MEDICINE HAT, AB. - The holiday season can be full of joy but for many Canadians, it can also be a time for incurring more debt. December 23rd is recorded as the busiest shopping day of the year in Canada. Miranda Davies, a business instructor at Medicine Hat College said shoppers are expected to spend $1.1 trillion.
While a lot of money is being spent, it might not immediately paid off.
“Statistics Canada just came out showing us that for every dollar made, $1.67 is spent,” she explained. “Every dollar we are spending are in debt, 60% of the people living in Canada are only paying that minimum payments on their credit cards.”
Davies said the average Canadian holding a credit card, has a debt load of $11,500, with young Canadians holding onto their credit card debt for longer periods of time.
“More than 40 percent of the new generation under the age of 28 haven’t paid off last year’s Christmas debt on their credit cards,” she explained. “They’re still carrying that over and that minimum payment becomes more than we can handle.”
Brian Betz, debt counsellor with Money Mentors said not planning ahead for spending can increase a person’s debt load.
“One of the things that really comes into play at Christmas is that people don’t factor in all the little things that add up to greater than normal expenses during the holiday season,” he explained.
It’s the “extra” expenses that add up said Betz, including gifts, holiday food and the cost of travel. He encourages people to prepare for Christmas by setting aside money each month of the year to prevent incurring debt.
“They don’t put away for seasonal things, annual vacations, car repairs, things like that don’t come up every month but when they do come up, they put it on a credit card,” he said. “They don’t get it paid off and the interest rate just keeps accumulating, they’re just in a treadmill of debt.”
If someone is already in credit card debt from their holiday spending or other expenses throughout the year and looking to get out, Betz suggests switching to a credit card with a lower interest rate.
“If you’re at one of the big banks, they usually have a lower interest rate credit card with less features and benefits,” he explained. “If you’re serious about paying down your debt, you might want to transfer your debt over to that card.”
Betz said speaking with a credit counsellor can help debt holders understand how to spend within their means and to budget for the holiday season.
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