Is it normal to have credit card debt?
Carrying a balance on a credit card is quite common. According to CreditCards.com Canadians carried (on average) about $3,953 per person in credit card debt in 2016. The average total household debt was around $200,000 (including mortgages), which means around 5% to 8% of household debt in Canada is being held on credit cards.
This probably isn’t a good thing for Canadians because most credit cards have a high interest rate. This makes them relatively hard to pay off compared to most personal loans and lines of credit. According to the same page of statisitcs, around 1% of credit card owners have trouble keeping up with their payments and are three months or more behind.
All of this indicates having an ongoing credit card balance (one that is not paid off every month in full) is common. However, while it’s normal to have credit card debt, it’s not a good idea if it can be avoided. Credit card debt typically comes with higher interest rates making it costly (and sometimes time consuming) to pay off, and the debt may damage a person’s credit score if it’s not paid off in a timely manner.
When it comes to credit cards it’s best to pay off the entire statement balance before the due date. If this isn’t possible, and it may take a few months to pay off, then it’s probably worth getting a low-interest personal loan or line of credit. These have lower interest rates – usually a third of the rate of a credit card (typically 19% versus 7%)- and will be easier to pay off. Using a line of credit to pay off the credit card and then working toward paying down the line of credit will be less expensive.
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