A new study conducted by Hoyes Michalos and Harris/Decima shows that 18% of Canadians polled carry both an outstanding balance on a credit card and a line of credit. Given the convenience, ease and even rewards associated with credit use it’s no surprise that many of us carry balances month to month.
While it’s one strategy to use a credit card to pay for items right before a payday, thereby reaping the benefit of instant credit without paying interest, roughly half of Canadians said they always or often carry an outstanding balance…good for the bank, not so good for the customer.
Other insights from the study include:
- Larger households of four of more people are even more likely than those comprised of only two to carry a balances
- The ever-growing population of Grandpa Debtors (a name given to debtors over the age of 55), are less likely than nearly all other groups to say that they pay more than the minimum required monthly payment on their credit cards.
A previous Hoyes Michalos & Harris/Decima study published in the fall of 2012 showed that the vast majority of Canadians would need to rely on some form of credit (ie debt) to raise $2,000 in the event of an emergency, with about a quarter of respondents feeling that they would not be able to raise that amount at all. Now combine those figures with other reports about savings being at an all-time low, record-level debt amounts AND that 62% are comfortable with their financial situation…Perhaps not so comfortable anymore?
Some good news is that most of the people with debt from a credit card or line of credit reported having considered cutting down on expenses or increasing their income to eliminate the debt, both of which are a great way to get started.
Unfortunately those may not be available avenues for those already stretched to their financial max, only able to make minimum payments or feeling that they will never be able to pay off the debts. The survey revealed that while 10% said they had considered talking to a credit counselor only 3% saw a Consumer Proposal as an option, showing the need for better education about regulated debt resolution options.