TORONTO, ONTARIO — A recent report released by Montreal-based BMO Financial Group data yielded staggering information about credit card holders in Canada — 46 percent are currently in debt with credit card companies, 30 percent do not pay their credit card bills every month and 28 percent have additional credit card debt to the tune of $1,192, on average, as a result of accumulated spending over the holiday season.
The survey discovered approximately one in four Canadian cardholders see their credit card as an additional spending resource — a misconception that is increasingly popular among Millennials.
Fifty-two percent of credit cardholders cover most purchases via credit card, while one-third of these spenders do not keep track of their monthly expenditures until reviewing their bill at the month’s end.
Only 51 percent of cardholders actually pay off their credit card bill in its entirety each month. Ultimately, this leaves 26 percent of these card users in a vicious cycle of gathering any and all available funds to foot the credit card bill and inevitably tacking on additional debt to cover other expenses.
Two of the most prominent monetary troubles for Canadians include dedication to budgeting and over-spending on unnecessary items.
BMO Bank of Montreal’s Managing Director of North American Retail Payments, Nick Mastromarco recommends that a credit card be used as “a payment tool, as opposed to a borrowing tool.”
Mr. Mastromarco also suggests that, with the help of a financial planner, Canadians create a budget, factoring in spending habits and savings plans, in order to manage their monthly household finances.
Keys to establishing healthy credit card habits:
- Build a budget — Break down all of your regular monthly expenses and include them in detail, along with your savings goals and debt repayment expectations. Make it detailed but realistic. Review your spending history and habits. If your typical monthly spending on groceries is around $500, don’t budget $150 as a goal. Most importantly, once you set a budget, commit to it.
- Skip the spending shock — When that monthly bill comes around, its contents should not come as a surprise. Monitor your daily expenses and track your spending consistently. Your parents may have taught you to log your expenditures by hand and balance your checkbook monthly. Today, there are all sorts of apps to help you manage your finances from your mobile device.
- Relish the rewards: Take advantage of rewards offered by credit card companies and use them to offset costs of spending. Airline air miles, no-fee cards and gas or grocery rewards are some benefits offered by most credit card companies. Use them.
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Editorial Note: Opinions expressed here are the author's alone, not those of any bank, credit card issuer, airline or hotel chain, and have not been reviewed, approved or otherwise endorsed by any of these entities.