Canadians are up to their eyes in credit card debt.
A new report from TransUnion says charge card balances for the average Canadian climbed 4.12% last year, up to $3810.
“For a lot of us those credit cards are that thing that we don’t think about as money for some reason.” Spruce Credit Union Financial Planner Shane Sienaert says “It’s just a number that comes on a statement… so I think these levels getting to this height are making it harder and harder for us to clear that balance off every month.”
He says that the benefit of any credit card incentive program like points or miles goes out the window once you start paying interest.
“We seem to live in this world now where everything isn’t about how much it costs, it’s what’s the monthly or bi weekly payment.” Sienaert says “ So then suddenly that credit card that we put to the side that owes $4000, that minimum payment might be $58, but maybe $52 of that is interest.”
He says that credit cards are not the problem, they merely facilitate it; spending more than a person earns.
The TransUnion report showed that the average levels of auto debt (+1.87% – $19,777), and installment loans (+1.30% – $22,476) climbed as well. Just lines of credit (-5.03% – $30,554) fell. The average consumer has a non-mortgage debt level of $21,512.
Sienaert added that cash flow and net worth planning are essential for everyone whether they are in debt or not.
“Then at least we can take some control, and not just shift from using my Visa to my Mastercard.”
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