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Credit Card Debt FAQs

Written by:
Staff Writer

According to Forbes, the average interest rate for a credit card is now between 19.99% and 25.99%. Handling interest that high alone is difficult. When you add in numerous fees, extreme convenience, and confusing due dates you’ve got the perfect breeding ground for debt. Fortunately, the more knowledge you have the easier it becomes to manage it instead of it managing you. After reading this Credit Card Debt FAQs you’ll be armed with all the information you need to get your credit card debt under control once and for all.

Getting rid of debt takes time, but it’s doable with the right techniques. Factors impacting time to become debt-free include:

Payment amount: To pay off your credit card debt faster, pay as much as you can afford each month. The more you pay, the quicker you’ll be debt-free.

Interest rate: High-interest rates can make it harder to get rid of your debt. Try talking to your credit card company to see if they can lower your interest rate. If they can’t, think about moving your balance to another card that has a lower interest rate.

Budgeting: Create a budget and stick to it. This will let you put more money toward paying off your credit card debt.

 

To see just how long it will take to pay off your credit card, check out our Credit Card Debt Repayment Calculator!

 

Remember, everyone’s situation is unique. Assess your circumstances first. Then, create a plan. Make sure the plan is one you can follow. Consistency and discipline are the keys to success when working towards becoming debt free.

When you die, your debt remains. Your estate includes this debt, and your executor or administrator must deal with it. They may use your estate’s assets to pay it off. If your estate doesn’t have enough money, creditors may try to retreive the money by way of your loved ones. How successful they are depends on the type of debt and whether it was held jointly with someone else. If held jointly, the living debtor will be help responsible for paying off the debt.

Keep debts low and aim to clear your balance monthly. It’s recommended to try not to be indebted over 30% of your credit limit. This is the threshold most financial institutions use when considering financial health. Check your finances often. Make smart choices with your credit cards. By doing these simple things will go a long way to preventing you from accumulating too much debt.

MoneySense reports that in the third quarter of 2023, the average Canadian had about $4,265 in credit card debt. This debt level can change based on income, how much someone spends, and their financial obligations. Properly managing credit card debt is crucial to prevent financial stress and to secure a better financial future.

In 2023, Nerdwallet reported that 43% of Canadians had credit card debt. This shows that many people are struggling financially and could use help with their debt. It’s important to understand the consequences of carrying a lot of debt and the strategies to manage it well.

Yes and no. You are responsible for any debt you and your spouse held jointly. Any debt held solely in their name though is their responsibility.

Banks can sue you for unpaid credit card debt. If you don’t make payments as agreed, they can take legal action. They’ll try to get back the money you owe them, plus fees, and interest. To prevent a lawsuit, it’s essential to deal with credit card debt quickly.

Credit card debt can chase you to a different country. Financial institutions can digitally track your debt worldwide. If you move to another country, it’s crucial to deal with and manage your credit card debt carefully and promptly.

Your home won’t be lost immediately if you have credit card debt. However, if you stop paying your bills, and your debt is sent to a collection agency, they might decide to sue you. If they win the case, the court could let them put a lien on your house. This lien means that when you sell or refinance your home, they can take some or all the money from the sale of your house to settle your debt.

The Canadian Revenue Agency can withhold your tax return for various reasons. These include unpaid taxes, student loans, and overdue child support payments. Credit card debt is different. It rarely affects an individual’s tax return directly. However, if you use your credit cards for business expenses, you can include that debt on your tax return as a claim.

Credit card debt is unsecured. This means it’s not tied to any collateral. If you don’t make payments, the credit card company can’t take any of your property to get back what you owe.

It’s a wise choice to pay your credit card debt first before leaving the country. Moving to another country doesn’t free you from your debts. Creditors can take legal action against you even if you are abroad. It’s better to deal with the debt responsibly.

You have a few choices if you want to combine your credit card debts. First, you could go to your local bank or credit union and ask about their loan programs for debt consolidation. Alternatively, you could look for trustworthy lenders that focus on consolidating debt. It’s also a good idea to talk to a credit counsellor, such as those working at Consolidated Credit. They can give you advice tailored to your needs.

There is no time limit as to how long a collections agency can pursue you to pay your debt. However, there is a limited amount of time where they can take legal action to collect the money owed. The amount of time varies from province to province. The timeframe ranges from 2 to 6 years from the last action you made on your credit card.

It’s important to note that no matter how long the legal action time limit is, the unpaid debt will remain on your credit report for 6 years. You’ll have certain restrictions when it comes to your credit for as long as it remains on your report.

Credit card companies can take you to court for debt. If you can’t pay back what you owe on your credit cards it’s best to talk to the credit card issuer before missing a payment or get help from a financial professional. The earlier you communicate with your credit card issuer the better and the more options will be available to you. A financial professional will guide you through what actions you can take for your particular situation.

No, your credit card company cannot raise your credit limit without your permission. The Financial Consumer Agency of Canada confirms this. Make sure to read your credit card agreement’s terms and conditions. This will help you know their rules on changing your credit limit.

Aim for a balanced approach to credit cards.

 

Managing your finances becomes hard with too many credit cards. Also, tracking payments gets difficult. On the other hand,if you don’t have credit cards, you may not be able to have a good credit history.

 

Ideally, match the number of and type of credit cards you have to your spending style. This doesn’t mean if you spend a lot get a lot of cards. It means make considered choices as to what cards you get. If you like to travel get a card that offers travel rewards. If you’d like to have a little extra to help deal with extra expenses a Christmas time, get a cash back card.

 

Ultimately, no matter what cards you get or how many just make sure to keep a good credit usage ratio and pay them all off on time and in full.

No. You cannot pay off one credit card by using another.

 

The only exception to this is if you are moving your credit card debt balance onto a balance transfer credit card. While this is an option available it is highly recommended that you speak to a financial professional beforehand. Doing this is risky and can cost you a lot more money in the long run if you’re uninformed.

When you get a cash advance on your credit card, remember several important points.

  • You’ll usually pay a higher interest rate on the cash you withdraw than on normal purchases.
  • Banks charge a cash advance fee, which is a percentage of the amount you take out.
  • Cash advances rarely have a grace period, so interest piles up right away.

You won’t go to jail for not paying credit cards. However, if you miss payments, it will damage your credit score. Plus, your creditors could decide to sue you or have money taken from your paycheck. If you’re struggling to pay, talk to your creditors or a credit counsellor.

Credit card balances usually have a deadline for payment. This time limit varies based on the credit card company’s rules. You often get a grace period, between 21 and 25 days, to pay without interest charges. By not paying in full by the deadline you will be charges interest. To know the specific payment time frame, check your credit card agreement or ask for the card issuer.

When a parent dies, their debts usually need to be paid out of their estate. Creditors can ask for payment from any property or money left by the parent. Depending on your situation, these situations can be very nuanced and tricky though so it’s important to speak to a lawyer to know the exact rules in your area.

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