The new age of technology has seen most people use credit cards like they once used cash. Credit cards are common and are used for pretty much everything from everyday purchases such as groceries and haircuts to hotel reservations and Internet shopping. People are also turning to their credit cards when things go wrong in their lives such as the loss of a job or an expensive emergency because they simply don't have the savings to fall back on.
Margaret Johnson, president and CEO of Credit Solutions Canada says, "People have started using credit cards, literally, for everything. The downside of that is that they have lost touch with cash."
This new 'way of getting by' has caused the average consumer household debt to skyrocket. The combination of high credit card interest rates, over use and minimal repayments is costing consumers a lot more than they realize. It is also having an enormous affect on their ability to get out of debt.
According to the Canadian Bankers Association, there are approximately 69.7 million credit cards currently unleashed in Canada, and according to Margaret Johnson, the average card holds an outstanding balance of just under $30,000, which is up significantly from the $18,000 to $20,000 balance a few years ago. It's not only credit card debt that consumers need to be concerned about. It's the long-term snowball affect of paying only the minimum payments on all outstanding debt. It can take up to 25 years to get rid of a load of credit card and department store credit debt. Of course people with debt problems are often advised to consolidate their loans with a lower interest rate.
Johnson also noted that she is concerned when she speaks to children about finances and they are under the impression it comes from a "machine." She stresses how important it is to teach children about debt and about money, even getting them involved in the family budget. She warns parents that, "Your back up should be a savings account, not another credit card."
There are many people who have lived their lives without the use of high-interest credit cards and have always stuck to paying cash. Perhaps they know something the rest of us don't. Saving a hundred or so dollars a month in interest fees when you're not able to pay your balance in full adds up to a lot of 'extra' money in a year. That money can go a long way to paying off other debt. If you feel stuck because of too many monthly payments, perhaps you should consider a consolidation loan.
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If you're having trouble with debt because of too many monthly bills, a debt consolidation loan may help you get your finances in order. If a standard financial institution isn't an option due to bad credit, we can help. Visit our Bad Credit Loans website today, for more information. Visit our blog for more articles about Bad Credit and Debt.
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