Finance Blog


Debt Consolidation Using Credit Cards

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Studies show that the average Canadian household has a credit card balance of more than $8,000 and pays an interest rate of more than 19.99%. This translates to a total payment of $1,600 per year in interest alone. If your debts are from multiple credit cards, you can consolidate them into one or fewer cards so as to reduce the total number of bill payments you make each month.

Advantages of debt consolidation using credit cards

  • You benefit from the low-interest rates once you consolidate your debts. You will also benefit from low promotional interest rates every now and then.
  • You can conveniently track your debt when you only have one credit card debt. There is no risk of forgetting or failing to make the monthly repayments.
  • There is no restriction on the amount you need to pay every month. On a bad month, you can pay the minimum amount and pay more in good months. Repaying the debt quickly will help save on interest.


  • The majority of people who wish to consolidate their credit card loans are already in dire financial problems. This means they don’t qualify for the percent balance transfer credit card. The best balance transfer deals are offered only to persons with a clean credit history and high credit scores.
  • The low promotional interest rates are only available for a couple of months. You will not be able to clear the debt within the duration of the low promotional interest rates.
  • Normal interest rates will kick in after the promotional rate period. In Canada, the normal rates are pretty high and can deplete your disposable monthly income.
  • For the undisciplined individuals, the fact that the minimum monthly repayments are very low means you will not be pressured to clear the debt. You can take decades to clear the debt.

It is good to always discuss your situation with a credit counselor. They will let you know which debt consolidation option is best for you. It is also good to note that not every counselor will have your best interest at heart. In the search for a reputable non-profit credit counseling organization, check for their willingness to send you free information without demanding you share vital details about your situation. You also need to check for licensing and availability of other services.

Is debt consolidation using credit cards for you?

There are various considerations you need to make to determine if this option is for you:

  • How much credit card debt do you currently have?
  • How much can you honestly afford to pay for the credit card debt every month?
  • What is the duration of the low promotional interest rate or the introductory low APR window?

Debt consolidation using your credit cards is ideal if you can’t find a lender to give you the debt consolidation loan. With a single credit card, you will be able to go for a 0% balance transfer credit card which will enable you to transfer store card as well as high-interest rate credit card to the balance transfer credit card that attracts low-interest rates. The interest rates can be between 0% and 2.99%. In most cases, the interest-free grace period is between 12 and 40 months. The transfer fee charged by most lenders is between 2% and 5%.

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