Worry over personal debts on the rise
Charis Sweet-Speiss’ descent into credit card debt was long and gradual and she knew her spending habits spelled trouble. But she maintains at the end it was “way too easy” to end up owing $67,000 on plastic.
“I was a credit card poster child,” said Sweet-Speiss, a 64-year-old registered nurse from Oliver who used the plastic mostly for everyday expenses.
She had a MasterCard, Visa, American Express and an increasing number of offers for cards because she was a good customer who kept up with minimum payments, but wound up living paycheque to paycheque due to the mounting bills before signing on to a debtrepayment plan four years ago.
And while Sweet-Speiss is climbing out from under her debt, there is new evidence that more British Columbians are becoming more uncomfortable with their own debt in a survey released Monday by the accounting firm MNP.
Faced with skyrocketing property prices and rising rents that contribute to a high cost of living, “many (consumers) feel they can’t get ahead and have no choice but to be in debt,” said Lana Gilbertson, a licensed insolvency trustee with MNP.
About a quarter of B.C. respondents expressed regret over the amount of debt they’ve taken just this year alone and up to one-third said they regretted the debt they’ve built up over their lives.
“We are seeing more and more people accumulate more debt than they used to,” said Judy Scott, an insolvency trustee and senior vicepresident at MNP.
“Part of it is low interest rates. Part of it just credit being very available to them.”
People are getting used to carrying higher levels of debt, Scott said, although they are also losing track of how much keeping up with payments on rising levels of debt can stretch expenses and put them at risk of going broke if interest rates rise.
The MNP survey, conducted by the research firm Ipsos, used an online panel of 1,500 respondents from across Canada, with a margin of error of plus or minus 2.9 percentage points 19 times out of 20.
In the results, four in 10 B.C. respondents said they are $200 or less per month away from not being able to pay all of their bills, though that finding is contradicted by declining rates of insolvency in the province.
Sweet-Speiss wound up paying up to $1,600 per month just to pay minimum balances on 13 credit cards, which stretched her ability to pay other bills and once forced her to use her bank’s grace option to skip a mortgage payment.
“It was very disheartening,” she said of that experience.
But she said she is now a year away from completely pulling herself out debt of thanks in part to a repayment plan arranged by the Credit Counselling Society.
Scott Hannah, CEO of the Credit Counselling Society, said he is wary of the MNP’s finding that four in 10 reported they are close to defaulting on payments because insolvency numbers are going in the opposite direction.
However, the MNP survey results are consistent with other studies that British Columbians are continuing to rack up debt, but haven’t built up a cushion to handle the sudden impact of a layoff, emergency car repair or other financial shock.
“Overall, consumers know that they’re carrying a lot of consumer debt,” Hannah said, “and know they should be taking action to address it, but they’re not.”