Credit cards have this sneaky way of keeping us in debt, and even encouraging overspending. In fact, people spend 12-18% more when using credit cards*. They’re what’s considered “revolving debt” - meaning you can continue to spend what you pay down.
If you’re like 46% of Canadians who carry a credit card balance every month*, you’ve probably experienced what we like to call...
The 5 stages of credit card debt.
Stage 1: Denial
Your bank upped your limit...you’re feeling super rich. You can totally handle this extra room on your card like an adult. Right??
Stage 2: Anger
Okay the extra limit maybe got the best of you. You “accidently” balled out on VIP Drake tickets...oh and that brand new outfit to wear to the concert too. Oops.
SH*T! You know you’re maxed out and you won’t be able to pay the balance off this month. We probably shouldn’t mention that maxing out your credit card wrecks your credit score as well…
Stage 3: Bargaining
Okay okay...what if you can just majorly cut back on everything else this month...
You consider eating only instant noodles, or taking up a dog walking gig on the side.
Stage 4: Depression
The noodle plan didn’t work out so well. Time to wallow in self loathing…
At this point you might as well just stay never leave the house again, and hide in your debt filled dread.
Stage 5: Acceptance
Alright, you’ve accepted it. You messed up. You’ve got some credit card debt to deal with.
But you know you can handle it; you’re going to make a game plan and get at it.
One way to handle credit card debt is to consolidate it with an installment loan.
Unlike credit card debt, an installment loan has a specific term and requires you to pay back interest AND principal in every payment, which means you have a set deadline for paying it off and getting out of debt.
We’re taught to only focus on interest rates, but we should be rewiring our brains to think about the type of credit product we’re getting and the total cost of borrowing instead.