Credit Counselling Society says high levels of borrowing and credit reliance are worrying
The Bank of Canada’s decision to pause interest rates at 4.5% on Wednesday is good news but is only a slight reprieve for debt-burdened Canadians.
That’s the warning from Peta Wales, the Credit Counselling Society’s president and CEO, who says that rising costs, economic uncertainty, and an unpredictable housing market, are just a few of the financial obstacles still facing Canadians.
"While it's good news for consumers that the rate has not increased, what we're still seeing is a growing reliance on borrowing – credit cards, payday loans, lines of credit -- and those higher debt loads, which can last years, can make it almost impossible to withstand these economic conditions without falling even further into debt," she said.
A recent report from Equifax Canada revealed that credit card debt had topped $100 billion for the first time and that missed payments were increasingly common.
Debt stigma
Arguably a bigger problem than a high debt burden itself is denying when it has become a problem.
Sandra Fry, a Credit Counsellor at CCS says that embarrassment and debt stigma can mean people avoid asking for help and try to hide that they are struggling with debt, which only exacerbates the issues.
"The longer someone waits to address their debts and other money problems, the greater the debt burden becomes, and the less options they have available,” she explained. “I much prefer if someone comes in sooner than later and I can outline more options than they might even be aware of. That's a far better scenario than waiting too long and facing more limited options with potentially greater consequences."
The CCS says that with five more rate decisions from the BoC due this year, those with debt issues should not wait to see what happens next, but act now to start rebuilding their finances.
