Rate hike a good time to regroup

Re: Bank of Canada raises interest rate for first time in 7 years to 0.75%, July 12

Last Wednesday, the Bank of Canada announced its decision to increase its benchmark interest rate, from .5 to .75 per cent. With that, it now costs more to borrow money in Canada.

Canadians with variable-rate mortgages and lines of credit will be impacted right away. As for the rest of us, we will feel it when we apply for credit or renew an existing credit obligation. Mortgages. Personal loans. Car loans. Whatever types of debt we assume in the near future, it is likely that they will come at a higher cost.

Though only .25 per cent, this increase is not without significance to those of us who are already financially overextended. Canadian households are among the most indebted in the world today. And, in the wake of this week’s announcement, some of us may find ourselves in situations where it has become difficult to make ends meet.

This, in turn, makes us even more vulnerable to unexpected life events, such as a losing a job or suffering from a serious illness.

But this interest-rate hike can present a fresh opportunity and motivation to improve our financial well-being.

As Commissioner of the Financial Consumer Agency of Canada (FCAC), I encourage all Canadians to take a look at their finances. Create a budget. Live within your means. And, of course, when possible, reduce debt and avoid taking on more than is affordable.

Financial consumers can derive invaluable information on and understanding of the best ways to achieve these goals by visiting the agency’s website at: Canada.ca/money.

Lucie Tedesco, Commissioner, Financial Consumer Agency of Canada