“I owe, I owe, it’s off to work I go” is what Canadian are apparently singing to themselves these days.
A new survey conducted by credit rating agency Equifax Canada reveals that Canadians are groaning under record levels of debt: $1.422 trillion in the fourth quarter of 2013. This is up from $1.36 trillion in the third quarter and up 9.1 per cent compared to a year earlier.
Credit card debt was up almost six per cent, with Canadians owing $81.6 billion on their plastic pals. Mortgages make up the largest part of our debt load: 63.6 per cent, or $903.8 billion in the fourth quarter; this is followed by bank revolving loans and instalment loans: 17.6 per cent ($249.9 billion) and 8.8 per cent ($125 billion).
Research also shows that Canadians are able to handle the debt for now, with delinquencies at an all-time low. But some industry observers ask whether a lot of us are just paying minimum amounts on our debts – a strategy that will crash and burn eventually.
“Usually it goes downhill from there, where people eventually can’t even make minimum payments as the interest creeps higher and higher. A vicious cycle,” says Laurie Campbell, executive director of Credit Canada, in a Financial Post article.
A very underused tool available to anyone with a problematic debt load is a consultation with a trustee. It costs nothing and usually provides a person with a realistic perspective and options that can really help see them through the forest. Even the Seven Dwarves (who probably didn’t have credit cards) needed to find their way through the forest.