Tag Archive for “credit card”

Overall household debt continues to reach record highs, but Canadian consumers are becoming better at paying off credit card bills.

According to a recent Equifax Canada study, average credit card debt declined 3.4 percent in 2011, despite Canadians piling on other debt from major purchases like home loans.

"The only product that has shown a reduction in balances over the course of 2011 are credit cards," said Nadim Abdo, vice-president of consulting and analytical services for Equifax Canada. "That in large part is due to changes in legislation and some restrictions placed on credit card issuers. Although this appears to be a good news story for Canada, there remains some concerns about the high level of debt Canadians carry on average." Continue reading »

Canadian teens are increasingly walking around with credit cards, cell phones and laptops, and experts suggest that parents begin having financial conversations with children at a young age.

According to a recent Simcoe report, a Canadian Institute of Chartered Accountants' survey revealed 89 percent of Canadians ages 16 to 22 believe parents are responsible for teaching their children money management skills.

"Money should not be a taboo topic in the home," said Nicholas Cheung, the CICA's president, as reported by the news source. "Our survey clearly showed kids want to learn money management skills at home and it’s important for parents to find opportunities to talk about money, talk honestly and stress confidentiality." Continue reading »

According to a recent survey conducted by Ipsos Reid, a significant number of Canadians are beginning to feel comfortable with their current debts outside of home loans.

Of the 2,000 Canadians responding to the survey conducted for the Royal Bank of Canada, 22 percent claimed they had no non-mortgage debt at all, while 45 percent felt comfortable with their current level.

Furthermore, 75 percent of respondents felt their personal debt levels were more comfortable than those of their neighbors and friends. In addition, 93 percent stated that paying down their debt levels was just as important as saving for the future. Continue reading »

According to a recent report in The Globe and Mail, the anticipated rate hike for the nation's home loans may lead to a significant increase in credit card use as more consumers struggle to deal with greater expenses.

When rate hikes occur, the average amount of household debt will most likely rise as well. As a result, consumers may turn to their lines of credit. The article explains that Canadians have been "seduced by easy access to low borrowing rates" lately. The stock of household credit has increased by more than one-third since the beginning of the credit crunch, the article states. Continue reading »

According to a recent report from CIBC World Markets, the overall Canadian household credit is now growing at the slowest rate recorded in nearly a decade.

CIBC deputy chief economist Benjamin Tal relayed that, during the last 10 years, household credit growth has averaged an inflated 8.2 percent. However, Tal believes this trend has now come to an end. Continue reading »

Financial debt among Canadians is piling up at a quick rate. According to TransUnion, a credit rating agency, the average Canadian owed just under $25,600 during the first quarter of 2011. This figure is up from $24,497 during the same period last year. Quarter-over-quarter, however, debt is actually down, falling by $112.

While debt is high, Canadians have been doing a better job handling their credit card bills recently, the article states. Overall, credit card debt is down $25 year-over-year, averaging $3,539 during the year’s first three months. The delinquency rate was small for the quarter, totaling 0.38 percent. However, this number is up 5 percent from the last quarter of 2010.

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More Canadians are taking on mortgages while reducing their credit card bills, according to a recent article in the Financial Post.

The Bank of Montreal’s CEO recently told the Post that the market for home loans “is continuing to be more robust,” as Canadian consumers begin to better manage their finances. BMO is reaping the benefits of this trend as well, as the bank increased its profits by 7.5 percent to begin the second quarter of 2011.

Since the recession took place in the U.S., more Canadian banks have cut their credit provisioning to boost their results. For the first quarter of 2011, BMO had set aside $145 million in provisions for potential credit losses, which was $104 million less than the previous quarter.

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For those checking with mortgage brokers in preparation for buying a home, having a good credit score can be important. The Canada Mortgage and Housing Corporation says there are a number of legitimate ways to improve a score.

The CMHC says a credit score is one of many factors mortgage professionals will consider. For those in Canada who don’t know their score, they can obtain a free credit report through the mail from Equifax or TransUnion, or pay a fee to see it online.

The agency says some consumers may not have a credit score, if they haven’t used credit cards or other loans before. The CMHC says an easy way to get started building credit is to apply for a credit card and use it regularly.

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For most people, mortgage brokers can follow a well-established process when making loans. However, as the National Post reports, self-employed workers have a slightly more complicated situation.

The simplest way, according to the paper, is to check over recent income reports from the Canada Revenue Agency. If the revenues and credit history over the past two years is adequate to justify the loan, then they can qualify for a standard loan.

However, some of the habits some small business owners get into could hurt their credit scores, which will make it more difficult to qualify for a mortgage.

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One of the biggest issues for many first-time homebuyers is figuring out how expensive a property they can actually afford. Real estate professionals say that there’s a relatively easy way for people to determine how much they can afford.

Agent Andrew Bodnar told Postmedia News buyers first need to add up all of their debt, such as credit card payments or auto loans. Then, they should use a mortgage calculator to figure out what the annual mortgage payments and taxes on a property would add up to, plus half of any condo fees.

If that sum is more than 40 percent of their gross family income, then the home is probably too expensive. Although he adds that people with a very good credit profile might be able to get away with a ratio as high as 44 percent.

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