Why pay more interest on your debt than you have to?
According to the Financial Consumer Agency of Canada, 41% of Canadian credit card holders are not aware of the interest rate charged by their main credit card company.
As national debt-to-income ratios across the country continue to rise, you could say it’s time for everyone to wake up and smell the interest rates. This is especially true considering that 39% of Canadians would feel increased financial pressure (specifically around their ability to make their mortgage and debt payments) if interest rates were to once again start climbing.
While you have no control over whether interest rates go up or down, you do have the power to better evaluate the types of credit you (continue to) keep.
For example:
- The average department store credit card charges 20% interest
- The average bank credit card charges 19% interest
- The average line of credit charges 8% interest
If you’re paying those kinds of exorbitant interest rates (or higher), we have to break it to you—you’re paying too much.
For some education members who rely on credit to fill their income gaps, however, taking better control of their debt situation can be easier said than done. Just ask Educators Financial Group Senior Financial Advisor Graham Walker.
“With pension plan contributions and a salary dependent upon where you are on the pay grid (as well as the need to be financially sustainable throughout the summer), it can be challenging for education members to balance that whole debt-to-income ratio”, says Graham, who grew up in a household headed by educators. “But I can assure you, with the right financial plan and the drive to succeed—it is entirely possible to stop stressing about debt and start living the life you want.”
Educators Mortgage Agent Level 1 – Regional Director, Lending Services Nick Rao couldn’t agree more.
“Debt can be an uncomfortable subject for people to talk about”, says Nick. “But I show my clients that there is light at the end of that ‘debt tunnel’ by providing them with lending solutions that can seriously lighten their financial burden.”
What a difference a day (and a lower interest rate) can make.
Nick can’t emphasize enough that, when it comes to interest rates, it pays to pay attention. “For example, by simply consolidating various high-interest credit cards and personal loans into one low-rate option, you can seriously save yourself a bundle over time.”
Besides debt consolidation, here are a few other ways to get your high-interest debt under control:
- Always make your payments on time. This will keep your credit rating in good standing.
- Shop around for lower interest rates. The higher your credit rating, the more bargaining power you’ll have.
- Pay off smaller balances first. Then once one loan/card is paid off, double up on other debt payments.
Check out 5 credit tips to put you on a path to borrowing responsibly (and saving money).
Better managing your debt requires a strategy that is tailored to your unique financial situation.
That’s where Educators Financial Group comes in.
As an organization that has been helping education members to borrow ‘smarter’ since 1975, we’re in the perfect position to provide you with the products and solutions to help you conquer debt once and for all. Because in the end, it’s all about helping you achieve success, no matter your financial goals.
Ready to stop paying more interest on your debt than you have to? We’re ready to help. Click here to have a mortgage agent contact you.
†Monthly payment is 3% of balance.
††Example is for illustrative purposes only.
Source:
https://www.cpacanada.ca/en/news/canada/2018-12-03-finance-study
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