Bank of Canada's Static Rate Doesn't Mean It's Time to Celebrate, Warns the Credit Counselling Society
Announcement is small relief given ongoing financial turmoil
NEW WESTMINSTER, BC, April 12, 2023 /CNW/ - Canadians are getting a slight reprieve from the storm of financial challenges they've faced in the first quarter of 2023. The Bank of Canada has announced the rate will remain at the current 4.5 percent. It might sound like good news, but experts at the Credit Counselling Society say it's the least of our worries.
"Rising costs, economic uncertainty, and an unpredictable housing market, are just a few of the financial obstacles still facing Canadians," explains Peta Wales, President & CEO of the Credit Counselling Society (CCS). "While it's good news for consumers that the rate has not increased, what we're still seeing is a growing reliance on borrowing – credit cards, payday loans, lines of credit -- and those higher debt loads, which can last years, can make it almost impossible to withstand these economic conditions without falling even further into debt," cautions Wales.
With credit card debt increasing by a staggering $93 billion across Canada last year, the impacts on financial and mental health continue to be felt. TELUS Health's recent Financial Wellbeing report found that over half of Canadians felt overwhelmed by debt. Of those, 61 percent have not reached out for financial advice or debt coaching, with 21 percent citing feeling embarrassed as the reason. Earlier this year, CCS's Consumer Debt Report noted similarly negative associations, especially from those in the 18-34 age group who said reaching out for financial help would make them feel inadequate (27%), out of options (43%), helpless (26%) or [like a] failure (27%).
"It's why so many people try to hide the problem and avoid the issue," states Sandra Fry, a Credit Counsellor at CCS. "Embarrassment and debt stigma are still very much a problem for people. It can take a long time to build up the courage to ask for help." The problem with that, she adds, is that financial issues are usually the most time-sensitive ones. "The longer someone waits to address their debts and other money problems, the greater the debt burden becomes, and the less options they have available. I much prefer if someone comes in sooner than later and I can outline more options than they might even be aware of. That's a far better scenario than waiting too long and facing more limited options with potentially greater consequences."
Those limited options can also be seen in housing choices. A recent Statistics Canada survey found 44 percent of respondents aged 25 to 34 either wanted to purchase a home or move but did not, or they moved sooner than planned or chose a more affordable house or rental.
The lack of affordability becomes even more of a barrier when you're struggling with debt, states Isaiah Chan, CCS's Vice President of Programs and Services. "Being in debt can put a hold on your future plans in a significant way. If you need to repair your credit score or pay back thousands in debt before you can start moving forward on a mortgage, it could take years."
With five more policy rate announcements left this year, the experts at CCS don't recommend waiting to get started on repairing your financial situation. Chan adds, "We are a free, objective resource for anyone who needs help with their finances. Our credit counsellors can provide guidance on your next steps, or we can review all of your options and help you build a detailed plan for getting out of debt."
Whatever you decide to do with your finances moving forward, Wales emphasizes to get help sooner rather than later. "These economic challenges are showing no signs of slowing down. Come see us, you can get your finances in order for free, and you'll be better prepared to weather any upcoming financial storms."
The Credit Counselling Society is a non-profit organization dedicated to helping consumers manage their money and debt better. CCS provides free, confidential credit counselling, debt repayment options, budgeting assistance and financial education. Visit nomoredebts.org.
SOURCE Credit Counselling Society
Media Inquires: The Credit Counselling Society has spokespeople from across Canada available for interviews to discuss this topic in more detail as well as any other relevant financial topics. Please feel free to reach out to the number below: Monika Ritchie, Media & Content Specialist, Direct: 604.636.0228, Email: [email protected]
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