How to avoid credit card debt?

Credit cards can be a powerful financial tool for Ukrainian newcomers to Calgary, but they also pose a serious risk of falling into debt. Understanding the principles of responsible credit card use and knowing how to manage your finances are critical skills for successfully adapting to the Canadian economy. In Calgary, where the cost of living continues to rise, it is especially important to learn how to use credit wisely in order to build financial stability instead of accumulating debt.

Understanding the nature of credit debt

Credit debt in Canada has reached record levels in recent years, with young Canadians aged 25 to 45 having some of the fastest-growing debt loads. According to Equifax Canada, more than 1.4 million Canadians missed at least one credit card payment in the first quarter of 2025, highlighting the prevalence of credit debt management issues.

The psychology of credit debt

Credit cards create the illusion of instant access to funds, which can lead to impulsive purchases and an overestimation of one's financial capabilities. For Ukrainian newcomers who are adapting to a new economic system, this can be particularly dangerous, as they may not fully understand the long-term consequences of using credit.

Main reasons for accumulating credit debt:

  • Perception of credit as free money
  • Making only minimum payments
  • Inattention to interest rates and terms
  • Using credit to cover basic living expenses
  • Multiple credit cards without proper control

The cost of credit debt

Canadian credit card interest rates range from 8.99% for low-rate cards to 22.99% or even 28.99% per year. This means that if you carry a balance of $1,000 on a card with a 20% interest rate and make only the minimum payments (usually 3% of the balance), it will take you more than 56 months to pay off the debt, and you will pay over $900 in additional interest.

Specifics for Ukrainian newcomers to Calgary

Cost of living in Calgary

The cost of living in Calgary in 2024-2025 continues to rise, putting additional pressure on newcomers' budgets. Renting a one-bedroom apartment in the city center costs an average of $2,026 per month, while outside the center it costs approximately $1,646. These expenses, combined with other basic needs, can tempt newcomers to rely on credit cards to cover the gap between income and expenses.

Key expenses in Calgary for newcomers:

  • Housing: $1,646 to $2,026 per month for a one-bedroom apartment
  • Utilities: approximately $165 per month
  • Groceries: $214 per person per month (Canadian average)
  • Transportation: Calgary Transit fare increases in 2024
  • Internet: $36 to $93 per month

Unique challenges for Ukrainian refugees

Ukrainian newcomers face unique financial challenges. Many arrive with limited savings and need time to establish a stable income. This creates a temptation to use credit cards to cover immediate needs, which can quickly lead to debt accumulation.

Emotional factors:

  • Stress from adapting to a new country
  • Uncertainty about future income
  • Desire to quickly establish a comfortable life
  • Pressure from the need to support family in Ukraine

Strategies for preventing credit card debt

Pay in full rule

The most effective strategy for avoiding credit card debt is to always pay your credit card balance in full before the grace period ends. In Canada, the grace period is usually 21 days from the statement date. If you pay the full amount by this date, you will not pay any interest.

Practical steps to ensure full payment:

  • Use your credit card only for purchases you can afford to pay for with cash
  • Set up automatic payments for the full balance
  • Check your balance regularly through mobile banking
  • Keep a daily record of your credit card spending

35% credit utilization rule

RBC and other Canadian banks recommend using no more than 35% of your available credit limit. This rule not only helps you maintain a good credit rating, but also prevents you from accumulating unmanageable debt.

Example of how to apply the rule: If your credit limit is $2,000, your spending should not exceed $700 at any given time. If you are approaching this limit, make an additional payment or stop using your card until the next cycle.

Budgeting as the foundation of financial discipline

Creating and sticking to a budget is a fundamental skill for avoiding credit debt. For Ukrainian newcomers to Calgary, it is especially important to consider all aspects of the cost of living in a new country.

Budget structure according to the 50/30/20 rule:

  • 50% of income for basic needs (rent, utilities, groceries, transportation)
  • 30% of income for wants (entertainment, restaurants, hobbies)
  • 20% of income for savings and debt repayment

Creating an emergency fund

Having an emergency fund is critical to avoiding credit card debt in unforeseen situations. Experts recommend saving an amount that covers 3-6 months of basic expenses.

Recommended emergency fund amounts for Ukrainian newcomers:

  • Single person: $14,000
  • Married couple without children: $18,000
  • Family with 1-2 children: $22,000-$27,000
  • Family with 3+ children: $30,000-$40,000

Strategies for creating an emergency fund:

  • Start small — even $10-25 per month
  • Automate your savings through automatic transfers
  • Open a separate high-yield savings account (TFSA)
  • Direct all unexpected income (tax refunds, bonuses) to the fund

Specialized resources for Ukrainian newcomers

Ukrainian Credit Union (UCU) support

Ukrainian Credit Union offers a special “Welcome Ukraine” package with free banking services for three years. UCU also provides financial seminars in Ukrainian.

UCU benefits for credit management:

  • Ukrainian-language support to understand loan terms
  • Financial literacy education programs
  • Personalized approach to financial planning
  • Ability to receive counseling in your native language

Banking programs for newcomers

Scotiabank StartRight Program:

  • Free account maintenance for one year
  • Credit cards designed specifically for newcomers
  • Financial counseling and educational resources

BMO NewStart Program:

  • Over $2,200 in welcome offers
  • Free accounts for two years
  • Specialized credit cards without Canadian credit history

Educational programs in Calgary

Immigrant Services Calgary, in partnership with BMO, organizes 8 financial literacy sessions per year, including seminars in Ukrainian.

The programs cover:

  • Basics of the Canadian banking system
  • Understanding credit products and how to use them properly
  • Budgeting and financial planning
  • Protection against financial fraud

Practical tips for everyday credit card use

Choosing the right credit card

Recommended features:

  • Low or no annual fee
  • Reasonable credit limit
  • Transparent interest rates
  • Ability to set up automatic payments
  • Access to online and mobile banking

Spending control techniques

  • “Freeze” your credit cards: physically freeze your card in ice to prevent impulse purchases.
  • 24-hour rule: for purchases over $100, wait 24 hours before paying.
  • Weekly balance reviews: set reminders to check your balance.

Managing multiple cards

Experts advise starting with just one credit card.

If you have multiple cards:

  • Use only one for regular expenses
  • Set up automatic payments on all cards
  • Check your balances regularly
  • Consider closing extra cards (be careful not to damage your credit score)

Recognizing early signs of debt problems

Financial signals:

  • Only able to make minimum payments
  • Using cards for basic needs
  • Transferring balances between cards
  • Reaching credit limits

Emotional and behavioral signals:

  • Avoiding reviewing bills
  • Stress over finances
  • Hiding purchases from family
  • Losing sleep over financial worries

What to do if you identify problems

If you notice early signs of credit debt problems, it is important to act immediately:

Immediate actions:

  • Stop using credit cards for new purchases
  • Make a detailed list of all debts and minimum payments
  • Create a strict budget that prioritizes debt repayment
  • Contact creditors to discuss options for assistance

Support resources in Calgary

Free counseling services

Credit Counselling Society (Calgary office):

  • Suite 115 - 1925 18 Avenue NE, Calgary
  • Free debt management counseling
  • Debt consolidation programs
  • Financial literacy education seminars

Consolidated Credit Calgary:

  • National non-profit credit counselling organization
  • Helped over half a million Canadians manage their debt
  • Debt consolidation programs with the potential for significant interest rate reductions

Emergency Financial Assistance

Rise Calgary - Basic Needs Fund:

  • Emergency financial assistance for low-income Calgary residents
  • Assistance with rent, utilities, medical expenses
  • Special support for those facing unexpected financial crises

Ukrainian Evacuee Emergency Financial Support and Benefits Program:

  • One-time emergency assistance for Ukrainian evacuees
  • Monthly payments for those with significant barriers to employment
  • Support with housing, transportation, food, and clothing

Specialized programs in Alberta

Alberta Supports:

  • Emergency financial assistance program through the Emergency Needs Allowance
  • Support in unexpected emergencies
  • Available to all Alberta residents, including newcomers

Long-term strategies for financial stability

Gradual improvement of financial condition

Avoiding credit debt is only the first step toward long-term financial stability. It is important to develop skills that will help you not only avoid debt, but also build wealth over time.

Stages of financial growth:

  1. Stabilization: Pay off existing debts and create a basic budget
  2. Protection: Create an emergency fund and obtain necessary insurance
  3. Growth: Invest in RRSPs, TFSAs, and other long-term savings
  4. Prosperity: Plan for retirement and transfer wealth

Using Canadian tax benefits

Tax-Free Savings Account (TFSA):

  • Contributions do not reduce taxable income, but earnings are not taxed
  • Flexibility to withdraw funds without penalties
  • Ideal for emergency funds and short-term goals

Registered Retirement Savings Plan (RRSP):

  • Contributions reduce current taxable income
  • Defer taxes until retirement
  • Ideal for long-term retirement planning

Cultural aspects and adaptation

Overcoming cultural barriers

For many Ukrainian newcomers, the concept of credit may be unfamiliar or cause mistrust. It is important to understand that in Canada, credit history is an integral part of the financial system, and proper use of credit can open up many opportunities.

Changing mindsets:

  • Credit is a tool, not an enemy, if used responsibly
  • Building credit history opens access to better financial products
  • The Canadian banking system is highly regulated and secure

Integrating into Canadian financial society

Participating in financial education programs and using the resources of Ukrainian organizations will help you adapt to the Canadian financial system more quickly. It is important not to isolate yourself from major financial institutions, but to actively learn about their capabilities and limitations.

Summary

Avoiding credit card debt for Ukrainian newcomers to Calgary requires a combination of financial discipline, education, and the use of available support resources. Key elements of success include:

  • creating and sticking to a budget,
  • always paying your credit card balance in full,
  • maintaining a low credit utilization ratio,
  • creating an emergency fund for unexpected situations.

Calgary offers numerous support resources, from specialized programs for Ukrainian newcomers to free debt counseling. Adapting to the Canadian financial system is a process, and mistakes can be corrected with the right strategies and support. With patience, discipline, and the use of available resources, Ukrainian newcomers can not only avoid debt traps but also build a stable financial future in Calgary and across Canada.