Jun 11, 2013

If Clint Eastwood were a credit counsellor he might be saying to all of the debtors out there, following the announcement this week from the Bank of Canada that there will be no interest rate increase, “Do you feel lucky?”

My answer – yes. Anyone who owes money would obviously be affected by any kind of interest rate increase. But not everyone applauds this policy decision. Some influential experts are happy to see our Bank of Canada governor, Mark Carney, leave on June 1st, 2013 because they believe this is his low interest rate policy and that it is wrong or stale dated.

The interest rate has been 1 per cent since September 2010.

The Bank of Canada’s reasoning follows, “….(a) continued slack in the Canadian economy, (a) …muted outlook for inflation, and (a)… constructive evolution of imbalances in the household sector…”

Even so, the message seems to be getting louder - that interest rates won’t be this low forever. An increase is certain for the future.

My advice – this is the time to take steps to better manage household debt. There are many ways to reduce the high rate of interest on consumer debt. There are many good reasons to reduce the cost of interest.

As Canadians owe $514 billion in consumer debt (excluding mortgages) as reported in May 2013 by the Bank of Canada, interest can become an obstacle to getting out of debt. This is particularly true with credit card debt. For many individuals and families, they sit on large balances because they don’t have the cash flow to pay entire balance off. Over time interest can become your worst enemy, especially if you are only paying the minimum monthly payment.

So, the pressure is on to increase interest rates in Canada, and for those of us with consumer debt, this is the best time to take action to consolidate or manage our debt better – get a lower rate of interest and improve your cash flow at the same time.

Mortgage debt is also an important component to the consumer’s battle with interest. Kevin O’Leary recently advised on the Lang O’Leary Exchange that if you haven’t paid off your mortgage by the age of 40, then you are in big trouble. Not exactly the words he used – his words implied that you had no hope.

Some merit can be attached to this approach to wealth accumulation and retirement planning as it draws attention to getting out of debt, and that getting out of debt should be a priority for us. However, I do not, of course, agree that there is no hope for people after 40 if they have a mortgage on their primary residence. Like many other areas of personal finance, real estate is an investment – and a proven one over a 20 or 25 year cycle.

Finally, there is always hope. Age is not as important as getting control and reclaiming our lives from the clutches of high interest bearing credit. Ultimately the best solution is to wipe the slate clean.

As a matter of fact this is the main reason why I am here. To help individuals and families get out of debt.

Remember, if you are experiencing financial difficulties do not wait. Call Solutions Credit Counselling at 1(877)588-9491 or fill out our Debt Consolidation Questionnaire and get your Free Credit Counselling Advice today.

For more information visit Debt Canada - your Canadian credit education centre.

If you are a woman in debt, speak with Women and Money first. We specialize in helping women with their personal and business financeMoney management advice you can count on!

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