Credit Card Debt Help Guide

Answer 3 basic questions to triage your debt and identify possible relief options with our credit card debt help guide

credit card debt help
  1. How is your budget?
    1. I can’t even cover my bills effectively
    2. I’m just managing to break even
    3. We have extra cash flow left each month
  2. How would you rate your credit?
    1. Excellent
    2. Good
    3. Fair
    4. Bad
  3. How much unsecured debt do you have, in total? (credit cards, payday loans, unpaid medical bills, personal loans)
    1. Less than $5,000
    2. $5,000-$15,000
    3. $15,000-$50,000
    4. More than $50,000

Solution #1: Debt reduction plan

  • Must have additional cash flow available
  • Any credit rating
  • Best used for less than $5,000 in total debt

How it works: Prioritize your debts, starting with the highest APR. Make minimum payments on all debts except the debt with the highest interest rate. Use all additional cash flow to make the largest payment possible on that debt. Once it’s paid off, move on to the debt with the next highest rate. Keep devoting as much cash as you have available to pay off each debt to reach zero faster. It’s also recommended that you call each of your creditors to see if they will negotiate to lower your interest rates.


  • Avoid making new charges
  • Make sure to pay all your bills promptly to avoid credit damage

Solution #2: Balance transfer

  • Best if you at least break even consistently
  • Ideal with excellent credit; possible with good credit
  • Typically used for $15,000 or less in debt

How it works: Apply for a balance transfer credit card with a 0% APR introductory period. You will qualify for longer introductory periods if you have excellent credit. Ideally, you want a card that offers 0% APR for 18 to 24 months. Once approved, transfer the balances from your existing cards. Then pay the debt off interest-free as quickly as possible. Your goal is to get to zero before the 0% APR period ends.


  • Don’t run up new balances on your existing cards
  • Check to make sure you can transfer all of your balances; some credit card companies won’t let you transfer balances from one of their cards to another.

Solution #3: Personal debt consolidation loan

  • Better if you are at least breaking even
  • Must have at least good credit
  • Typically works better for $50,000 in debt or less

How it works: You apply for a traditional fixed-rate unsecured personal debt consolidation loan. You want to qualify for the lowest interest rate possible, which is why should at least have good credit; aim for 10% APR or less. The lender may require a list of your debts and creditors; they may also insist on direct disbursement to your creditors. You use the funds from the loans to pay off all your debts. This leaves the loan to repay. In general, you want a loan with a term of 60 payments or less.


  • If you have high debt, such as from student loans, your debt-to-income ratio can be too high to qualify
  • Although you can get a secured personal loan, such as a home equity loan, for the same purpose, experts advise against it. It’s rarely worth the increased risk of foreclosure to pay off unsecured credit card debt

Solution #4: Debt management program

  • May reduce your payments if you are falling behind
  • No credit score required to qualify
  • Works even for $100,000 or more in household debt

How it works: First you call a credit counselling agency for a certified review of your debt and budget. Law requires credit counsellors to review all options available. If no self-help options are available the agency can help you enroll in a debt management program. This is a debt repayment plan administered by through the agency. They find a monthly payment you can afford, then negotiate with your creditors for lower interest rates. You make one payment each month to the agency; they disburse it to your creditors.


  • Not a viable debt solution, if you have no income or unsteady income to afford the payments; if you miss payments and don’t make arrangements, you may be kicked off.
  • Enrollment is voluntary; however, if you leave the program, creditors may reinstate previous rates and penalties; all payments are credited though.