Canadians are Behind on Their Credit Payments

Posted on July 7, 2009 at 12:34 pm
Filed Under Financial Planning

Equifax Canada recently released information stating that more then half a million Canadians are continuing to fall behind on their credit payments.

In their report, they went on to say “The average delinquency rate for Canada rose by approximately 19% over a one-year span from May 31, 2008 to May 31, 2009…This means that over a half a million Canadians are now more than 90 days behind on their credit payments.”

What’s even scarier to me is that Equifax claims “The sharpest increase has resulted from Credit Card and Sales Finance purchases, which have increased by 38% and 58%, respectively, since May 2008. Such transactions typically represent the purchase of durable goods, such as furniture or electronics, and consumers appear to be willing to fall behind on them first before they miss payments on their Bank Loans and Lines of Credit.”

You’re Take-Away: This information may not be news to you, nor may it make any difference to you if you’re one of those lucky few who are able to live debt free or at least manage your debt payments. The one lesson that stands out to me however is that we need to be learn to manage our cash flow better, for the sake of our financial futures and credit ratings.

After all, the reality is that those falling behind aren’t doing so in terms of their mortgages or lines of credits mainly. In fact, they’re falling behind on payments that have resulted largely from consumer purchases, which I like to call, consumer wants. The financial companies that offer no interest or payments for a year or more are still making money or they wouldn’t offer the program in the first place. Read the fine print. If you miss your payment by a day, they will back charge you for the entire period of time that you haven’t paid anything with interest rates as high as 24% and more.

The long and short, if you’re going to purchase anything using a store issued credit card, make sure to make a note and pay that purchase off at least one week prior to the deadline. If you don’t, you will see your bill jump dramatically and possibly join the Canadians mentioned above in the Equifax report.

Until next time, happy spending and have a Terrific Tuesday!

Chris