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How Our New Debt Calculator Can Help You

by:
Anna Guglielmi

Unless you’ve created a budget and spending plan, it can be difficult to truly know where you stand financially. So how great would it be if you could get your financial outlook in seconds, with just a few clicks of a mouse or taps on your phone? Now you can! Credit Canada’s new Debt Calculator gives you an inside look at your situation, so you can determine the best way to begin paying down those debts. Best of all, it’s completely free to use!

How our free Debt Calculator works

First, you’ll need to round up your credit card statements, or just go online to get your balances and the annual percentage rate (APR) for each credit card—that’s the amount of interest you pay on your card over the course of a year (and it’s also a big factor for many people’s debt problems!). Armed with this information, you simply plug the data into the Debt Calculator, and voila! A whole host of information arrives.

The Debt Calculator lays out a variety of different payment methods, so you can determine what's the best debt repayment option for you. It will show you how long it will take to pay off your debt using each of the following methods:

Making minimum payments

This, of course, is simply paying the minimum required to keep your credit report clean—and keep the creditor or collection agents from calling you! But be forewarned, the outlook of becoming debt-free using this method is usually pretty grim. Happily, there are other options!

The snowball method

This involves paying as much money as possible towards your smallest debt, regardless of the interest rate, while maintaining just the minimum payments on all your other debts. Once the smallest debt has been paid off, you roll the money you were paying toward that debt into your payment towards the next smallest debt, and so on. This way, you continue to increase the amount you’re paying towards your smallest debts, knocking them off one by one, as your payments “snowball” into faster debt repayment.

The avalanche method

This involves paying the minimum on all of your debts, but paying the most money you can towards the debt with the highest interest rate first, regardless of how much money is owed. Then, once that debt has been paid off, you roll that payment you were making into the next debt with the highest interest rate, and so on. While it might take longer to eliminate your first debt based on how high the balance is, in the long-run you're likely to save hundreds, if not thousands of dollars in interest charges.

Debt consolidation loan 

This involves taking out one large loan (ideally from a first-tier lender, like your bank) in order to pay off all your debts. However, in order to get a debt consolidation loan, you need good credit—something that many people struggling financially simply don’t have. So while the numbers here may look promising, this might not be a viable option for many. Also, many people have gotten into further trouble with a debt consolidation loan because it puts their credit card balances back at zero (because they've all been paid off thanks to the loan) so they start racking up debt again—and that's on top of the massive loan they have to pay back!

Debt Consolidation Program 

This involves rolling all of your debt into one monthly payment through a non-profit credit counselling agency, like Credit Canada. In a Debt Consolidation Program, a certified credit counsellor will work with your creditors to help you pay off your debts over time, while reducing or stopping the interest, and then provide expert money management advice along the way. And the best part is that you don't have to face your debt alone—you'll have your counsellor on your side!

The Debt Calculator goes into more detail regarding each repayment method, such as how much your payment would be every month, how long it will take you to be debt-free, and how much interest you'll pay in the process. And that’s not all! You can also request a more detailed report highlighting amortization rates for each method too.

At Credit Canada, we truly care about people and their financial well-being, because it can impact so many other areas of in our lives. That why we made the Debt Calculator completely free and easy to use. It’s also mobile-friendly, so you can get your results on the go. (We’ll also email you a free report that you can print out for reference, too.)

Ready to look into your financial future? Check out our Debt Calculator now. And once you’ve received your report, if you’d like to speak with a credit counsellor about your results and what you can do, give us a call at 1.800.267.2272 and we'll book you a free counselling session. All of our counselling is free, and so is the advice! We can even help get you enrolled into a Debt Consolidation Program if that's your best option. We're always happy to help and it's just one phone call away.

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Topics: Debt Calculator

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