When it comes to debt, it’s always in your best interest to get a jumpstart at paying it off, especially if you want to avoid being in debt for years to come. Easier said than done, we know.

While some borrowers only have to deal with a moderate credit card bill every month, many are currently trying to pay off thousands of dollars in high-interest debt, car loans, and mortgages. The good news is that no matter what kind of debt you have, the same core principles will help you pay it off faster: lower your interest rate, pay more than the minimum, and put every extra dollar toward your principal.

How Fast Can You Pay Off Debt?

How quickly you can become debt-free comes down to three things: how much you owe, your interest rate, and how much you can put toward your debt each month. The higher your payment and the lower your interest rate, the faster you’ll get there.

To see the difference for yourself, plug your numbers into a debt repayment calculator. It will show you how much sooner you can be debt-free (and how much interest you’ll save) by increasing your monthly payment or lowering your rate. As you’ll see below, even small increases to your payment can shave years off your timeline.

How Much Debt Does The Average Canadian Have?

Debt is a reality for most Canadian households. According to Statistics Canada’s Survey of Financial Security, credit cards and vehicle loans make up a large share of the average family’s consumer debt. Here’s how the average balances stack up by type.

Can You Pay Off Debt Early?

In most cases, yes. Credit cards, lines of credit, and most personal and car loans can be paid off ahead of schedule, and doing so saves you money on interest. That said, some loans and closed mortgages come with prepayment penalties that charge you a fee for paying off your balance early or for paying more than a set annual limit.

Before you make a large lump-sum payment, check your loan or mortgage contract for any prepayment restrictions. If a penalty applies, do the math to make sure your interest savings outweigh the fee. In many cases they will, but on a fixed-rate mortgage the penalty can be steep, so it’s worth confirming first.

Best Methods To Pay Debt Off Fast

There are many different strategies and tools to help you pay off your debt, but these are ways to help you pay it off faster. No matter which type of debt you’re focused on, start with these two foundational methods.

Should You Pay Off The Highest Balance First Or The Debt With The Highest Interest Rate?

There are certain debt repayment methods that are designed to help you eliminate all your debt in a timely fashion, specifically the snowball and avalanche methods. While one focuses on paying off the smallest balance first, the other focuses on paying off the debt with the highest interest rate first.

Snowball Method

The snowball method is a debt repayment strategy that involves first paying off your smallest balances. The concept is to focus on debts that can be paid off the fastest. This will, hopefully, get you motivated and provide momentum to repay all your debt. For all other debts, you’ll make the minimum payment amount every billing cycle to ensure you don’t fall behind.

The money that you otherwise would have used to pay that first credit product is now available to put toward the next lowest-balance debt. Continue this cycle until all your debt has been eliminated.

Avalanche Method

The avalanche method focuses on paying the highest-rate debt first. The idea here is to help you save on interest payments.

Once the higher-interest debt is paid down, you can then use that money toward the account with the next highest rate. The process continues until all your debt is repaid.

Not sure which order makes the most sense for your specific debts? Your balances and interest rates will point you to the right one, and either method works as long as you stay consistent.

Pay More Than The Minimum

When you have a lot of debt spread across multiple cards, just keeping up with the minimum payments can be tempting. After all, at least you would be avoiding a penalty, right? This is a bad idea. While you might not notice it at first, the interest that accumulates with every unpaid amount can add up to way more than you anticipated.

As such, paying more than the minimum payment is important when trying to pay off your debt fast.

How Long Would It Take To Pay Off Debt With Minimum Payments?

If you have a credit card with a balance of $2,000, how long would it take you to pay off versus making regular payments above the minimum? Here’s an example:

Best Ways To Pay Off Credit Card Debt Faster

Credit cards carry some of the highest interest rates of any debt, often over 20%, so they’re usually the most important to tackle first. Here’s how to pay off credit card debt faster.

Pay More Than The Minimum

As the example above shows, making only the minimum payment on a credit card can keep you in debt for over a decade while interest keeps piling up. Paying as much over the minimum as you can afford is the single most effective way to pay off credit card debt faster, since more of your money goes toward the principal instead of interest.

Try A Balance Transfer

A credit card balance transfer involves moving your balance from one account to another with a low or 0% interest rate. The principal amount will not change, but you’ll be able to save a lot of money in interest thanks to the much lower rate. As such, you’ll be able to repay your debt faster, since more money will eventually go toward repaying your principal and less toward interest.

Keep in mind that the low or 0% introductory interest rate on your new credit card is only temporary. These introductory periods usually last anywhere from six to 18 months. If you don’t repay your balance by the end of the introductory period, you’ll begin paying the regular interest rate on the card, which could be over 20%.

As such, it’s best to transfer your balance only if you think you’ll be able to pay down your entire balance within the introductory period. That way you can take advantage of zero or low interest, which can save you a ton of money. Otherwise, it may not be worth the effort.

Get A Debt Consolidation Loan

If you have accumulated a lot of high-interest debt, then a debt consolidation loan is a good solution. When you have multiple debts to keep track of, it can cause you to miss payments, which can worsen your debt issues and may even affect your credit scores.

With a debt consolidation loan, your lender would grant you one big loan to pay off all your smaller ones. You can then pay back the loan through single monthly installments, making it easier to manage. The goal is also to qualify for a loan with a lower interest rate to help lower the total interest you owe. This in turn can help ensure more of your payment goes toward the principal, leaving you debt-free faster.

Use Your Home Equity

If you’re a homeowner, you may be able to tap into your home equity and take out a home equity line of credit or a home equity loan. These are loans that are secured against the equity in your home. They are good options for consolidating debt because they often have very low interest rates. You can then take advantage of these rates and consolidate your high-interest debt, which will allow you to pay off your debt faster.

Best Ways To Pay Off A Line Of Credit Faster

A line of credit is revolving debt, which means you can keep borrowing as you repay it. That flexibility can make it easy to carry a balance for years if you only cover the interest. Here’s how to pay it off faster.

• Pay more than the minimum. The minimum payment on a line of credit is often interest-only, which never touches what you actually borrowed. Set a target payoff timeline, calculate the payment needed to hit it, and pay that fixed amount every month instead of just the minimum.
• Make lump-sum payments. If you receive a tax refund, bonus, or other unexpected income, put it straight toward your line of credit. Because there are usually no prepayment penalties, every extra dollar reduces your principal and your interest.
• Convert the balance to a fixed loan. Some lenders let you lock all or part of your revolving balance into a fixed-rate, fixed-term loan. This gives you a set payment and a firm payoff date, which can be easier to stick to than an open-ended minimum. Consolidating the balance into a personal loan can accomplish the same thing.

Best Ways To Pay Off Car Loan Debt Faster

Car loans are usually a fixed amount with a set term, so the main levers are lowering your rate and shortening your timeline. Here’s how to pay off car debt faster.

Refinance Your Car Loan

If your credit score has improved since you originally took out your car loan, you may now be able to secure a lower interest rate. If so, consider refinancing your car loan. By refinancing at a lower interest rate, you can save a lot of money in interest and repay your debt faster.

Alternatively, you can refinance your car loan to shorten the loan term. While your regular payments may be higher, you can repay the loan much faster and save a lot of money in interest.

If refinancing your car loan sounds appealing, then consider using SafeLend to facilitate the process. SafeLend is an online lending platform that provides car loan refinancing solutions to help consumers reduce their loan amounts by lowering their rates without having to trade in their cars.

Trade In For Something Cheaper Or Sell Your Car

If you can part with your vehicle or have more than one, consider selling it. Liquidating your vehicle will bring in a large sum of money that you can use to pay down your debt. Alternatively, you can trade in your current vehicle for a cheaper, more affordable one, which lowers your monthly payment and frees up cash to put toward your other debts.

Best Ways To Pay Off Personal Loan Debt Faster

Personal loans usually have a fixed rate and term, so paying one off faster comes down to putting more money toward the principal and, if possible, lowering your rate.

• Make extra or larger payments. Putting more toward your loan each month, or making an extra payment when you can, reduces your principal faster and cuts the total interest you pay. Ask your lender to apply any extra amount directly to the principal.
• Refinance to a lower rate. If your credit has improved, refinancing your personal loan at a lower interest rate means more of each payment goes to the principal, so you become debt-free sooner.
• Watch for prepayment penalties. Some personal loans charge a fee for paying off your balance early. Check your loan agreement first, and if a penalty applies, confirm that your interest savings still come out ahead.

Best Ways To Pay Off Mortgage Debt Faster

A mortgage is likely your largest debt, so even small changes to how you pay can save tens of thousands of dollars in interest and cut years off your amortization. Here’s how to pay off mortgage debt faster.

• Switch to accelerated payments. Choosing accelerated bi-weekly or weekly payments means you make the equivalent of one extra monthly payment each year. This simple switch can shave several years off a typical 25-year mortgage at no extra cost per payment.
• Make lump-sum prepayments. Most mortgages let you pay a set percentage of your original balance toward the principal each year without penalty. Applying a tax refund, bonus, or inheritance to your mortgage can significantly reduce your amortization and interest costs.
• Increase your regular payment. Many lenders let you raise your payment amount by a set percentage each year. Even a small increase goes straight to the principal and adds up over the life of the mortgage.
• Refinance to a lower rate. If rates have dropped or your finances have improved, refinancing can lower your interest costs. Just weigh any prepayment penalty for breaking your term against the savings.

Before making a large prepayment, read your mortgage contract carefully so you stay within your prepayment privileges and avoid penalties.

Paying Off A Fine With The Fine Option Program

Not all debt is owed to a lender. If you owe money on a court-ordered fine and can’t afford to pay it, the Fine Option Program may let you clear it without cash. The program lets you work off your fine through approved community service, earning credit toward the balance at the minimum wage rate for every hour you work.

The Fine Option Program is available in several provinces and territories, including Saskatchewan, Manitoba, and Alberta. To take part, you generally register with an approved agency after your fine has been issued, and you’re assigned community service work. It’s a practical way to satisfy a fine, avoid the risk of jail time for non-payment, and keep the debt from growing.

Unique Ways To Cut Costs And Put It Towards Your Debt

If money is tight, freeing up even a little extra cash can speed up your payoff. These strategies can help you get out of debt on a low income by cutting your everyday costs.

Food Banks

If you’re really struggling with your finances to the point that you can’t afford groceries, consider getting help from one of the many food banks around you. A quick online search will help you find a food bank near you.

Another way to help with the grocery bill is to take advantage of a grocery rebate. In 2023, the federal government issued a one-time grocery rebate to eligible low-income Canadians as part of that year’s federal budget. Couples with two children were eligible for up to $467, single Canadians with no children for up to $234, and seniors for up to $225. Keep an eye out for similar relief measures, and check your eligibility for the GST/HST credit, which is paid out on an ongoing basis.

Rent Assistance

Government-run rent assistance programs are available to help low-income renters avoid eviction if they’re unable to pay their rent. Consider the following rent assistance programs in these provinces:

• Quebec. The Low-Rental Housing Program in Quebec helps keep rent at an affordable level for low-income earners by allowing renters to pay rent equal to 25% of their income. Participants in the program are chosen based on their income and housing conditions.
• Ontario. The Canada Ontario Housing Benefit (COHB) program helps eligible participants with rental costs for housing anywhere in Ontario. The COHB covers the difference between the average market rent in the area and 30% of a person’s household’s income.
• BC. The Rental Assistance Program provides qualifying low-income families with monthly financial assistance to help cover their monthly rent. Payout amounts depend on location and size of the family.
• Alberta. The Rent Supplement Program in Alberta offers a subsidy to help keep rent affordable for those who are struggling to keep up with rising rents.

Use Free Stuff

Buying furniture, school supplies, and other items needed for everyday life can be incredibly expensive. Fortunately, there are ways to get your hands on these pricey items at a steep discount, and even for free.

Free School Supplies

Backpacks, laptops and tablets, calculators, books, and clothing are all necessary in classroom settings, but many parents cannot afford the hefty price tag. But there are plenty of ways to get these items for free, including online resources such as Freecycle, Facebook Marketplace, Just Free Stuff, and Smiley360, among others.

There are also many charitable organizations in each province that provide students with free school supplies needed during the year.

Free Furniture

You can save tens of thousands of dollars furnishing your home by getting everything you need for free. For instance, you can check local college or university campuses on the last day of school when students move out of campus and are looking to liquidate their belongings.

You can also scope out the neighbourhood for garage sales, or check out driveway curbsides on garbage day to see if anyone is getting rid of unwanted furniture that’s still in decent condition.

Free Baby Products

Having a baby comes with a myriad of new costs that you otherwise wouldn’t have to think about, including baby bottles, diapers, strollers, cribs, and formula, among other things. And throughout your child’s life, you’ll be spending a pretty penny. In fact, it costs roughly $13,000 per year to raise a child in Canada from birth to age 18.

But during those first couple of years, you may be able to alleviate the pressure on your wallet by taking advantage of freebies. One of the best ways to get free items is from baby samples provided by companies looking to gain loyal customers or to simply test out their items. Programs like Huggies No Baby Unhugged, Pampers Rewards, and Nestle Baby & Me give away tons of free products that you and your baby need.

Free Credit Score

If you’re looking to take out a loan or credit product, your credit score will impact your ability to get approved. That’s why it’s important to check your score before applying.

But you shouldn’t have to pay to see your score. There are free online platforms and tools you can use, like Loans Canada’s CompareHub tool, that let you check your credit score for free.

Never Pay Full Price

There are so many strategies you can use to reduce the price of items you need. For starters, there are always coupons and online discount codes you can use to slash the cost of goods. You should also take the time to price match, whereby retailers will lower their prices to match a competitor’s. Most major retailers price match, including Best Buy, No Frills, and Canadian Tire.

Don’t Forget About The Small Stuff

It’s not just the expensive items that cause a big dent in your budget. The little things can also impact your finances when you add them all up. Here are a few ways that the small stuff can cost you.

Buy-Now-Pay-Later

While BNPL programs can make expensive items affordable with their no-interest payment plans, it can cause a lot of debt if you’re not careful. When you have multiple BNPL purchases, it can be hard to track and cause you to rack up debt. And if you miss payments, you may be slapped with additional penalty fees.

Water Heater Rentals

Many homeowners in Canada prefer to rent their hot water tanks rather than buy them outright, to avoid making a lump sum payment for the purchase. But renting can end up costing a lot more over the long run.

For example, a brand-new hot water tank costs an average of about $1,000 and lasts an average of about 16 years. A hot water tank with a rental contract can add up to as much as $5,000 or more over a hot water tank’s average lifespan.

Too Many Monthly Service Fees

Food delivery services, streaming services, and even banking fees can really add up. For instance, paying for Netflix and Disney+ subscriptions would cost you nearly $30 per month or about $263 a year.

By simply cancelling these subscription services for a few months or a year, you can save a few hundred dollars that you can later put toward your debts.

Protecting Yourself From Debt

To protect yourself from getting trapped in a mountain of debt in the future, consider the following:

Have An Emergency Fund

It’s good practice to set aside some savings to act as a cushion should you ever experience financial challenges. At times, budgeting and reduction of expenditure are not enough to accommodate increasing monetary obligations.

You also need to consider the possibility of a financial emergency, either because of tough economic times or because of a job loss, disability, or illness. Planning ahead for such catastrophes will soften the blow once the crisis hits.

How Much Should You Have Saved?

It is generally recommended that you have 3 to 6 months of your income or your monthly expenses saved.

Get Insurance

If you’re someone who doesn’t have an emergency fund, consider getting insurance to help cover your debts in the case of illness, disability, or job loss. Here are some different types of insurance that can protect you:

• Creditor insurance provides financial assistance to you and your family by paying off your outstanding debt or taking over those payments, for a certain time period, if an unexpected event in your life makes it difficult for you to keep up with your financial obligations.
• Disability insurance replaces a portion of your income if you’re unable to work due to disability. Generally speaking, disability insurance provides between 60% to 85% of your income.
• Critical illness insurance pays out a one-time payment if you’re diagnosed with a debilitating or life-threatening illness. The amount you’re eligible for depends on the amount of coverage under your policy.

What Can You Do If You Can’t Pay Off Your Debt?

If your debt is becoming or has become too overwhelming for you to handle, reach out to a credit counsellor. They can help assess your financial situation and offer you custom debt relief solutions. While some options they may offer are simple, others might be more severe.

Depending on your debt situation, you may need a debt management program, a consumer proposal, or bankruptcy.

Additional Reading

What Debt Should I Pay Off First?

How To Avoid Debt In Canada: Tips And Tricks

Debt Management Tips For Credit Users

Bottom Line

While you can always get a side job to help whittle down your debt, there are so many other things you can do. The fastest results usually come from combining several of the strategies above: choose a repayment method, pay more than the minimum, and use the right tool for your specific type of debt to lower your interest rate. Do that consistently, and you can shave years off your timeline and save a lot of money in interest.

Debt FAQs

References

1. Statistics Canada. (2026). Household credit market debt to disposable income. Statistics Canada.
2. Statistics Canada. (2023). Assets and debts held by economic family type, by age group, Canada, provinces and selected census metropolitan areas, Survey of Financial Security (Table 11-10-0016-01). Statistics Canada.