Credit card debt can quickly pile up with high interest rates and monthly minimum payments that barely make a dent. If you’re struggling with multiple credit cards in Canada, consolidating your debt can be a smart strategy to regain control of your finances — but it’s important to do it right.
In this article, we’ll walk you through how to consolidate credit card debt in Canada in 2025, with tips to save money and reduce stress.
🔍 What Is Debt Consolidation?
Debt consolidation means combining multiple debts into one single loan or payment plan. Instead of juggling several credit cards, each with different balances and interest rates, you pay off all your cards using one loan with a potentially lower interest rate.
✅ Benefits of Consolidating Credit Card Debt
- Lower interest rates: Personal loans or lines of credit usually offer lower rates than credit cards.
- Simplified payments: One monthly payment is easier to manage.
- Potential credit score improvement: Paying off cards can reduce your credit utilization ratio.
- Clear payoff timeline: Fixed-term loans have a set repayment schedule.
💡 Smart Ways to Consolidate Debt in Canada
1. Apply for a Personal Loan
A personal loan is one of the most common ways to consolidate credit card debt. You borrow a lump sum to pay off your cards, then repay the loan over time with fixed monthly payments.
- Look for loans with interest rates lower than your credit cards.
- Check lenders like RBC, TD, or online platforms such as LoanConnect.
2. Consider a Home Equity Line of Credit (HELOC)
If you own a home, a HELOC lets you borrow against your home’s equity at a lower interest rate than credit cards.
- Great for large balances, but be cautious — your home is collateral.
- Requires good credit and sufficient equity.
3. Use a Balance Transfer Credit Card
Some Canadian credit cards offer balance transfers with 0% interest for a promotional period.
- Transfer your high-interest balances to one card.
- Pay off as much as possible before the promo ends to avoid high rates.
⚠️ What to Watch Out For
- Fees: Some loans and balance transfers come with upfront fees.
- Higher risk: Using a HELOC puts your home at risk if you can’t repay.
- New debt temptation: Avoid adding new credit card debt after consolidation.
📊 Steps to Get Started
- Calculate your total credit card debt.
- Check your credit score.
- Compare consolidation options and interest rates.
- Apply for the best option you qualify for.
- Use the loan proceeds to pay off all credit cards immediately.
- Create a budget to stay on track with payments.
📌 Final Thoughts
Consolidating credit card debt in Canada can be a powerful tool to save money and simplify your finances — but only if you plan carefully and choose the right option for your situation. Always read the terms, avoid accumulating new debt, and focus on paying down your balance.