Credit card debt is one of the most expensive kinds of debt you can carry in Canada. Most cards charge 19.99% annual interest, and store cards can go as high as 29.99%. If you're carrying a balance, a structured repayment strategy saves you money and gets you debt-free faster.
First: Stop Adding to the Balance
Before choosing a strategy, address the source. If you're putting new charges on a card you're trying to pay off, the math works against you. Move day-to-day spending to a debit card or a card you pay in full each month while attacking existing balances.
The Avalanche Method: Math-Optimal
The debt avalanche prioritizes the highest-interest debt first. Here's how it works:
- List all your credit cards and their interest rates.
- Make minimum payments on every card.
- Put all extra money toward the card with the highest interest rate.
- Once that card is paid off, roll its full payment to the next-highest-rate card.
Why it works: You pay the least amount of total interest over time. If you have a card at 29.99% and one at 19.99%, attacking the 29.99% first saves significantly more money mathematically.
The downside: If your highest-interest card also has the largest balance, it can take a long time to see a card reach zero. Some people lose motivation.
The Snowball Method: Psychology-Optimal
The debt snowball prioritizes the smallest balance first regardless of interest rate:
- List all your cards from smallest balance to largest.
- Make minimum payments on all cards.
- Put all extra money toward the smallest balance.
- Once paid off, roll the full payment to the next-smallest balance.
Why it works: You get quick wins. Paying off a $400 card in two months feels great and builds momentum. Research shows people who use the snowball method are more likely to stay committed to their payoff plan.
The downside: You may pay more total interest if your smallest balance has a lower rate than a larger card.
Which Is Better for You?
If you're disciplined and motivated by numbers: use the avalanche. You'll pay less interest overall.
If you've started debt repayment before and lost motivation: use the snowball. The emotional wins matter more than the math difference.
For many people, the difference between the two methods is smaller than you'd expect. Both strategies work, the best one is the one you'll actually stick with.
Balance Transfers: A Third Option
Many Canadian banks offer balance transfer promotions, move your existing balance to a new card at 0% or low interest for 6–12 months. This can give you a window to pay down principal faster without accruing interest. Watch for transfer fees (usually 1–3% of the amount transferred) and make sure you can pay the balance before the promotional period ends.
Ottawa Credit Counselling Resources
If your debt feels unmanageable, the Credit Counselling Society (CCS) offers free, non-profit credit counselling in Ottawa. They can help you negotiate with creditors and create a formal repayment plan. This is a legitimate service, be cautious of for-profit debt settlement companies that charge large fees.
The Goal: Zero Balance, Every Month
Once you're out of debt, make it a rule to never carry a balance. Pay the statement balance in full each month. You get all the credit-building benefits of a credit card with none of the interest costs.
