Types of Debt

Types of Debt » Credit Card Debt

Credit Card Debt

Credit card debt is the most common type of unsecured debt in Canada.

Thousands of Canadians have turned to the help of credit card companies, and often several credit cards, to cover the cost of day-to-day life as well as unexpected payments.

While credit cards can play an important part in a financial emergency it’s important to stay on top of what you owe to avoid problem debt.


Write off up to 80% of your unaffordable debt

What is credit card debt?

There is no denying that credit cards come with a wealth of benefits. No matter how prepared you think you might be, the reality is life is unpredictable and there will come a time when your finances won’t stretch to cover unexpected expenses such as emergency home repairs.

However, if you find yourself reaching for the plastic to manage your finances month to month, that is when your credit card debt can become unmanageable.

According to industry figures, only 25% of Canadians pay off their credit card debt in full, with the rest accruing interest on the remaining balance which could amount to thousands of dollars every year.

Credit card debt can affect your credit score and your financial future. Any missed payments will appear on your credit report, so it’s important to tackle the issue head-on if you find yourself struggling with credit card debts.

What are the warning signs of credit card debt?

Credit cards understandably come with a wealth of benefits, almost acting as a financial safety net at times when unexpected payments pop up. However, it can be all too easy to become complacent about repaying outstanding balances and that’s when debt can start to wrack up. Knowing the warning signs to look out for can help stop you from falling into an unmanageable billing cycle and save you from the stress of dealing with financial insecurity.

Not paying credit cards in full: Only making the minimum payments each month will mean that you will accrue interest charges on the balance you carry over each month. This interest can make managing monthly payments much more difficult.

Reaching your credit limit: Is your credit card nearing its maximum limit? Reaching the credit limit on one or more of your credit cards is a sign that your debt may be out of hand.

Paying one credit card with another: Using a balance transfer from one credit card to clear another is a slippery slope and can be one of the clearest signs that your credit card debt has become unmanageable.

Unsure of interest rates: Understanding the interest rates on all credit cards is vital if you are to manage regular payments and clear the debt you owe.

Using advanced payments: Another sign you could be struggling with credit card debt is if you’re using advanced payment cheques often offered with a range of credit cards.

The budget doesn’t stretch: If you find yourself regularly using your credit card to manage day-to-day finances it could be a sign that you’re living beyond your means each month and need to reconsider your entire financial situation.

You’re missing payments: The minute you miss a payment on your credit card or other debt is a sign that you’re struggling with debt and when you can’t handle the amount of money you owe. Missing a payment can affect your credit score and will appear on your credit report.

How can I deal with credit card debt?

Admitting you have a debt problem isn’t easy, however, it’s important not to hide away from the issue.

The longer you continue to only make the minimum payment on your credit card, or not pay at all, the more interest is added to your balance.

There are various debt relief options available to you if you’re unable to manage to pay all of your debts.

You should speak with a credit counsellor from a reputable financial institution to discuss your current financial situation and the best debt solution for your needs.

Credit counseling will give you an overview of your finances showing all your debts and how much you’re paying towards them before establishing a repayment plan.

There is a range of debt relief options available, including a consumer proposal, debt consolidation and debt settlement programme, to name just a few. You’ll only be advised to consider declaring bankruptcy as a last resort.

Living with credit card debt can have an impact on everyday life, not just your bank balance.
Credit Card Debt

Does a credit card affect my credit score?

Having a credit card itself doesn’t affect your credit score but how much you borrow and how well you pay off your credit card, or credit cards, every month will reflect on your credit score.

Your credit card company will share details of your account activity with credit reference agencies. This allows them to update your credit score.

This then allows other lenders to determine your ‘creditworthiness and decide how much of a risk it is to let you borrow money from them.

It’ll also be noted on your credit report. This shows your credit history, including how much you owe, how many payments you’ve made, if you’ve missed any payments and details of your credit limit.

How credit card debt can affect everyday life

Credit card debt affects everyday life, not just your bank balance. Whether you’re struggling with one credit card or have borrowed from a number of credit card issuers, it’s important not to ignore how much money you owe.

Mental Health

Living with debt can, understandably, have a serious impact on your mental health. In fact, according to industry statistics, the likelihood of having a mental health issue is three times higher amongst people living wit debt, with a recent Forbes article suggesting that financial stress can cause similar feelings to PTSD. Financial distress can also be an isolating experience, with many people not knowing where to turn for support and internalizing feelings of stress and failure.

Social Life

This probably seems obvious but living with credit card debt can have implications on your social life. Hiding debts from friends will mean that won’t give your finances a second thought. Invitations to dinner or to grab after work drinks can often seem too tempting to give up but struggling with debt can make it hard to keep up with.


Money can’t buy happiness but there is a direct link with financial security. Living a life worrying about how you’re going to make your next bill payment can be daunting and stress-inducing and lead to anxiety, depression and a host of other psychological problems.


Finances can be the leading cause of stress in a relationship. Whether it’s your relationship with your spouse, partner, family or friend money troubles can cause a strain with tempers often at breaking point when times look particularly bleak.


Living with unmanageable debt can have a negative impact on your credit score which can obviously have an impact on your ability to borrow further credit but did you know it can also prevent you from certain job and apartment opportunities?

Credit Card Debt
Credit Card Debt

Worried about credit card debt?

If you’re worried about credit cards, our expert advisors can help you become debt-free. They can offer advice about the best way to deal with all your credit cards and outstanding debt to help you regain control of your finances. Call 416-842-0040 to find support today.

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How we can help you with your debt

You’re on your way to resolving your debt problems, this is what will happen next.

Fill out the form and arrange a call back with one of our debt advisors.

We will then run through all of the options available to you and advise you on which is the best option for you

We will then help you put the debt solution in place that will help you get back on track