Take the Next Step Toward Debt Freedom with Debt Counselling


You’ve tried to pay it back on your own. You’ve trimmed your expenses, you’ve increased your payments, but it feels like you’re hardly making any progress. Debt’s never easy to get out of, especially high-interest debts like credit cards and payday loans.


How High Interest Stands in Your Way

The high charges you see when you carry a balance are what make it so hard to pay down debt. Every month (or more frequently, depending on the loan), you get charged for carrying a balance and your debt grows. You’re not just repaying the money you borrowed in the first place.

The problem with interest charges is that you have to pay them off before any of your money goes to the principal (the money you initially borrowed). The principal is the base amount on which interest is charged. If you’re going to make any progress, you need more of your money to go toward the principal. The best way to do that is to increase your payments, but that’s easier said than done if you can’t raise your income or cut your expenses any further.

Ways to Get Out of Debt with Low Income

If you can’t increase your payments, the other option is to reduce your interest rates. You can reduce or even eliminate the interest rates you pay on unsecured debts with the help of a Debt Consolidation Program with the help of a non-profit credit counselling agency like Credit Canada. Here’s what you need to know about Debt Consolidation Programs:

  • A certified Credit Counsellor negotiates lower or zero interest rates with your creditors;
  • Unlike a debt consolidation loan, you don’t have to apply for a new loan;
  • You also get help with budgeting and money management to get closer to debt freedom.

A Debt Consolidation Program makes getting out of debt easier by helping you put more money toward the principal rather than getting stuck paying interest forever.

Does Paying Off Credit Card Debt Help Your Credit Score?

One of the best things you can do for your credit score is to pay off the balance. There is a common credit myth that you need to carry a balance to improve your credit score. People often say it’s because carrying a balance makes you more profitable for the credit company. But that’s not how credit scores work; they’re designed to evaluate the risk of lending to you.

In order to have a good credit score, you do need to have a credit history. That means it’s not a bad idea to use your credit card, but you don’t have to carry a balance. You’re only paying interest when you don’t have to. If you can pay in full every month, your credit score will slowly benefit.

There are cases where closing off an installment payment or line of credit can temporarily lower your credit score but that’s because closing it off reduces the amount of credit considered available to you. It’s frustrating to see that result, but by paying off everything, you can correct the temporary imbalance. Just keep your credit cards open after bringing their balance to zero.

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Take the Next Step Toward Debt Freedom with Debt Counselling
One of the best things you can do for your credit score is to pay off the balance.
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