Bank of Canada Staying at 1.75% for December 2018 – But Don’t Delay Dealing with Interest Rate Debt

Good news for 2018: we won’t be seeing any more Bank of Canada interest rate increases this year.

On December 5, 2018, the Bank of Canada (BOC) announced that the overnight interest rate would stay at 1.75% for the month of December.

The next interest rate announcement is scheduled for January 9, 2019.

What does this mean for Canadian consumers? It’s a positive if:

You’re carrying a lot of debt — this means your payments won’t be increasing yet.
You’ve been charging holiday purchases to your credit cards. While you’ll still have to pay for those purchases, and associated credit card interest rates if the balances aren’t paid in full, you won’t have an additional BOC rate hike.
You have a variable-rate mortgage. This means that your rate won’t be increasing this month.
You’re rebuilding credit. If you’re working on credit repair, it’s important to pay your bills in full and on time. If you have bills that are affected by changing interest rates (i.e. not a fixed cost), it will make it easier on your budget.

What this doesn’t mean:

You should spend more this holiday season. Remember that whatever you charge will need to be paid off in full and on time if you want to avoid interest. If you’re racking up holiday purchases and are tempted to spend more because of the interest rate hold, proceed with caution.
Interest rates are done increasing. It’s possible the BOC will raise rates during the January 9 announcement. If so, this is a relatively small window. Make a plan now while there is a break in increases.
You can ignore dealing with debt. If it’s hard to make ends meet now, it will be even more difficult if rates rise again. Honestly assess your finances and ask if you could handle an increased rate. If not, it’s time to consider debt management options, like accessing home equity, applying for a debt consolidation loan, or filing for a consumer proposal or for bankruptcy.

DebtCare Canada can help future-proof your budget against interest rate increases.

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