It’s the most wonderful time of the year and many of us celebrate by making purchases for our loved ones. Sometimes lots of purchases.
We at Borrowell paused to consider how this time of year might make Canadians in debt feel.
Earlier this year, a survey we commissioned found that 58% of Canadians have carried or are currently carrying a balance on their credit card. That doesn’t include other forms of debt, like student loans, lines of credit, car loans or mortgages. When you factor in that the average consumer owes just over $22,000 in debt in 2015, not including mortgages, we wondered why no one was addressing how Canadians juggle the expectations of holiday shopping with the realities of their debt.
Dr. Oren Amitay, a noted Toronto psychologist, told us the holiday shopping season is a time of year that can cause emotional and psychological distress for people who are in the red.
Financial pressure takes its toll
“A lot of people try to ignore their debt by doing things like not opening their bills,” explains Dr. Amitay. “But you can’t run from it at holiday time. Continue Reading…
When comparing credit cards, it’s easy to get seduced by reward programs offering cash back, travel points, or other benefits. If you pay off your entire credit card balance every month, then these types of cards are a great option. But if you don’t usually pay your balance off in full or you have an upcoming expense that’ll take you a while to pay off, using a rewards card might not be the smartest move.
1.) What’s the best type of credit card?
If you usually carry a balance on your card, you might want to consider getting a low-interest credit card.
As the name suggests, low-interest credit cards are specifically designed to offer competitive low interest rates on purchases, balance transfers, and cash advances. Not only will you pay less in interest, you will also be able to pay off your debt faster since your interest costs will be lower.
This is why a low-interest rate is one of the key features many people look for in a credit card.
2.) What’s the best low-interest card?
There are a number of fixed low-interest credit cards so it’s worth comparing them, but one of the best cards available is the BMO Preferred Rate MasterCard.
Or you can scroll down below for a lightly edited transcript of the proceedings.
But first, here’s an overview written by Doug Hoyes, co-founder of insolvency trustees Hoyes Michalos:
Doug Hoyes
Doug Hoyes:
Today’s podcast is the first ever podcast interview with Jonathan Chevreau and Mike Drak together, talking about their new book Victory Lap Retirement. This is so exclusive an interview that the book won’t even be officially released until October 10, 2016 but it is available for pre-order at amazon.ca, and the Kindle version is available now.
Mike Drak created the concept of a Victory Lap as an alternative to retirement, and teamed up with Jonathan to write their new book.
So what is a Victory Lap?
You will have to read the book for a full description, but as Jonathan and Mike and I discussed the concept of retirement has changed significantly. Our grandparents and parents had a good chance of working at the same company until aged 65, and then retiring with a full pension before dying at age 70.
Today almost no-one works at the same company for their entire working life, and most employers no longer offer full pensions, so the old fashioned view of retirement at age 65 with a full pension is no longer reality for most workers.
Instead, we are working longer, and living longer.
The essence of Victory Lap Retirement is to leave corporate employment, which usually entails working for someone else, and enter a new and different phase of your life.
Mike and Jonathan wrote Victory Lap Retirement to show readers how to transition from a high stress work environment to a low stress sustainable lifestyle to enjoy a happier, healthier life. For many, that may involve turning a hobby or passion into income during your “retirement” years, or working part time to “stay involved.”
Debt and Retirement
Debt is a prominent subject in Victory Lap Retirement, including this quote:
…make breaking free from the chains of debt your first priority. Not only will debt limit your financial freedom severely, it will suck the life right out of you.
As we discussed, debt and retirement don’t mix. When you retire your income decreases, so it’s likely you won’t be able to afford payments on a mortgage or other debt in retirement. Get out of debt long before retirement.
Unfortunately that’s not always possible, which is why seniors are the fastest growing age group of people filing bankruptcy and consumer proposals. Older debtors, aged 50 and older, now account for 30% of all insolvency filings, up from 27% two years ago, and that number keeps growing.
Senior debtors, people aged 60 and over, have the highest amount of unsecured debt of any age group when they go bankrupt, almost $70,000. A growing percentage of them even resort to payday loans to stay afloat.
If you’ve got debt, retirement is very difficult. If you have trouble making your debt payments while you are working, it may be impossible to keep up when you retire and your income drops, which is why we all agree that eliminating debt is essential long before retirement.
In addition to eliminating debt, Mike and Jonathan suggest you ask yourself “what do I like to do?” and start planning your Victory Lap now.
For more, listen to the podcast or read the transcript.
Credit cards, much like any financial product, seem to create anxiety for many. With so many rumours surrounding credit cards, we decided to turn to top influencers in the community for help on busting these myths and sharing the facts.
Here are your top 5 credit card myths busted once and for all:
Myth #1: Having a credit card means you are financially irresponsible
Credit cards are a great way for you to start building credit and earn rewards from everyday purchases. If you’re spending wisely and are paying off your balance each month, credit card debt won’t be an issue.
Myth #2: Getting a credit card will hurt your credit score
The exact opposite is actually true here. The best way to establish credit is to start by getting a credit card. By paying off your debt in full each month, there’s nowhere but up for your credit score. Be wary of credit utilization though. A high utilization ratio will affect your credit score negatively.
Credit cards can offer many benefits to achieve your financial goals. And with most credit cards today, the more you swipe, insert or tap, the more opportunities you have to earn and redeem loyalty rewards.
According to a recent TD survey, nearly three-quarters (72 per cent) of Canadian adults carry at least one card that offers a rewards program, with most cardholders (82 per cent) saying it’s one of the top factors when choosing a credit card.
North Americans are among the most rewards-savvy consumers in the world; they’re always looking for better ways to get the most from their rewards programs to reach their goals faster. That is why it’s no surprise our survey also shows that almost half (49 per cent) of Canadians are willing to change where they shop to earn and redeem points faster. But remember to pay your balance on time and in full to avoid incurring interest charges on purchases. Continue Reading…
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By Eva Wong 
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