Credit Counselling Society

July 12, 2007 10:00 ET

Rise in Interest Rates Puts Pressure on Consumer Debt Load

Attention: Assignment Editor, Business/Financial Editor, City Editor, News Editor NEW WESTMINSTER, BC, PSA--(Marketwire - July 12, 2007) - A rise in the Bank of Canada rate to 4.5 % marks the first increase in over a year. This increase and the possibility for a rate change on September 5th may have some consumers feeling the pinch as they manage their debt load.

The rise in the prime lending rate effects short-term borrowing. Consumers with lines of credit, loans or variable mortgages will see an impact on their monthly payments. With long-term fixed mortgage rates also rising from 6% to 7.24% over the past 12 months, the cost of borrowing may quickly become an issue for those consumers with a heavy debt load. Many Canadians have been on a spending spree with much of that purchasing power on credit. According to Statistics Canada, over $321 billion in consumer credit, excluding mortgages was granted through banks, credit unions and trust companies in 2006, up 27% from 2003.

Scott Hannah, President of the Credit Counselling Society, the non-profit debt solutions service says that consumers need to carefully evaluate their overall financial fitness. "If rates continue to rise to offset inflation those consumers servicing a heavy debt load could be caught short." notes, Hannah. "It is a double edged sword. Inflation means higher costs for goods and services which can place a strain on the average household income. Higher interest rates are needed to slow this inflation and that can place pressure on consumers if they are not in a strong financial position to pay the increased costs of borrowing."

Reviewing your monthly household budget and financial objectives is always time well spent. "We recommend that people keep a budget by listing all their monthly expenditures, including mortgage and loan payments, taxes, insurance, food, transportation and utilities as well as setting aside an amount for seasonal expenses." suggests Hannah. "When a single item, such as interest costs increase, it is important to review your budget and make adjustments in spending. Consumers who rely on their line of credit or credit cards to supplement their income and defer these costs may cause themselves financial difficulties in the future."

About the Credit Counselling Society

The Credit Counselling Society is a non-profit organization dedicated to helping individuals and families find solutions to their debt and money problems. They provide free credit counselling and confidential guidance for debt repayment and credit education to consumers across Canada. The Credit Counselling Society is federally registered as a Canadian Charitable Organization and licensed in the provinces of British Columbia, Alberta, Manitoba and Saskatchewan. For more information, visit or call 1.888.527.8999.
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Contact Information

  • Scott Hannah, Credit Counselling Society
    Primary Phone: 604-636-0211
    Secondary Phone: 604-527-8999
    Toll-Free: 888-527-8999