Canadian’s personal debt has grown and moved to floating and high rate products
CGA Canada produced their 2010 report Canadians debts. Most of us quietly assess ourselves against others and against the average as one way to judge success in achieving our financial goals. This report provides a window into the financial lives of Canadians and it is freely available.
Credit (excluding mortgages) all through the last three years has been increasing and at much higher rates than the US.
Drilling deeper we see that 77% of this debt is in loan products with floating (Line of Credit) or high rates (credit cards) and therefore essentially no amortization. We know that if the minimum payment is regularly made on those products they will take over 30 years to repay in full, no matter the amount outstanding. This is hardly a recipe for reducing debt.
The CGA worry about three future risks for Canadians.
1. Decline in income
2. Asset price shock
3. interest rate shock
At CommunityLend we want to help in any way we can with transparent prices and products designed to reduce debt while also providing some protection from the risks mentioned in this report.
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