Canadian Seniors are Struggling with Debt
A new report released today, shows that non-mortgage debt among Canadian seniors is growing.
According to Equifax, non-mortgage debt is on average $15,244 for Canadians over 65-years-old. These figures have been echoed by representatives from Credit Counselling Society, who claim that the number of seniors seeking help from their organization has grown to 21 per cent of their client base, which is up from the only five per cent from 20 years ago.
Larry Moser, a divisional manager at BMO InvestorLine, says it’s important for retirees thinking about borrowing money to understand how they are going to pay it back or if they are going to let their estate repay the money after they die.
He says for retirees looking to borrow, the most obvious way if they own their home is to access that equity.
“A lot of retirees are house rich and cash poor and perhaps that’s the most easily accessible option,” says Moser, adding that if a retiree is looking to borrow money, they should have an exact amount in mind. [Globe and Mail]
What can seniors do to better manage their debt? Lots:
- Understand credit: understand what makes up your credit score and what will affect it. Here’s a free guide on understanding your credit.
- Don’t rush into credit cards: don’t start with multiple credit cards, start with one (with a low limit) and master the management, then move onto two.
- Shop around: shop around for the best credit card rates and deals, and never be afraid to ask for advice when it comes to your finances.
- Read the fine print: always read your credit card agreements closely, and make sure you understand it before you sign.
- Keep cards paid off: try to pay off your credit card balance each month, not just the minimum payment.
- Pay your payments on time: just one late payment can affect your credit in a negative way, and will also raise your interest rate in the future.
- Budget: simple advice, but set a budget and make sure you stick to it.
- Update accounts: make sure your credit card companies are always kept aware of any changes in your address, etc.
- Be proactive: if you know a payment will be late, call your credit card company right away and setup a payment schedule. In most cases, being proactive won’t hurt you, and most companies are willing to work with you.
- Control spending: at the first sign of overspending on your card(s), stop using them. If you really can’t control yourself, give your credit cards to a friend for safekeeping until you get them under control again.
To learn more about credit card smarts and information you need to know, here’s my free guide: 11 Credit Card Secrets.
