New Canadian Debt Trends and What They Mean for You | Refresh Financial
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New Canadian Debt Trends and What They Mean for You


Here’s a surprising fact: the majority of consumers in Canada are now decreasing their debt load, according to a study by the credit bureau, Equifax. What’s more, the average Canadian is paying off their credit cards in full every month. It’s a positive trend and great to see, however, those who are not decreasing their debt, are adding to it enormously. These people accumulating more debt tend to be people who fall into higher income brackets, taking on more debt because they can afford it.

What are they going into debt for? The report says all kinds of things - because they have the extra means, they're spending more on houses, cars, televisions, you name it. There are a vast number of Canadians who are decreasing their debts, but the ones who are increasing their debts are taking it on at a rate that is pushing the average up for Canada as a whole.

While most Canadians are bringing their debts down, people with better paid jobs and higher income are increasing their debts and doing so rapidly. This trend has been observed taking place in the third quarter of 2016, and will likely only get worse with the holiday season.

So, what can we take away from this? Well, there are a few things.

1. Spend your income wisely

Getting a better job or more income doesn’t mean you should be spending more. Taking on more debt just because right now you can afford to make the payments each month isn’t a good enough reason. Is your work seasonal? Will you always be making this kind of money? Do you have a nest egg tucked away for emergencies? Consider what you truly cannot live without and opt for saving instead.

2. Don't make excuses for the holidays

The second thing we need to consider when it comes to this new data is that it’s really easy to sink deeper into debt over the holiday season. It’s pretty easy to use Christmas and gift-giving as an excuse to reverse any progress you’ve made bringing your debts down over the course of the year. During the holidays, more than ever, it’s important to budget, plan and save, because you never know what could be coming around the corner.

3. Your income does not equal your credit score

The third thing we can take away from this new study by Equifax is that there is now more evidence than ever that a great income and a great job don’t necessarily mean a better credit score. Your score, instead, depends on how you use your income to pay down your debts, like we talked about here. Rich people can be worse with debt than average income earning people. Way worse.

So, while overall the trend in Canada is positive, with most of us bringing our debts down, there are still warning signs we definitely need to think about, especially if you’ve seen your income increase during the past year. Keep up your good habits no matter how much you make, and the rest will take care of itself.

Were you surprised to find out that Canadians are decreasing their debt? Let us know in the comments!

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In February 2015, I tried to apply for a loan so I could pay off my school debts and my credit card. At least put a dent into my payments. Well, things went all wrong and I was denied for approval of a loan.

Refresh Financial contacted me, concerned as they are to help individuals like myself to have a better future. We went over my finances and decided that the Refresh Financial loan will bring up my credit score to apply for a loan.

I was greatly impressed when every month I saw my credit climbing to the numbers I wanted from the beginning. I was entirely happy for my credit score being higher. My job as well, I made it possible to pay bi-weekly on my payments. With that being said, I learnt to pay my outstanding bills instead of spending money.

I only not have better credit, I have better spending habits and I am happy with the results! ”

Jessica, Frog Lake, AB