Card Bills

Even if you’ve been lucky enough to remain employed through the recent recession, you’re probably not feeling as confident as you were five years ago. You’re not alone: These days, Canadians from British Columbia to New Brunswick are coping with stagnating wages even as the cost of basic necessities continues to rise. Unless you have substantial savings on which to draw, you may be nearing the end of your financial rope.

Although Canadians have historically been prudent with their finances, the economic turmoil of the past half-decade has dramatically altered the country’s financial landscape. Faced with declining incomes, millions of Canadians have been forced to rack up unseemly credit card bills just to cover their day-to-day expenses. Many are close to exceeding their maximum spending limits.

If you’re like these folks, you’re probably having trouble keeping up with your mounting credit card bills. Even with a minimum payment as low as 3 percent of your outstanding balance plus accrued interest, you may be skimping on basic necessities just to avoid missing your next installment.

Of course, you may already have missed a payment. If so, you’re facing a serious predicament: In addition to accruing late fees and penalty interest, you may now be dealing with harassing phone calls and e-mails from irate creditors.

Before things get out of hand, think about consolidating your debt with a proven debt relief strategy. You have four options from which to choose: declaring bankruptcy, taking out a debt consolidation loan, talking to a credit counselor, or calling a proven debt settlement provider.

Filing for bankruptcy offers two clear advantages. First, your creditors will stop calling and e-mailing you as soon as they learn of your new financial status. You’ll certainly appreciate being able to spend an afternoon at home without dreading the ringing of your own phone.

More importantly, you’ll probably exit the bankruptcy process with few remaining debts. However, wiping your financial slate clean carries some costs. In exchange for forgiving your debts, your creditors may seize many of your assets. There are some exemptions to what they can take: For instance, creditors in Ontario are barred from seizing personal vehicles worth less than $5,650 and clothing items worth less than $7,500 in the aggregate.

Nevertheless, you’ll exit bankruptcy without many of your prized possessions. The process will also devastate your credit rating for a decade or longer. For these reasons, you may wish to consider bankruptcy only if your credit score is already in the gutter and you don’t have much physical property to lose.

If you’re willing to try consolidating your debts before filing for bankruptcy, consider taking out a debt consolidation loan. Issued by traditional banks as well as specialized lenders, debt consolidation loans advance you sufficient cash to pay off your current creditors. This process effectively refinances your disparate existing obligations into a single loan that eliminates the confusion of dealing with multiple monthly statements.

Unfortunately, you’ll have trouble securing a debt consolidation loan unless you have an above-average credit score or live in a booming area like northern Alberta. Even if you are able to find one, it may not save you much money.

Don’t feel bad about being unable to secure a debt consolidation loan. You’ll find it far easier to be accepted into a credit counseling program.

Credit counselors negotiate directly with your creditors to reduce the interest rates on your existing debts. Depending on your unique basket of debts, they may save you a great deal in the process: If they’re able to cut your 20 percent interest rate in half, they’ll save you $1,000 per year on a $10,000 outstanding balance and $5,000 or more over their program’s average term of five to seven years.

Credit counseling isn’t a cure-all: It can damage your credit score for years and does nothing to reduce the actual amount that you owe your creditors. You may have better luck consolidating your debt load with a debt settlement program.

Unlike debt consolidation loans or credit counseling, the debt settlement process is tailored to reduce the principal balances on each of your outstanding debts. While each case is different, debt settlement has reduced the total debt loads of participating Canadians by an average of 40 to 60 percent in years past. Even better, the process takes less time to complete than other debt-relief options: Most programs of debt settlement finish up in no more than four years.

Don’t go another day without thinking about consolidating your debts. Before you make a decision, carefully research your options and choose the debt-relief method that’s best for your particular financial situation. If you make the right call, you’ll find yourself back on the road to financial freedom in less time than you ever thought possible.