Credit card debt is mounting in Canadian households as more families try to ease the pressure of post-pandemic inflation, financial experts say.
Statistics Canada data indicates that for every dollar the average Canadian household has as disposable income, $1.85 is owed in credit market debt, amounting to $2.32 trillion of debt nationwide.
The lion’s share of this debt is made up of household mortgages, however, recent findings from Equifax, a consumer credit reporting agency, show that on average Canadians are charging 21.5 per cent more on their credit cards than they were prior to the pandemic
“Every day we are dealing with people who have questions about credit, who are feeling overwhelmed with credit,” Jennifer Robins, executive director of Launch Okanagan, said. The organization is a non-profit organization that delivers a variety of programs for anyone who wants to better understand money management, personal finances and how to save.
One issue is that people are using credit cards to buy groceries or pay bills and for many, debt is getting out of control. But it doesn’t have to.
Paula Woodroff is with Valley First a Division of First West Credit Union and she said there are ways for people to break the cycle of credit debt.
“I think the most important thing to do is have a sound budget. I know that most people don’t like to do a budget but it really is important to keep on track,” Woodroff said.
“The second one would be always when you are making a purchase have that good intention and the ability to make sure that you can pay that credit card off monthly. If that’s not the case then make sure you make your minimum monthly payment on time to avoid that interest and service charges.”
The third is simply avoid having too many credit cards.
If debt has already racked up, Woodroff said don’t be overwhelmed.
“You should consider a debt consolidation loan or a home equity line loan. This will give you way lower interest rates and you can find a payment that is affordable and fits within your cash flow and your budget … you will pay off that debt sooner than later,” she said.
Valley First has partnered with Launch Okanagan to help them offer free courses online that can give people the knowledge and skills to help control credit and avoid the credit card trap.