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Tag: consumer debt

  • Credit card interest calculator – MoneySense

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    Play around with our credit card interest calculator to calculate credit card interest and figure out how long it will take you to repay the debt. This tool can help you develop a plan to address your balance and avoid paying interest going forward.

    How to use the credit card interest calculator

    Our credit card interest calculator can help you figure out two key pieces of information: 

    • How much money you’ll pay in interest based on your current monthly payment
    • How many months it will take to pay off your credit card balance

    Start by inputting your credit card balance and your card’s annual percentage rate (APR). If you don’t know this number, log into your credit card account and pull up your card’s terms and conditions. 

    Next, decide if you want to see how much total interest you’ll pay based on your current monthly payment (and enter that amount) or specify your payoff goal in months to see how the total interest charges.

    How to calculate credit card interest

    Since interest is expressed as an annual percentage rate, card issuers take several steps to determine how much to charge each month. Here’s how you can figure out their method:

    1. Convert your APR to a daily rate. Most issuers charge interest daily, so divide the APR by 365 to find the daily periodic interest rate. Make sure you’re using the purchase interest rate (not the cash advance or balance transfer rate).
    2. Figure out your average daily balance. Check your credit card statement to see how many days are in the billing period. Then, add up each day’s daily balance, including the balance that carried over from the previous month. Once you have all the daily balances, divide the figure by the number of days in the billing period to find your average daily balance.
    3. Multiply the balance by the daily rate, then multiply the result by the number of days in the cycle. Now that you have all the details you need, multiply the average daily balance by your daily periodic interest rate. Then multiply that number by the number of days in the billing cycle. This shows you how much interest you’ll pay in a month.

    A quick example

    If you have a credit card with a $1,000 balance and 20% APR, your daily interest rate would be 0.0548%. Assuming you don’t add to the debt, you’ll be charged around $0.55 in interest every day. If there are 30 days in the billing cycle, you’ll pay $16.50 in interest for the month.

    How to avoid paying credit card interest

    When you get a credit card statement each month, you’ll see a minimum payment amount listed. This is often a flat rate or a small percentage of your balance (usually 3%), whichever is higher. 

    While it’s tempting to just pay the minimum payment your credit card issuer asks for, doing so guarantees you’ll be charged interest because you’ll be carrying a balance into the following month. 

    Instead, make a point of paying off your balance in full every month. Not only will you avoid paying credit card interest, but your card issuer will report these payments to the credit monitoring bureaus, which can boost your credit score. Plus, the cash back or rewards you earn with the card won’t be offset by the interest you’re charged, so you truly get more out of using your card.

    How to reduce credit card debt

    If you already have a credit card balance, don’t despair. There are strategic things you can do to get out from under credit card debt.

    1. Negotiate with your credit card provider

    As a first step, call your bank or credit card provider to request a lower interest rate. Your card issuer may be willing to work with you, so don’t hesitate to ask. They might agree to lower your rate, offer to switch you to a lower-interest card, or create a repayment plan that works for your situation—but you’ll never know if you don’t ask.

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    2. Make a budget and pay with cash or debit

    It’s important to honestly track your income and expenses so you can trim unnecessary costs. Stop charging purchases to your credit cards and switch to cash or debit, instead.

    While it might seem difficult, try to contribute to an emergency savings fund. If an unexpected expense comes up (like an appliance repair or vet bill), you can pull from your fund rather than charge it to your credit card.

    3. Open a balance transfer credit card

    If you have significant debt, find a balance transfer credit card with a great promotional rate. Then, move your existing balance to the card. You can quickly pay down the balance while you’re not being charged interest. The golden rule of balance transfer cards: never charge new purchases to the card.

    Canada’s best credit cards for balance transfers

    4. Try the avalanche or snowball repayment strategy

    There are two main approaches to paying off debt:

    • Avalanche method: Focus on paying off the debt with the highest interest rate first, while making only the minimum payments on your other accounts. Once the highest-interest debt is paid off, move on to the next-highest-interest debt.
    • Snowball method: Start by paying off the debt with the smallest balance first, while continuing to make minimum payments on your other debts. After clearing one debt, move to the next-smallest balance. This method may cost more in interest over time, but it can provide strong motivation and momentum to stay on track with debt repayment.

    5. Work with a credit counselling agency.

    It’s completely understandable to feel overwhelmed by your credit card debt, which is why a credit counsellor can be so helpful. Speak to representatives from your financial institution, a credit counselling agency, or a debt consolidation program to discuss your options. They can help you create a tailored plan to resolve the situation.

    5. Consider debt consolidation.

    If you’re juggling multiple loans and credit card balances and having trouble paying them off, it may make sense to consolidate your debt. This means combining two or more debts into one, with just one payment to make each month.

    Another option is a debt consolidation loan from a bank or other financial institution. Or you could work with a credit counselling agency to negotiate a debt consolidation program (DCP) or consumer proposal (repaying only part of your debt) with your lenders.

    Learn more about each of these options by reading “How to consolidate debt in Canada” and “Who should Canadians consult for debt advice?”

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    Jessica Gibson

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  • GoFundMe CEO says the economy is so bad that more of his customers are crowdfunding just to pay for their groceries | Fortune

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    GoFundMe’s CEO just said the quiet part out loud: in this economy, more Americans are crowdfunding groceries to get by.

    The head of GoFundMe, Tim Cadogan, told Yahoo! Finance the economy is so challenged that more Americans are raising money to buy food—an arresting data point that captures the widening gap between household budgets and basic needs.

    In a recent interview on the Opening Bid Unfiltered podcast with Brian Sozzi, he described a notable rise in campaigns for essentials like groceries, a shift from one-off emergencies toward everyday survival.

    “Basic things you need to get through life [have] gone up significantly in the last three years in practically all our markets,” Cadogan said.

    That evolution underscores the new economic reality for many Americans: persistent inflation, higher borrowing costs, and thin financial cushions are forcing many households to triage bills, juggle debt, and seek help in new ways.

    Groceries as the new emergency

    Cadogan’s observation—that more people are asking strangers to help pay for staples—marks a sobering turn for a platform historically associated with medical bills, disaster relief, and community projects. When the cost of food stretches paychecks past the breaking point, crowdfunding morphs from altruism to a parallel safety net.

    In previous Fortune coverage of inflation’s long tail, consumers’ coping tactics have included trading down brands, shrinking baskets, delaying car repairs, and leaning on credit cards. The shift Cadogan describes suggests those tactics have run out of runway for a growing slice of the country, especially younger and lower-income households who rent, commute, and carry variable-rate debt.

    The inflation aftershock

    Even as headline inflation cools from its peak, elevated price levels remain embedded in household budgets. Fortune has tracked how cumulative inflation, not just the monthly prints, weighs on families. For instance, groceries cost more than they did two or three years ago, rents have reset higher, and child care is straining paychecks.

    Wage gains helped many workers, but unevenly and often after costs had already jumped. For families without savings buffers, a higher cost baseline is the real story. That backdrop explains why an uptick in grocery campaigns on GoFundMe isn’t a curiosity—it’s a barometer of the current economy.

    The credit crunch at the kitchen table

    Household balance sheets have been whipsawed by stubbornly high prices on necessities as well as steeper borrowing costs on credit cards and auto loans. Fortune’s reporting has highlighted rising delinquency rates among younger borrowers and the squeeze from student loan repayments resuming after a long pause. For some, the social capital of friends, community groups, and online donors now substitutes for financial capital. Crowdfunding groceries is a last-mile solution in a system where wages, benefits, and public supports haven’t fully bridged the gap.

    The Great Wealth Transfer meets a giving plateau

    Cadogan also frames this moment as an opportunity: the U.S. is entering a historic wealth transfer as baby boomers pass tens of trillions to heirs and philanthropy. Yet overall charitable giving as a share of GDP has struggled to break out sustainably above roughly 2%. A central challenge is converting private balance-sheet strength into public generosity at scale. Fortune has explored the paradox of robust asset markets—fueled by equities, real estate, and private investments—coexisting with widespread financial insecurity. The wealth transfer could amplify that divergence or narrow it, depending on whether inheritors and living donors commit to more dynamic, needs-based giving.

    Gen Z, millennials, and a new donor thesis

    The GoFundMe CEO hopes younger donors, who are often more values-driven, digitally native, and community-oriented, will push giving higher and faster.

    These cohorts already power mutual aid networks and micro-giving online; the question is whether that instinct can scale beyond one-off campaigns to sustained support for food security, housing stability, and local services.

    If employer matching, donor-advised vehicles, and purpose-built funds become easier to use—and if transparency and immediacy remain high—small-dollar giving could compound into a measurable macro effect.

    What comes next

    Many Americans remain one shock away from going into arrears. More GoFundMe campaigns for groceries fits that narrative and raises a challenge to wealth holders on the cusp of inheritance decisions.

    If the wealth transfer is the economic story of the decade, the generosity transfer might be its moral counterpart. Whether giving can rise meaningfully above its long-running share of the economy will hinge on channeling today’s empathy into tomorrow’s infrastructure, so that no one needs to pass the hat to put food on the table.

    For this story, Fortune used generative AI to help with an initial draft. An editor verified the accuracy of the information before publishing. 

    Fortune Global Forum returns Oct. 26–27, 2025 in Riyadh. CEOs and global leaders will gather for a dynamic, invitation-only event shaping the future of business. Apply for an invitation.

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    Ashley Lutz

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  • 1.4 million Canadians missed a credit payment in second quarter – MoneySense

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    It shows 1.4 million Canadians missed a credit payment in the second quarter. While that’s up by 118,000 compared with the same time last year, it’s down slightly from the first quarter. 

    Rebecca Oakes, vice-president of advanced analytics at Equifax Canada, said it’s “a bit of good news” to see the delinquency rate levelling off. “We’re starting to finally see that stabilize a little bit,” she said in an interview.

    “The less good news, though, is that below that high level number, we’re still seeing this financial gap widening for some groups of consumers,” she added, particularly between home owners and non-home-owners. 

    Widening gap between home owners and non-home-owners

    About one in 19 Canadians without a mortgage missed at least one credit payment, compared with one in 37 home owners, the report said. 

    Total consumer debt rose 3.1% year-over-year to $2.58 trillion, Equifax said, while average non-mortgage debt per consumer increased to $22,147.

    Oakes said various factors, including high unemployment and economic uncertainty—amplified by trade disruptions—have made it harder for many Canadians to keep up with day-to-day expenses. 

    Consumers under the age of 36 are being hit the hardest, the report suggests.

    Canada’s best credit cards for balance transfers

    Affordability crisis is affecting younger Canadians most

    Millennials and Gen Z saw their average non-mortgage debt rise 2% to $14,304 from a year ago. The group’s 90-plus days non-mortgage balance delinquency rate also rose to 2.35%—a 19.7% jump year-over-year. 

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    “The affordability crisis seems to be hitting younger consumers the hardest,” Oakes said. “Between rising costs, employment uncertainty, and limited access to affordable credit, many are struggling just to stay afloat.”

    Also, many home owners who locked in lower mortgage rates during the height of the pandemic could see their payments rise upon renewal. 

    “Payment levels are going up for many consumers when they’re renewing their mortgage and when that is a little bit too much, the first place you tend to see that is (missed payments) on things like credit cards,” she said.

    Ontario remained the hot spot for financial distress in the second quarter. The 90-plus day delinquency rate was 1.75%, which is 15.2 basis points higher than the national average, the report said. 

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    Rates of missed payments are higher in Toronto and surrounding areas

    The rates of missed payments were even higher in the city of Toronto and the surrounding area, which are exposed to the tariff-hit auto and steel sectors. 

    However, Oakes said the financial gap between home owners versus non-home-owners in Ontario peaked last year and has started to come down.

    Another credit-tracking agency, TransUnion, released its second-quarter consumer credit report last week. It said consumer debt reached $2.52 trillion in the second quarter, up 4.4% year-over-year.

    “Subprime consumers are more likely to feel the impact of higher costs of living and may choose to take on additional debt, such as credit card balances, to help cover the costs of goods and services,” Matthew Fabian, director of financial services research and consulting at TransUnion Canada, said in a statement.

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    The Canadian Press

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  • Personal loan versus line of credit: Which should you choose? – MoneySense

    Personal loan versus line of credit: Which should you choose? – MoneySense

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    Personal loans vs. lines of credit

    With a personal loan, you borrow a single (fixed) amount of money from a bank or other lender. In return, you agree to pay back the principal plus interest over a certain period of time. This is called “installment credit.” Often, personal loans are for specific expenses. For example, you might apply for a car loan to buy a vehicle, or a debt consolidation loan to reduce your debt. Personal loans can be secured with collateral or unsecured, and the amount you’re eligible to receive is tied to your credit history and financial picture.

    When you’re approved for a line of credit, the bank, firm or lender extends a certain amount and you can borrow on an as-needed basis. Whatever you pay back, you can access the credit again, just like with a credit card. This is called “revolving credit.” You can use the money for any purpose you wish. Just like with loans, lines of credit can be secured or unsecured. 

    Here are the key differences at-a-glance.

    Personal loan Line of credit
    Type of credit Installment (non-revolving) Revolving
    Payment schedule A fixed amount over a fixed time period. As-needed, with a minimum monthly payment if you borrow
    Interest rates Fixed or variable Usually variable, and tied to the Prime Rate (which is currently 6.45%.)
    Interest applicability On the whole loan Only on what you borrow
    Extra fees Transaction or service fees Transaction or service fees
    Uses A need specified when applying Any purpose, no need to reveal

    Pros and cons of a personal loan

    Here are the pros and cons for personal loans.

    Pros

    • Interest rates can be lower than with credit cards
    • The fixed payment schedule ensures your loan will be repaid by a certain date.

    Cons

    • Typically higher interest rates than the majority of lines of credit.
    • To use more credit you have to refinance the loan or get a separate loan.
    • Lenders may charge fees for administering the loan.
    • There might be limitations on what you can spend the money on. A car loan is only for the purchase of a vehicle, which may seem obvious, but other loans may only be used for renovations or debt consolidation. 

    Pros and cons of a line of credit 

    Here are the pros and cons for lines of credit.

    Pros

    • Typically have lower interest rates than personal loans.
    • Interest is only charged on the portion of credit used.
    • There is no fixed term so you can pay it off at any time without penalty (as long as you pay the minimum monthly amount).
    • The credit is “revolving”, meaning that once you pay it back you can borrow again without refinancing.
    • You can use the money for any purpose.

    Cons

    • Interest rates are variable, based on the prime rate, so the loan rate will fluctuate. For example, you might have a line of credit where the interest rate is prime + 1.5%. As the prime rate changes, so will the total interest on your line of credit.
    • Lenders often offer the maximum amount which can make it easy to overborrow. 
    • As there is no fixed payment schedule, you must manage repayment on your own. 
    • A secured line of credit against your home (like a HELOC) will require a one-time appraisal as well as legal fees. 

    How interest rates work for loans and lines of credit

    The interest you pay on a personal loan or a line of credit will depend on many factors including the lender, your credit history, the terms of the credit and the prime rate (in the case of variable interest). That said, these are the variables you can negotiate to get the best rates. 

    For a personal loan:

    • Interest rate
      Look for the lowest rate available to you, and decide whether you prefer a fixed or variable rate. 
    • Fixed or variable rate
      Loans most often incur a fixed rate, meaning that the interest is the same throughout the term of the loan. With a variable-rate loan, the interest rate will change in the same direction as the prime rate. 
    • Secured or unsecured
      You might negotiate a lower interest rate if you can secure the loan with collateral, such as a home. 
    • Amortization period
      Amortization is the amount of time you take to pay off the loan and can range from six months to 60 months (five years) for personal loans, reports the Financial Consumer Agency of Canada. Adjusting your amortization period might affect your interest rate.
    • Fees or penalties
      Loans come with fees. With personal loans, for example, you may pay a penalty if you pay it off early.

    For lines of credit:

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    Keph Senett

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  • Canadian consumer debt: How we’re paying for our credit cards – MoneySense

    Canadian consumer debt: How we’re paying for our credit cards – MoneySense

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    What is causing debt for Canadians?

    Matthew Fabian, director of financial services research at TransUnion Canada, said many household incomes are not keeping up with inflation and higher interest rates, leaving them to rely on credit.

    “Consumers that have had significant increases in their mortgage payment have made that deliberate trade-off to pay less on their credit card and in some cases, they’re missing their payment,” Fabian said in an interview. “We’ve seen a higher delinquency rate in credit cards for those consumers that have mortgages than traditional credit card consumers.”

    How much debt do Canadians have?

    Total consumer debt in Canada was $2.38 trillion in the first quarter, compared with $2.32 trillion in the same quarter last year, and down only slightly from a record $2.4 trillion in the fourth quarter. The report said 31.8 million Canadians had one or more credit products in the first quarter, up 3.75% year-over-year. The jump was mainly driven by newcomers and gen Z signing up for their first credit products. The report showed there was a 30% surge in outstanding credit card balances for the gen Z cohort compared with the previous year.

    “The younger generation (is) only getting access to credit for the very first time in their life,” said Fabian. “They’re still learning how to use it, they’re still learning what it means to pay your monthly obligations.”

    Meanwhile, millennials held the largest portion of debt in the country—about 38% of all debt—likely due to higher credit needs as they grow older, according to the report. “They’re in the life stage where they’re probably having children, getting houses and have auto loans,” Fabian said. “The structure of the debt is shifted where 10 years ago, the majority of them would have had credit cards and car loans.” (Read: “How much debt is normal in Canada? We break it down by age”)

    Are mortgages in Canada at risk for defaults

    Fabian said he isn’t overly concerned about households falling behind on their mortgage payments because of the strict screening process established by the banking watchdog to qualify for a mortgage. He also said cash-strapped consumers will typically pay their mortgage first at the expense of other credit products like their auto loan or credit card. 

    Even though there are concerns about missed payments among the vulnerable population, Fabian said, “We’re still seeing pretty decent resiliency in the Canadian consumer base, especially when you look at how quickly it’s grown with gen Z and the volume of credit participation.”

    He added interest rate cuts, which are anticipated as early as June, can lessen the burden on households over time. “Our expectation is that the market will start to correct back to normal,” Fabian said.

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    The Canadian Press

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  • What happens if you get rejected for a credit card? – MoneySense

    What happens if you get rejected for a credit card? – MoneySense

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    Having a delinquency on your credit report can also make it more challenging to get approved for a credit card as banks see you as a high-risk applicant. Whether you’ve missed a payment or experienced a financial setback that led to your debt going to collections, having a delinquency on your record can significantly impair your credit score and make it very hard to get approved for most credit cards. So, if you do have a delinquency on your report, work to resolve the issue and settle any amounts in collections before applying for new credit.

    5. You’ve applied for a lot of credit recently 

    Applying for several credit cards in a short time can be a red flag. Lenders can view this as a sign of desperation for credit and worry that you’re borrowing more than you can handle, which could affect your ability to make the minimum payments. 

    In addition, every new credit-card application generates a hard inquiry that will lower your credit score. Hard credit inquiries account for 10% of your credit score so it is important to only apply for new credit products you need, one at a time. If you’re rejected for a credit card, wait between three and six months before reapplying to limit the impact of hard inquiries. 

    6. You have too much debt 

    If you already have a lot of debt through loans, mortgages and high credit-card balances, opening a new credit card could be seen as a warning sign to lenders that you are having problems paying down your existing balances. They might flag you at a higher risk of defaulting and reject your application. 

    When it comes to assessing your creditworthiness, lenders focus not just on the amount of debt you owe, but also look at how much of available credit you’re using. This is known as credit utilization, which makes up 30% of your credit score. Try to keep your utilization under 30% of available credit for maximum positive impact on your score. For example, if you have $10,000 in total credit available to you, try not to carry a balance of more than $3,000 at any given time. This shows lenders you can manage your credit responsibly.

    7. There’s an error on your credit file 

    If you’ve been turned down for a credit card (even if you have an excellent credit score), but have no debt and a clean payment history, it’s worth checking your credit report for errors. Incorrect payment details could be affecting your credit score—and, in turn, your eligibility to get approved for new credit. 

    You can identify this by reviewing your credit report regularly to see what’s documented and make sure the information is correct. For no charge, you can remove incorrect information by filing a dispute directly with the credit bureau.

    8. You don’t meet the age requirements

    In Alberta, Saskatchewan, Manitoba, Ontario, Quebec and Prince Edward Island, you must be at least 18 years old to obtain credit. In all other provinces and territories, the minimum age is 19. If you don’t meet these age requirements, your credit card application will automatically be denied, so hold off until you are eligible. 

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    Doris Asiedu

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