How one woman paid off $50K of credit card debt

Charline Cormier remembers the dayshe realized she was trapped by debt.

A chart at the bottom of her credit card statement caught her eye. It showedhow long it would take her to pay off her debt if she continued tomake minimum payments.

"That number was 20 years. And I thought, 'I can't handle this anymore,'"said Cormier, a 50-year-old public servant.

I'd never get out of debt because the interest was accumulating faster than I could pay it off.- CharlineCormier

"I was still making minimum payments, but I'd never get out of debt because the interest was accumulating faster than I could pay it off."

Cormier had already spent nearly eight yearstrying to pay off her credit cards, but compound interest had pushed her total debt to more than $50,000.

Cormier is now debt-free, butsaidit was a struggleto learn to think differently about credit.

Interest rates on the rise

It's a struggle many more Canadians could soon be facing.

• Canadians debt to disposable income level climbs
• Almost half of Canadians living paycheque to paycheque: survey

After seven years of record-low interest rates, the Bank of Canada has raised itsbenchmark rate twice in the past three months;by one quarter of one per cent in July, and again by the same amount in September.

At the same time, a recent survey found35 per cent of employed Canadianssaid they felt"overwhelmed" by their level of personal debt.

The survey by the Canadian Payroll Association polled 4,766 Canadianworkersbetween June 27 and Aug. 5,and found nearly half were living paycheque to paycheque due to soaring spending and deepening debt.

Ottawa credit counsellor Pamela George saidfor most of her clients, credit isa way of life, andeven when they're mired in debt they struggle to giveup their credit cards.

"This brings on a lot of anxiety, a lot of tears.I have had clients shaking," George said. "That's how emotionally attached they are to their credit cards."

Minimum monthly payments

Cormier figures she was about 23 when she got her first credit card.

"I got a credit card, and that sort of became the balance.... 'OK, there's a little bit missing, I'll use the credit card.' And it was always manageable."

ThenCormier moved to Toronto, where she began having trouble paying off the balance each month. She soon fell behind to the tune of $10,000.

The tipping point came in 2004when a family member racked up an additional $25,000 on her credit card.

Cormier saidbecause she made a good salary withthe federal government, she feltshe could manage the debt.

For the next few years, she continued to make minimum payments.

But her debt quickly ballooned thanks to compound interest. Her $35,000 debt grew by hundreds of dollars each month.

"It was very stressful. It led to depression, some shame, because I couldn't talk to friends about it," Cormiersaid.

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'I had nothing as collateral'

Cormier approachedher bank forsome advice, butwas told she wouldn't qualify for a loan.

"I had nothing as collateral. I don't have a line of credit because it's not against a home, and I'd never been able to afford a homebecause I was trying to pay off the debt," she said.

Cormier was payingalmost $1,000 per month to service her credit card debt. She spent hours poring over spreadsheets, trying to figure out a way to increase her payments.

She stopped buying new clothes andhousehold items, and even put off buying eyeglasses and a new hearing aidbecause she couldn't afford them.

"I had nothing extra at the end of the month," Cormiersaid.

Sought credit counselling

It was a TV ad for a credit counsellorthat madeCormier seek help, and inNovember 2012an insolvency trustee helped her negotiate a consumer proposal, the last option before declaring personal bankruptcy.

Under this legalagreement, Cormierhad to give up her credit cards and make afixed payment of about $700 permonth.In return, hercreditors stopped charging her interest.

By April 2017Cormierhad managed to pay off her entire credit card debt, just in time for her 50thbirthday.

"I took a snapshot of the [final] cheque I wrote and sent it to a whole slew of friends," Cormier recalled.

Cormier said the experience of giving up her cards and paying off her debt completely changed her thinking on credit.

"Now I budget on, 'Here's the things that I want to do.' Next year when I take that vacation, I can pay for it, cash, and not have to depend on the credit card."