According to Equifax, Canadians owe an average of $20,000 of non-mortgage debt. The average Canadian was expected to spend about $1,517 over this past Christmas, the lowest holiday spend in three years, according to a separate BMO study. Last year, average-income Canadians burned through about $1,810 in celebration of the season. The actual Christmas spend recorded is not in yet but you can bet on the fact that much of it was spent using credit, not cash.
Most Canadians pay off their credit card bills by minimum monthly payments. It will take decades to pay off your debts with minimum payments however it is the most palatable one for the average Canadian who is spread a little thin each month financially. The average interest rate on a credit card is 19% and the average person pays only the minimum payments each month. By doing this it would take 18 years to pay off a $5,000 loan and just over $5,000 in interest.
Ed Portelli, president and owner of OCCA Consumer Debt Relief, is an expert on debt collection and debt repayment. He knows what a mousetrap it is making only minimum payments on a credit card.
“With some retail credit cards, you’re talking about a 120-year repayment term. For a regular credit card, you’re talking 30 to 50 years,” Mr. Portelli says. “This is for an object that you bought when you were 30 and the plan is to pay it off by the time you are 60. That’s if you don’t use the card again. As you pay down the minimal amount, you start to refill it up again.”
To matters more complicated, the federal government, effective this January, will be taking more Employment Insurance (EI) tax and Canada Pension Plan (CPP) tax off every pay cheque. This will leave consumers with even less each month. Let’s not forget municipal taxes that were due January 1st. January is going to be a bit of a hangover for many Canadians.
Here is a good tip to help you avoid overspending next Christmas:
Store a copy of your shopping receipts from November, December and January with your Christmas decorations. When you’re ready to start decorating your home for the next holiday season the old receipts laying at the top will remind you of how much you spent the year before. It is easy to forget how much we spend when we don’t keep receipts in sight to remind us. This little tip may be an eye opener when the festive season is just revving up!
For more about how to deal with debt from the holiday season, read “Facing Holiday Bills with a Debt Hangover” on our blog.
Could you use some expert advice on how to resolve your debts or manage your personal finances better? OCCA Consumer Debt Relief has been helping Canadians get out of debt for over 12 years. We work with all creditors to negotiate your debts to a tailored repayment that you can afford. Now is the time to get informed about your debt relief options. Give us a call for your free financial assessment at 1-855-873-6222. Our counselors are available to take your call and provide you with the professional help you need..
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