As interest rates slowly creep up across the country, it seems that Canadians are starting to feel the effects. The generation of adults from their late teens to their mid-40s is paying for more of their purchases, almost exclusively, with credit cards unlike their predecessors who paid more by cash. Apparently, because of this and because of poor savings plans, regardless of low bank interest rate incentives to save, there is a dearth of future savings and financial planning within this age group.
Credit card borrowing will likely continue to grow and impact people in Alberta and across Canada if they do continue to spend without also saving. Speaking with a Licensed Insolvency Trustee or credit counsellor at A.C. Waring & Associates Inc, in Edmonton, is an effective first step. They can provide helpful financial counselling that includes teaching individuals how to budget and save, as well as explain the various debt solutions available.
Canadians’ financial struggles
A recent Ipsos survey shows that at least 33% of Canadians are now struggling to pay household bills on a monthly basis while balancing debt payments at the same time. Meanwhile, almost 50% were surveyed as saying they can barely fulfill all of their financial responsibilities and are consistently walking a tightrope. Not coincidentally, unemployment, while dropping presently, was the highest it has been in over 25 years.
Despite only a small increase in interest rates right now, what is most significant is the negative impact the change has already had on many families in the country. In only a six-month timeframe, some households have noted that their monthly savings ability has decreased by almost 30%. Many are concerned about growing debt and lowered financial stability, potentially even leading to the need to file for bankruptcy in Edmonton.
Credit card dependency
Ultimately, this means people may continue to borrow on their credit cards to make most of their purchases. The survey found that approximately one-fifth of respondents cannot even afford to pay off their credit card balances from their savings accounts, yet they are still finding themselves overspending during the holidays. Similarly, a quarter of Canadians consider themselves too financially strapped to afford taking vacations. The problem is not credit cards. The problem is spending on non-necessities and luxuries without first considering the actual available resources to back up their payment. These resources are ‘savings’.
Younger Canadians are the most affected by the interest increases as rates have been consistently low since many of them have been adults; a steady rise could lead to unfamiliar territory. Surveys indicate, not surprisingly, that this group is the most concerned about facing debt and filing for bankruptcy. They are also partial to regularly expensing their bigger, and often day-to-day, purchases on credit cards. The missing link is the understanding that their plastic card represents a loan, even for a coffee, and that loan is due in full. Don’t let it get ahead of your savings. Pay off all credit card invoices, in full, every month. Letting them get ahead of you by paying only the minimum payment, is a RED flag. Take heed.
Contact a Licensed Insolvency Trustee
It is important at any age to be prepared financially for any small dips and peaks in interest rates and other factors beyond your control. A.C. Waring & Associates Inc. has been Licensed Insolvency Trustees and Trustees in Bankruptcy for over 25 years, serving Edmonton and Central/Northern Alberta from our Edmonton office. We are experienced and knowledgeable to help you understand your options and seek positive solutions to address debt and provide advice on living as debt free as possible. Initial consultations are free. Call or drop in.
Contact us today by calling our Edmonton office at 780-424-9944 or toll-free at 1-800-463-3328.
A.C. Waring & Associates Inc.
“The Debt Solutions People”®