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As COVID cases continue to spike across the country, the prospect of another lockdown is becoming increasingly more likely.
Many Canadians are still feeling the pinch from the first wave — and with the end of CERB — a second lockdown will mean more layoffs and less relief during an already stressful time.
If you’re leaning on your credit cards during the pandemic in the hope that things will return to normal soon, you could be waiting a while.
And if you’ve only been making the minimum payments each month, you’re probably racking up a mountain of interest that’s just going to snowball if you leave it unchecked.
Stopping the interest avalanche and paying off your credit card bill sooner is a possibility if you look at getting a debt consolidation loan through a free service like Loans Canada.
Please note that this post is a sponsored collaboration with Loans Canada, but the opinions and writing shared are my own.
How does debt consolidation work?
Managing multiple credit cards can be overwhelming, especially if you’re juggling different due dates and interest rates.
When you consolidate your debt, you’re basically trading in all of your existing bills for a single loan at a much lower rate.
You’ll only have one payment to make each month, and if you choose a fixed plan you’ll know the exact date when your debt will be fully paid off.
You’ll also be able to set the terms of your loan based on your financial goals — you can go with a shorter repayment plan if you want to become debt-free sooner, or a longer plan if you just want to reduce your monthly payment.
Services like Loans Canada can help you find the lowest rate available to you on debt consolidation loans from Canada’s top lenders.
All you have to do is fill out a simple application form and you get matched with the best option for your specific financial needs.
Depending on how much interest you currently pay on your cards consolidating your debts could save you thousands of dollars.
Here’s how much you could save
Let’s say you owe $15,000 on two different credit cards at two different interest rates:
|Total Owed||Interest Rate||Minimum Payment|
|Credit card #1||$10,000||22%||$300|
|Credit card #2||$5,000||18%||$150|
With just the minimum monthly payments, it’ll take you over 25 years to fully pay off your debt, and you’ll spend $19,907 in interest alone. Yikes.
But with a good credit score and assuming you’re able to consolidate your debt into a 48-month loan at 8% interest, you can lower your monthly payment by $83, save $17,330 in interest, and pay off your debt more than 21 years sooner.
That’s a huge difference.
A simple way to break free from debt
With the threat of another lockdown growing, cut yourself loose from your high-interest credit cards.
Loans Canada can help you consolidate your credit card bills, avoid spending thousands of dollars extra on interest, and clear your debt years — or possibly decades — sooner.
So take the first step towards financial freedom and apply today.
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