The Pros & Cons of Paying off Credit Card Debt with a Line of Credit

A credit card is a helpful financial tool as it provides convenient access to credit, enables cashless transactions, and often offers rewards or benefits, contributing to financial flexibility and management.

Although this borrowing option can be beneficial, credit card debt can also be a significant financial burden for many individuals, especially when people cannot pay off their debt on time. According to a December 2023 Equifax press release, the rising cost of living, higher interest rates, and the economic slowdown have contributed to rising credit card debt, with total card balances reaching an all-time high of $113.4 billion in the third quarter of 2023.

Finding effective ways to manage and pay off credit card debt is a common challenge many face. One option that often comes into consideration is using a line of credit to pay off credit card debt. As reputable online loan providers in Canada, GoDay understands the importance of paying off credit card debt without accumulating additional unnecessary debt. Here’s a guide to help you better know when it might be beneficial to use a line of credit to pay off credit cards and when it may be best to avoid this financial strategy. 

What is a Line of Credit?

A line of credit is a flexible borrowing arrangement provided by financial institutions, allowing individuals to access funds up to a predetermined limit. Borrowers can draw funds as needed, repay, and redraw up to the specified limit. Interest is only charged on the amount borrowed, making it an attractive option for those seeking financial flexibility.

Unlike a traditional loan, where a lump sum is borrowed and repaid with fixed monthly installments, a line of credit provides more flexibility, allowing borrowers to pay off debt quickly when using this method to get rid of high-interest loans. 

When To Use a Line of Credit to Pay Off Credit Cards

Here are some scenarios under which you may want to consider using a ​​line of credit to pay off credit card debt.

High-Interest Rates

One common scenario where using a line of credit makes sense is when credit card debt carries high interest rates. Lines of credit often offer lower interest rates than credit cards, potentially leading to significant interest savings over time. 

Consolidation of Multiple Debts

If you have multiple credit cards with varying interest rates, consolidating these debts into a single line of credit can simplify your financial obligations. This streamlined approach may make it easier to manage and track your debt. 

Temporary Financial Hardship

When you face temporary financial difficulties, utilizing a credit line to pay off a credit card can provide short-term relief. For example, if paying your credit card bill is challenging due to financial strains, this can help avoid late payment fees and maintain a positive credit history.

How to Pay Off a Credit Card with a Line of Credit

If you’ve determined that using a line of credit to pay off debt is the right option, follow these steps.

Assess Your Financial Situation

Before using a line of credit, evaluate your overall financial health. Understand the interest rates on your credit cards and the line of credit. Consider your ability to make regular payments on the line of credit. 

Although taking out multiple loans at once is possible, it is one of the critical factors you should consider before applying for a line of credit. The last thing you want is to accumulate too much debt that you can’t pay for promptly.

Transfer Funds to a Credit Card

Once you’ve assessed your financial situation and determined the credit line limit, transfer the necessary funds from the line of credit to your credit card. This process may involve contacting your financial institution or using online banking services. 

To get the most out of your credit card, it’s important to make prompt payments that ensure your credit score remains positive. 

Determine Credit Line Limit

Check the available limit on your line of credit and ensure it is sufficient to cover your credit card debt. It’s crucial to avoid exceeding the credit limit to prevent additional fees and penalties. 

Develop a Repayment Plan

Outline a realistic and manageable repayment plan for the line of credit. Create a budget that allows you to make consistent payments, reducing the outstanding balance over time.

Pros of Using Line of Credit to Pay Off Debt

Consider the following benefits of using a line of credit to pay off debt.

Lower Interest Rates

One of the significant advantages of using a line of credit is the potential for lower interest rates compared to credit cards. This can result in substantial savings on interest payments over the life of the debt. 


Lines of credit offer flexibility in terms of accessing funds when needed. Borrowers can draw funds, make repayments, and reaccess the available credit, providing a versatile financial tool. This makes handling credit card debt easier and reduces the risk of defaulting on payments.

Consolidation Benefits

Consolidating credit card debt into a line of credit simplifies the repayment process. Managing a single debt with a potentially lower interest rate can make it easier to track progress and reduce overall financial stress. 

Temporary Relief

For individuals facing short-term financial difficulties, using a line of credit can provide easy access to cash, preventing the accumulation of late fees and maintaining a positive credit history.

Cons of Using Line of Credit to Pay Off Debt

There are also some drawbacks of using a line of credit to pay off debt that you should be aware of before applying for a line of credit.

Temptation to Accumulate More Debt

Access to a line of credit can lead to the temptation to accumulate additional debt, especially if spending habits are not adequately controlled. This can result in a worsening financial situation. 

Variable Interest Rates

Unlike fixed-rate loans, lines of credit often have variable interest rates, which means the interest charged can fluctuate. This variability introduces uncertainty and may increase repayment costs if interest rates rise. 

Potential for Higher Fees

Depending on the financial institution, using a line of credit may involve various fees, such as transaction fees, annual fees, or maintenance fees. It’s essential to be aware of these costs and factor them into the overall cost of using a line of credit. 

The key to responsibly choosing an online loan lender is learning about the lender’s fees and loan terms. It’s essential that you select a reputable lender like GoDay to avoid any surprises along the process. We take pride in our transparent borrowing process, ensuring borrowers can make informed decisions when borrowing through us.

Risk of Overborrowing

The flexibility of a line of credit can be a double-edged sword. Without disciplined financial management, there is a risk of overborrowing, leading to increased debt levels and financial instability.

Alternative Methods to Pay Off Your Credit Card Debt

If you want to hold off on using a line of credit to pay off debt or explore your options, here are some alternative methods to consider.

Snowball or Avalanche Method

Consider popular debt repayment strategies like the snowball or avalanche method. The snowball method involves paying off the smallest debts first, while the avalanche method prioritizes high-interest debts. These methods provide a systematic approach to debt elimination. 

In some cases, you may need to take additional loans to pay off high-interest debt. The good news is GoDay offers same day loans in Canada that can help you pay off your credit card debt. You can apply for a loan online, and once approved, receive the funds in your bank account within the next business day. This hassle-free option reduces the need to stand in long lines at banks or other financial institutions, allowing you to focus on managing your debt. 

Debt Consolidation Loans

Explore obtaining a debt consolidation loan with a fixed interest rate. This type of loan allows you to combine multiple debts into a single, manageable loan, potentially with lower interest rates than credit cards. 

Before applying for a loan online, take the time to learn more about the rate the lender offers you. It’s essential that you carefully choose the right lender before using debt consolidation loans to avoid any hidden fees throughout the process.

Negotiate with Creditors

Contact your credit card companies to negotiate lower interest rates or explore hardship programs. Many creditors are willing to work with individuals facing financial difficulties and may offer more favourable terms. 

Seek Professional Advice

Consult financial advisors or credit counselling services for personalized guidance on managing and eliminating credit card debt. Professional advice can provide valuable insights and strategies tailored to your financial situation.


Using a credit line to pay off credit cards can be a strategic move for some individuals, especially when facing high-interest rates and seeking repayment flexibility. However, it’s crucial to approach this strategy carefully, considering the pros and cons.

Choosing a line of credit should align with your overall financial goals and be part of a comprehensive debt management strategy. Exploring alternative methods and seeking professional advice can enhance your ability to make informed decisions and regain control of your financial well-being.