Today, almost everyone carries a credit card in their wallets. It is used to pay for almost everything from groceries to flight tickets to gas.

If managed properly, credit cards can be an essential financial tool that allows users to build credible credit, earn money back and gain great perks, like purchase protection and insurance. However, carrying a poor credit balance can plunge you into massive debt.

“Credit card debt is very high-interest debt, typically in the neighbourhood of 20% or more,” said Scott Hannah, president and CEO of Credit Counselling Society in a report.

If you have a balance payment on your credit card, clearing it off can be a difficult task if you’re a low-income earner—or you’ve already incurred too much debt that after using a credit card payment calculator you know you’ll be unable to pay back.

However, no matter how terrible you think your current situation is, there’s always a way out that works best for you. With interest on loans compounding everyday, there’s little wonder why clearing a credit card debt is so difficult. In fact, according to MNP, an accounting firm, nearly half of all Canadians are less than $200 per month away from becoming financially insolvent.

Tackling credit card debt can seem quite tedious, especially with many people choosing to ignore the problem and just keep making the minimum payment. Here are some practical strategies you can take advantage of to effectively tackle credit card debt.

1. Gain a complete understanding of your debt problem

This starting point for anyone trying to get out of debt is to understand why you’re in debt, in the first place.

Critically examine all areas of your finances to determine if your expenses don’t match your finances or if it was due to an unforeseen circumstance such as a medical emergency. Whatever the case may be, it is very important to know the reason why you are in so much debt so you can effectively tackle the root cause.

2. Look into your spending habits

Typically, one quick way to stop yourself from running into credit card debt is to examine your spending habits. What are the things you spend your credit card on? Are they essentials or things that can be easily done away with?

According to Hannah, most people can only account for about 75 to 80 per cent of their monthly expenditures and the remaining gets blurry. It is important to track your expenditure—whether it’s an extra shot of drinks at the bar or a box of cereal from the supermarket. Knowing what you spend money on allows you to build a better financial strategy against debt.

3. Build a budget

Once you have a clear picture of what your monthly expenses are, building a budget becomes the most important step towards managing your income better. Having one central location for tracking both your income and expenses is great in curtailing unnecessary spending and getting you out of debt.

Your budget needs to contain all of your expenses incorporated from essentials like groceries, mortgage, medical care and insurance to others such as utilities. While most people struggle to stick to their budget, you can create some margin for flexibility to make it easier for you.

4. Increase your minimum payment

For most credit cards, the minimum payment is approximately 2 per cent of the last month’s balance. But therein lies the problem because if you consistently pay only the minimum, then the lump of that money goes straight to your interest and not the principal.

Paying some extra money every month would go a long way in helping you clear your credit card debt faster and reduce the compounding interest.

5. Ask for a lower rate

It is very possible to negotiate for a lower rate with your bank; only thing is, most people tend not to do so. If you find yourself struggling with paying back your credit card debt, you can reach out to your lender and ask them to offer you a lower rate.

Long-time customers who have a history of making timely payments have more advantage with getting their request approved.

6. Take advantage of a balance transfer promotion

In a bid to entice new customers, lenders run promotions periodically on balance transfers for their credit cards. Basically, these offers involve having a low-interest rate between 0 to 2 per cent for a limited period—usually between 6 to 10 months.

Always be on the lookout for a lender that offers the lowest rates and longest promotional period, which would give you enough time to clear your debt.

7. Switch to a low-interest credit card

Once you have critically examined your spending habit and created a budget, yet it is obvious that you will always carry over a credit card balance, then it is time to switch to a low-interest credit card.

While these types of credit cards usually have little perks, they are quite useful in wiping a couple of percentage points off your interest. Typically, rates on low-interest credit cards vary but they could be as low as half the interest on a regular card.

8. Begin an avalanche

The avalanche method is great for those who have a lot of debt with several creditors. This method means you’d make the minimum payments on all your existing debts and then add any extra income to the debt that has the highest interest rate.

Using the avalanche method allows you to reduce the interest paid while clearing multiple debts.

9. Use the debt snowball approach

Another debt repayment strategy that you should consider is the debt snowball method. In this strategy, you would focus on paying off your small debt first before moving to the larger ones—all whilst still paying the minimum on all other debt—regardless of interest rate.

10. Get an extra income source

Creating additional streams of income goes a long way in helping you clear your credit card debt. By finding a better paying job or choosing a good side hustle, you can easily put down more money towards your debt repayment.

There’s a lot of gigs you can offer today to raise extra money such as writing, graphic design, proofreading, teaching and programming.

11. Use a personal loan

If your credit card balance is quite high, paying it off using a personal loan may be very advantageous. While the interest rates on credit cards can be as high as 29 per cent, with a good credit score you can qualify for a personal loan at a lower rate.

The main advantage of using this strategy is being able to pay off multiple credit card debts and focus on making single but fixed monthly payments on the remaining loan. Also, you spend lesser money on interest costs and repaying the loan in instalment would boost your credit score.

12. Spend more cash

Despite being very valuable items, credit cards can quickly run you into massive debt when not used properly. If you already have some debt yet to be paid, it is better to spend more cash than accumulate more debt on your credit card.

Get a low-interest credit card but only use it in emergencies once you know there isn’t enough money in your bank account to pay off the accumulated debt.

MONTREAL — Dorel Industries Inc. says it will continue to pursue its business strategy going forward after terminating an agreement to go private after discussions with shareholders.

« Moving ahead. Business as usual, » a spokesman for the company said in an email on Monday.

A group led by Cerberus Capital Management had previously agreed to buy outstanding shares of Dorel for $16 apiece, except for shares owned by the family that controls the company’s multiple-voting shares.

But Dorel chief executive Martin Schwartz said the Montreal-based maker of car seats, strollers, bicycles and home furniture pulled the plug on a deal on the eve of Tuesday’s special meeting after reviewing votes from shareholders.

“Independent shareholders have clearly expressed their confidence in Dorel’s future and the greater potential for Dorel as a public entity, » he said in a news release.

Dorel’s board of directors, with Martin Schwartz, Alan Schwartz, Jeffrey Schwartz and Jeff Segel recused, unanimously approved the deal’s termination upon the recommendation of a special committee.

The transaction required approval by two-thirds of the votes cast, and more than 50 per cent of the votes cast by non-family shareholders.

Schwartz said enhancing shareholder value remains a top priority while it stays focused on growing its brands, which include Schwinn and Mongoose bikes, Safety 1st-brand car seats and DHP Furniture.

Dorel said the move to end the go-private deal was mutual, despite the funds’ increased purchase price offer earlier this year.

It said there is no break fee applicable in this case.

Montreal-based investment firm Letko, Brosseau & Associates Inc. and San Diego’s Brandes Investment Partners LP, which together control more than 19 per cent of Dorel’s outstanding class B subordinate shares voiced their opposition to the amended offer, which was increased from the initial Nov. 2 offer of $14.50 per share.

« We believe that several minority shareholders shared our opinion, » said Letko vice-president Stephane Lebrun, during a phone interview.

« We are confident of the long-term potential of the company and we have confidence in the managers in place.”

Many entrepreneurs have had to tap into government loans during the pandemic, at first just to survive, but now some are using the money to better prepare their businesses for the post-COVID future.

One of those businesses is Del Friscos, a popular family restaurant in Dollard-des-Ormeaux that, like many Montreal-area restaurants, has had to adapt from a sit-down establishment to one that takes orders online for takeout or delivery.

“It was hard going from totally in-house seating,” said Del Friscos co-owner Terry Konstas. “We didn’t have an in-house delivery system, which we quickly added. There were so many of our employees that were laid off that wanted to work so we adapted to a delivery system and added platforms like Uber and DoorDash.”

Helping them through the transition were emergency grants and low-interest loans from the federal and provincial governments, some of which are directly administered by PME MTL, a non-profit business-development organization established to assist the island’s small and medium-sized businesses.

Konstas said he had never even heard of PME MTL until a customer told him about them and when he got in touch, he discovered there were many government programs available to help his business get through the downturn and build for the future. “They’ve been very helpful right from day one,” said Konstas.

“We used some of the funds to catch up on our suppliers and our rents, the part that wasn’t covered from the federal side, and we used some of it for our new virtual concepts,” he said, referring to a virtual kitchen model which the restaurant has since adopted.

The virtual kitchen lets them create completely different menu items from the casual American Italian dishes that Del Friscos is known for and market them under different restaurant brand names. Under the Prasinó Soup & Salad banner, they sell healthy Greek options and their Stallone’s Sub Shop brand offers hearty sandwiches, yet the food from both is created in the same Del Friscos kitchen.