Soaring Debt crisis: The rise of credit card debts among young Canadians

Proven Tips to Pay off Debt and Stay Debt-free
The cost of living in Canada has skyrocketed post-pandemic, negatively affecting young Canadians who are relying on their credit cards to augment daily expenses and gradually falling into perpetual debt. Recent data from Equifax shows that the average credit card balance owed by young Canadians has increased significantly since 2007, reaching an average of $4,300. Additionally, total Canadian credit card debt has surged by a whopping 21.9%, amounting to about $91.5 billion before the pandemic.
The cost of carrying credit card debt in Canada can range from 19.99% to 22.9%, which can be financially draining if not managed properly. This can lead to other financial issues, like low credit scores, high interest rates on the cost of borrowing, securing a mortgage, auto loans, and lines of credit.

Ways to avoid debts
The best way to avoid debts is to abstain from borrowing completely which be impossible with the rise in low employment, inflation, and buying power. As much as we hate to admit it, discipline is an essential tool in our financial toolbox that we must have to stay debt-free and increase our savings and investment. Even with all the tips on reducing expenditures, without the financial discipline to follow through, those tips are ineffective. Below are Some of the practices needed to sharpen our financial discipline skills:
Focus on Needs Over Wants: Reduce discretionary spending to focus on essentials.
Track All Expenses: Use a personal spreadsheet or budgeting app to track where every dollar goes.
Avoid Impulse Purchases: Think carefully before making unplanned purchases.
Stick to a Budget: Create and adhere to a budget to manage your finances effectively.
Limit Spending: To avoid financial strain, keep your spending below your bank balance or take-home pay after all mandatory expenses are paid.
Pay-off balance: Avoid only paying the lowest balance on debts, like credit cards, which gather interest each billing cycle. Aim to pay off the debt in full when possible.


If all these tips are exalted, seek expert help to pay down debts and stay debt-free. Any questions, leave a comment happy to help.

Sources

CFI Team. (2024). Personal Finance. Corporate Finance Institute. https://corporatefinanceinstitute.com/resources/wealth-management/personal-finance/
FNCB Bank. (n.d.). Why Is Personal Finance Important? http://Www.fncb.com. https://www.fncb.com/Why-is-Personal-Finance-Important
Munohsamy, T. (2015). (PDF) Personal Financial Management. ResearchGate.
https://www.researchgate.net/publication/279198054_Personal_Financial_Management
TD Bank. (2024). Everyday Finances: Financial & Investment Planning | TD Canada Trust. Tdcanadatrust.com. https://www.tdcanadatrust.com/planning/everyday-finances-made-easy/everyday-finances-made-easy/discretionary-spending.jsp

2 thoughts on “Soaring Debt crisis: The rise of credit card debts among young Canadians”

    1. Thanks for your comment. Yes, the current economic situation is hard on everyone, and
      where borrowing is the only option which is okay depending on what it’s spent on. I will borrow to invest or spend on mandatory expenses but never non-essential expenses.

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