Canadians have gotten the message: pay off debt faster. Equifax Canada’s National Credit Trends report found that not only are Canadians borrowing less but they are missing fewer payments. This is good news. It shows that more and more Canadians are taking control of their debt.
“Throughout 2012, we continued to see slower growth in overall credit and a vast improvement in serious delinquencies, which were at a record low” said Nadim Abdo, Vice President, Consulting and Analytical Services, Equifax Canada.
The good news about how Canadians are paying down their debt:
- Average fixed loan bank debt (such as car loans) grew by 5%.
- Average revolving bank debt (think lines of credit) remained flat compared to 2011
- Average credit card balances dropped by 3.7%
This seems to signal that Canadians are finding ways to pay off debt by moving away from high interest credit card debt, locking in on fixed rate loans while rates are low and are using less credit to fund consumables.
3 Simple Ways To Pay Off Debt Faster
- Pay more than the minimum payment. Break the debt repayment trap and pay more than the minimum required on our credit card statement each month. Paying the minimum only keeps you in debt longer. Instead, pay as much as you can afford each month. A little pain now is better than living with the burden of debt over your head for years.
- Lock in on low interest rates. If you have revolving or credit card debt, talk to your bank about locking in while rates are low. If you have good credit but are carrying a lot of high interest debt, ask your bank or mortgage lender about a debt consolidation loan. Lowering your interest costs, but maintaining as high a monthly payment as you can afford, will help you pay more against your outstanding debt and pay off your debt faster.
- Renegotiate with your creditors. If your debts are more than you can handle even with the first two options, you may need to negotiate a settlement with your creditors. Let your creditors know your situation. Ask for a new and lower payment schedule, with a reduced interest rate. Negotiating a settlement with your creditors on your own may work if you only have one or two debts to settle. A word of caution however: self-negotiated settlements may not be binding. A legally binding debt settlement such as a consumer proposal may be your best option. If you need help negotiating with collection agencies, Canada Revenue Agency (revenue canada) or any of your creditors you can talk to a Consumer Proposal Administrator (also a Bankruptcy Trustee) about negotiating a debt settlement.
It is good news to hear that more and more Canadians are starting to pay off debt faster and are working towards a positive financial future. Take control of your credit and debt levels too.