Credit card debt is alarmingly normal in the Canadian population. The average Canadian is in $4,154 of credit card debt that they will obviously not be able to easily pay back, given the size of the sum. The compounding interest on that amount can add up to an incredible amount of interest charges over time. If you have some credit card debt yourself, you’ll be happy to hear that this is not an inevitability. There are many low interest credit cards Canada available to you if you apply for them, and they can help you to change your life if you let them.
The Problem With Standard Credit Cards
Credit cards can be great tools to help you extend your cash flow or pay for small emergencies as they crop up. They also help you to build your credit so you can get a better deal on the bigger purchases that you make in your life, such as a car or a house, that you will likely need to use some credit in order to afford. Everyone should have a credit card in their back pocket, even if they almost never use it. It’s just a good idea to have just in case, and to help give you more possibilities in the future.
However, there are many downsides to using credit cards too, and they can unfortunately be quite severe in some cases. Because credit cards are easy to use once you have them in your pocket, they can sometimes present too much temptation for some people to deal with in a financially safe manner. You can use them to buy anything as long as you keep your total credit balance below whatever limit is in place on your card. That means that having one can sometimes feel like having free money that you can spend on anything, including frivolous purchases that you might not otherwise make. The trouble is that it is not free money – even if you don’t have to pay for your purchases right away, you will eventually have to, and you’ll be paying interest for the privilege of having been able to wait as well. You can easily end up with a far greater debt total than you expected to have when you first started making purchases, and it can be hard to get out from under the debt burden that you have created.
What Low Interest Cards Do Differently
A low interest credit card is exactly what it sounds like – a card that charges less in interest than the standard ~20% that you’ll find on most Canadian credit cards. The usual rate for these cards hovers somewhere around 12%, but you can find cards with rates both lower and higher than that in some cases. This means that every payment you make on a balance accrued on these cards will cost you 8% less in interest every month, and as a result of the power of compound interest, significantly less over the course of time. Carrying a balance on one of them is therefore far less punishing to the consumer, and you can even use them to carry out balance transfers of existing debt to save on interest charges you are already paying.
As great as these lower interest rates are, they don’t come without any sacrifices. You’ll have to give some things up if you want to see their benefits. You’ll usually have to forgo any access to rewards systems to get them, and you may even have to pay an annual fee in some cases. However, this fee is never very large, and it should easily be paid for in the savings that you will earn back if you carry a balance on your new card. The rewards are also a very reasonable concession to have to make. It isn’t fun to have to give up your goodies, but the trade-off doesn’t necessarily have to be permanent. You can always switch back to a normal card and get them back once you get your credit card debt and habits under control.
How Much Could You Save?
Even if low interest credit cards already have you interested, you may not have realized just how much you can actually save with them yet, so let’s look at some more specific figures to give you a better idea of that. For the sake of this example, we’ll posit that you have $5000 of credit card debt toward which you are paying $200 a month – as you read in the introduction, this is very close to the situation for many real Canadians right now.
If you’re using a card with the standard 20% interest rate, it will take you 33 months to pay this balance off, and you’ll pay $1,500 in interest before you’re done with that task. That’s a very high cost to pay just for using credit, and although you can reduce that amount by making bigger payments to pay it off sooner, that may not be feasible for everyone. What anyone can do to save, however, is transfer their balance to a low interest card. If you’re using a low interest card with a 12% rate instead, it will take you a slightly shorter 29 months to pay off this balance – but more importantly, you’ll be paying just $780 in interest instead. That’s just a little more than half of what you would pay in interest in the original scenario, which is an incredible amount of savings.
Find Low Interest Credit Cards In A Flash
Low interest credit cards are clearly worth getting, but do you know where to go to get one for yourself? There’s no need to worry about that when Bonsai Finance is here to be your guide. We’ll show you where to apply to get the best low interest credit cards available to you, making the entire process as easy as can be. You don’t have to pay as much as on your credit card balances as you are right now – let us show you that there’s a better way.