By Julie Jaggernath
We’re often asked, “How do you pay off a credit card?” Many Canadians juggle more than one card, and even if you faithfully make your minimum payments, it may feel like you’re hardly making a dent. While there isn’t one silver bullet for paying off credit card debt, a few steps working together can get you there. Here are some of the most effective approaches, plus some new calculators that show how your plan could play out.
If you’d like to dig even deeper and get even more ideas, here’s our very popular resource: 12 Ways to Get Out of Debt
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Pay More Than the Minimum Payment
If you only make the minimum payment on your credit cards, it can take years, even decades, to pay off your balances. Most credit cards set the minimum payment at around 2% of your balance, and at a typical interest rate of about 21%, much of that payment goes toward interest instead of what you owe.
Here’s how that adds up. On a $10,000 balance, our credit card interest calculator shows that making only minimum payments could cost more than $67,000 in interest. Switching to a fixed payment of $250 a month brings the interest down to about $7,350. Even an extra $50 a month can make a difference. Never default for the lowest possible credit card payment if you want to get out of debt. That minimum is simply your reminder to aim higher.
Understanding the Cost of Credit – Try it with your own balance and see how much you could save!
The Debt Snowball & Avalanche Methods
Two popular credit card payoff strategies can help you see progress. With both, you keep making minimum payments on all your cards and direct any extra money to one card at a time.
The debt snowball method targets the card with the smallest balance first. Paying off a card quickly gives you an early win, and that boost can keep you motivated to stick with your plan.
The debt avalanche method targets the card with the highest interest rate first. It saves a little more on interest, which can make a noticeable difference when your highest-rate card also carries a large balance.
How Does the Snowball Method Work? How Do You Pay Off a Credit Card Using It?
- Once it’s paid off, roll that payment into your next smallest balance. Each payoff frees up more money for the next card, creating a snowball effect that helps you pay off your credit card debt.
- As your payments grow, each balance disappears faster than the last.
The avalanche method follows the same steps. You simply line up your cards by interest rate, from highest to lowest, instead of by balance. In many situations, the two end up close in total cost, so the best choice is often the one you’ll stick with. Our new debt repayment calculator lets you enter your own cards and compare the snowball, avalanche, and other repayment options side by side, right down to your debt-free date.
Curious what will work best for you? We’ve preloaded popular Canadian credit cards to make setup quick and easy! Debt Repayment Calculator with Snowball & Avalanche Methods
Or maybe you’re looking for extra money – small daily changes add up. Saving $5 a day comes to about $150 a month you could put toward your cards. Check out the Power of Small Daily Savings Calculator and let the numbers be your motivation!
Debt Relief Options for Credit Card Debt
If you’re struggling, it may help to talk with someone directly and learn about the debt relief options available in Canada. There are many that you may not know about, or if you’ve heard of them, you might not realize all the ins and outs of how they work.
A balance transfer moves your credit card balance to a card with a lower promotional interest rate. It may save you interest, but there could be a transfer fee (often between 1% – 3%), applying for a new card adds a hard inquiry to your credit report, and the interest rate goes up once the promotion ends.
Here’s how that could look. Say you move a $7,500 balance to a card with a 0% promotional rate for nine months. To pay it off before the promotion ends, you’d need to pay about $835 a month. If you pay $300 a month instead, $4,800 will still be left after nine months, and the rate jumps to 21% on that balance. At $300 a month, it would take about 19 more months to pay off and cost roughly $880 in interest. If you’d left the $7,500 on a 21% card and paid the same $300 a month, you’d pay about $2,450 in interest over almost three years. A balance transfer can save you money, but it works best when you have a plan to pay off most or all of the balance before the promotional rate ends.
A debt consolidation loan combines your debts into one payment at a fixed interest rate. Because the loan has a set term, you’ll know exactly when your debt will be paid off, which a credit card’s minimum payment doesn’t give you. Banks and credit unions look at your credit score, income, and other debts when they decide whether to approve you and what rate to offer. If your credit has taken a hit, the rate may not be much lower than what you’re paying now. Be cautious with lenders who offer quick approval at high interest rates or with added fees. A consolidation loan works best when you qualify for a lower rate and avoid building your credit card balances back up while you repay the loan. You can see how a consolidation loan compares with your other options in our debt repayment calculator.
How to Avoid the Debt Consolidation Loan Trap
Our non-profit credit counsellors can help you weigh these options, and also explain a Debt Management Program (DMP).
A DMP consolidates your credit card and other unsecured debt payments into one monthly amount you can afford based on your budget. You don’t borrow any more money and your credit score is never an issue. You make your one payment to us and we distribute the funds to your creditors each month. Interest on your debts is usually reduced to zero. Some creditors may not eliminate the interest completely, but the rate is normally reduced substantially.
FAQ About Debt and Credit Consolidation
So How Do You Pay Off a Credit Card?
The best way to pay off a credit card is by getting started – and choosing an approach you can stick with. Pick the strategy that makes the most sense for you, map out your plan with our calculators, and watch your balances fall.
Once a card is paid off, think it through before you cancel it. Closing a card lowers your available credit, which can raise your credit utilization (how much of your available credit you’re using) and may lower your credit score, especially if it’s one of your oldest accounts. These ups and downs to your score aren’t usually very much, and it doesn’t take long for your score to move up if you’re managing all of your remaining credit well. Keeping the card open but tucked away can be a good middle ground. But, if it tempts you to spend or charges an annual fee, closing it would still be the better bet.
And if you’d like some support, we’re here to help. Our credit counsellors offer free, confidential, and non-judgmental appointments, and they’re happy to help you build a plan that fits your life.
Learn more with these related articles:
Understanding Credit Scoring and Reporting in Canada
Snowball vs Avalanche: Which Debt Payoff Method Is Right for You?
Where to Find Money to Save
Money Saving Tips
Last Updated on October 6, 2026
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