The announcement is a small relief given Canada’s ongoing financial turmoil
NEW WESTMINSTER, BC, April 12, 2023 /CNW/ – Canadians are seeing a slight easing of the storm of financial challenges they’ve encountered in the first quarter of 2023. The Bank of Canada has announced the rate will remain at the current 4.5 percent. This may sound like good news, but experts at the Credit Counselling Society warn 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, the President & CEO of the Credit Counselling Society. “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 climbing a massive $93 billion nationwide last year, the impacts on financial and mental health continue to take a toll. TELUS Health’s recent Financial Wellbeing report revealed 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 reporting that feeling embarrassed as the reason. Earlier this year, the Credit Counselling Society’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%), helpless (26%), out of options (43%), or a failure (27%).
“It’s why so many people try to hide the problem and avoid the issue,” shares Sandra Fry, a seasoned Credit Counsellor at the Credit Counselling Society. “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 discovered that 44 percent of respondents aged 25 to 34 either wanted to purchase a home or move but did not, or they moved sooner than originally planned or chose a house or rental that was more affordable.
The lack of affordability becomes a greater barrier when you’re struggling with debt, shares Isaiah Chan, the Credit Counselling Society’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 to go this year, the experts at Credit Counselling Society don’t recommend waiting to get started on addressing 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 as you move forward, Wales emphasizes that it’s important 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.”