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Category: Bank of Canada Interest Rate

  • Does a Lower Interest Rate Really Mean That You Should Borrow More?

    As the economy is beginning to show signs of recovery and the physical distancing rules are being eased, various benefits and deferrals mandated by the government are also ending. With the buffer being removed, it is crucial for you to evaluate your financial position to ensure that you’re prepared to handle your debt payments.

    For instance, the Canada Revenue Agency’s tax filing deadline for 2019 individual income tax returns is now September 30. Individuals who are not able to make payments by this date will likely face late-filing penalties.

    Similarly, over 700,000 households who had been given the benefit of deferring mortgage payments, will soon have to resume these payments.

    Basically, all the payments that were temporarily deferred will be due at some point.

    Interest rate update

    Today, the Bank of Canada issued a press release announcing its decision to keep the interest rate at 0.25%. The interest rate is currently being kept on the lower side to enable individuals and businesses to have access to better credit deals during these unprecedented times.

    While it may seem enticing to explore borrowing options, given that the interest rate is low, you should proceed with caution.

    Even though the BOC interest rate is lower, it doesn’t mean that all lenders will offer a low rate, especially to those individuals who already have debt to pay off. Also, additional credit can help in the short-term, but it is not sustainable, and you will eventually need a plan to pay it off.

    Long term planning is the key to eliminating debt!

    What’s the recommended course of action?

    It is important to start getting your finances back on track. Some of the things you can do to keep your finances in check are:

    • Reviewing all your liabilities and paying off high-interest debt.
    • Creating a budget and tracking expenses.
    • Avoiding unnecessary debt such as credit card expenses, until absolutely necessary.

    Following these steps will help you anticipate and address any future issues such as a lien on your property. If you feel that you need additional support, reach out to credit counseling services to assist in consolidating debt payments or filing for insolvencies.

    What’s the right solution?

    There is no one size fits all approach. Especially during these times.

    The solution usually depends on the type of debt you are carrying. For instance, mortgage debt could be dealt with through a refinancing, if enough equity is available. Unsecured debts might be eligible for settlement, and outstanding utility bills could be handled through a debt consolidation loan.

    The key is to consult with a debt counsellor who can walk you through your options and make a plan that’s tailored according to your requirements.

    At DebtCare Canada, we have helped thousands of Canadians reduce and restructure their debt. If you’re struggling with mortgage, rent payments, or any other bills, please get in touch so we can help you find a way through.

    Contact us by calling or texting 1-888-890-0888 or visit www.debtcare.ca to learn more about our credit counselling services.

    You can also find out more about our financial solutions here: https://debtcare.ca/financial-products/

    The next BOC announcement is scheduled for October 28, 2020.

  • BOC Interest Rate Announcement and Your Lendable Equity: Are They Correlated?

    The COVID-19 pandemic has impacted economies across the globe and the Canadian economy is no different. Economic uncertainty has led to business closures, unemployment, and a decline in real estate activity.

    Looking specifically at the real estate industry, there has been a significant decline in the number of properties sold over the past few months. In fact, according to the Housing Market Outlook, CMHC does not expect housing sales and prices to recover before mid-2021.

    What does the future hold? 

    The decline in Canada’s real estate industry has a direct correlation with the rising rate of unemployment. In May 2020, the unemployment rate was the highest it has been in over four decades! Additionally, many jobs in Canada have disappeared altogether. 

    Ontario alone has lost over one million jobs since the pandemic started. Canada’s national statistics agency reported the loss of over 64,500 jobs, only in the month of May, bringing the provincial unemployment rate to a staggering 13.6%.

    Due to the growing uncertainty and strained budgets, many Canadians have to choose between taking care of current pressing expenses and making debt payments. To top it off, the short-term debt relief that kept them afloat is now ending.

    Therefore, the Canadian government is deploying various fiscal policies, along with lower interest rates, to pave a path for economic recovery. In a recent press release, BOC shared an overnight target rate of 0.25%. As the interest rate continues to remain low, there is an opportunity for you to refinance your mortgage and explore other debt repayment options.

    Assessing your net worth

    A good point to start from would be reassessing your net worth. You can do this by simply deducting your overall debt from the value of your assets. In case, you don’t have a decent credit score (680+) and provable income, you may have to rely on your home equity to clean up your finances.

    Though, in addition to the housing regulations introduced in the recent years, CHMC has announced further tightening of lending standards in June 2020 to protect the housing market during COVID-19. Due to these additional measures and the high unemployment rate, CMHC has forecasted a 9-18% decline in the average house prices over the next year.

    This will impact your loan-to-value (LTV) ratio (the ratio of the loan to the value of your home) and reduce the lendable equity available. As the value of a property decreases it reduces the amount you are able to borrow.

    Plus, if your credit has been bruised or your income was disrupted due to COVID-19, a trust company, a mortgage investment corporation, or a private lender might also be hesitant to lend to you as they base their decision to lend mainly on equity.

    This is why a quick and accurate analysis of equity and credit is absolutely essential at this point in time!

    Planning ahead

    Equipped with the right information you can avoid unpleasant surprises and restructure your debt on better terms.

    Discuss your financial circumstances with a debt counsellor to get guidance and create an actionable plan. Choose an experienced debt counsellor who can connect you to lenders, who have access to federal government programs, to protect you if refinancing is not an option.

    Even if you’re laid off, depending on your equity position, a qualified debt counsellor can still provide solid recommendations. For instance, they may recommend taking out a home equity loan. Home equity loans allow you to consolidate your high-interest debt such as overdrafts and credit cards into a single monthly payment. This not only improves your finances but also enables you to take advantage of lower interest rates and improve your credit rating.

    At DebtCare Canada, we offer a free consultation to discuss debt consolidation and settlement solutions that are right for you.

    Contact us by calling or texting 1-888-890-0888 or visit www.debtcare.ca to learn more.

    You can also find out more about our debt consolidation and financial solutions here: https://debtcare.ca/financial-products/

    The next BOC announcement is scheduled for September 09, 2020.

  • Bank of Canada Interest Rate Decreases and Coronavirus in Canada

    Over the past month, the Bank of Canada interest rate has dropped to the lowest it has been since July of 2017 — 0.25%.

    Is this a good thing? A negative? And what does it mean for your finances — especially during the novel coronavirus (COVID-19) pandemic? We’re answering all these questions and more.

    Canadian Interest Rate Decrease: March 2020 to April 2020

    From March 4, 2020 to April 15, 2020, the Canadian interest rate has dropped significantly.

    Before March 4, it was at 1.75% — the highest it reached since the Bank of Canada (BOC) began increasing it in July of 2017.

    However, on March 4, the interest rate dropped to 1.25% — due to threat of the coronavirus.

    The next BOC announcement was scheduled for April 15. But between March 4 and April 15, the BOC made two emergency changes to the interest rate as the impact of the coronavirus became direr.

    On March 13, the BOC dropped the interest rate to 0.75%.

    On March 27, they further decreased it to 0.25%.

    The BOC maintained 0.25% on April 15 and noted that this is the lower bound — indicating the rate is not likely to go any lower. (By comparison, some other countries have interest rates of 0% or even a negative percentage.)

    With interest rates the lowest they are likely to get, what does this mean for you?

    Managing Credit During the COVID-19 Pandemic

    Lower interest rates traditionally make it easier to secure access to credit. And that was the intent of the BOC in lowering them during this time — to help Canadian consumers and businesses have access to credit to weather the storm.

    However, the COVID-19 pandemic is a truly unprecedented situation, and there are some things to keep in mind if you’re considering taking on more credit during this time.

    1. Not all lenders — and credit — are the same

    When it comes to securing a loan in Canada, not all lenders are the same. A loan from a bank or a reputable private lender might look very different from a payday loan, for example.

    Similarly, not all credit is good credit. If you are taking on a loan, make sure that it is from a lender that reports to the Canadian credit bureaus so good payment habits can be tracked and used to fix credit, if needed.

    And credit isn’t the only consideration to make when taking on a loan. You also have to look at your ability to repay it. For instance, if you take on a new credit card, you are responsible for paying the balance each month — and this could vary depending on how much you use it. However, a secured loan may have a fixed payment plan that can make it easier to budget for.

    1. Some lenders might be increasing rates to mitigate risk

    The other consideration with interest rates is that just because the Bank of Canada key interest rate is lower, it doesn’t mean that all lenders have lowered rates.

    For instance, analysts have noted that rates for new mortgages are actually going up, not down.

    This is because of the risk that lenders must take on during this time. With so many Canadians out of work or on the cusp of being out of work (the Bank of Canada noted that more than 1 million people lost their jobs in March), lenders may fear that clients will lose their income and not be able to repay their loans – so they set a higher interest rate.

    1. Only take on credit you can afford

    Just because you can access more credit doesn’t necessarily mean that you should.

    This is an especially tough situation because with the ongoing COVID-19 pandemic, if you have lost income, credit can seem like the only way to bridge the gap. But you could be doing long-term damage to both your credit score and your finances.

    While credit can help in the short-term, you need a plan to pay it off. Relying on debt to pay your bills isn’t sustainable.

    If it feels like the only choice that you have, there might be another way. Contact a debt counsellor for a free consultation to explore other options.

    1. Make wise use of credit

    If you do decide to take on more credit, do so with your eyes open and with a purpose in mind.

    Lower interest rates can make this a good time to deal with your debt and create more flexibility in your budget.

    For instance, a debt consolidation loan could take care of your unsecured debts.

    If you have lost income, you may be able to get a better settlement deal for any existing debts now, vs. waiting for your paycheque to return. This is because debt settlements are generally based on income.

    Make lower interest rates work for you — not the other way around.

    Read the full text of the April 15 Bank of Canada announcement here: https://www.bankofcanada.ca/2020/04/fad-press-release-2020-04-15/

    The next BOC announcement is scheduled for June 3, 2020.

    Have questions about managing your debt during COVID-19 and beyond? DebtCare Canada is here for you – 100% remotely. We are fully operational with service by phone or online.

    Call 1-888-890-0888 or visit www.debtcare.ca for a free consultation

  • COVID-19 Income and Debt Help for Canadians

    The past two weeks have been a non-stop train of breaking news as Canada copes with the novel coronavirus, COVID-19.

    This public health pandemic is affecting many across the country — both medically and financially.

    In order to “flatten the curve” and reduce the risk of infection, many businesses and public services have been suspended, including in some provinces:

    • Public and private school closures.
    • Daycare closures.
    • Eat-in restaurant closures (take-out and delivery are still available).
    • Temporary closure of non-essential businesses, such as clothing retailers.
    • Temporary closure of public event spaces, such as movie theatres.
    • The list goes on…

    While all of these measures are meant to reduce COVID-19 risk and pressure on our healthcare systems, it has created another challenge: financial difficulties.

    Many Canadians are now out of work, or unable to work due to the need for childcare or caring for those who are ill. While some are working from home, not everyone has that opportunity.

    Businesses are also feeling the loss of income, and some have had to lay off employees temporarily.

    While public safety is essential, there is no denying the challenge this has had on the Canadian economy — and that’s where emergency relief comes in.

    Emergency Response Package

    On March 18, 2020, Prime Minister Justin Trudeau announced an economic aid package of $82 billion. This includes:

    • A temporary boost to Canada Child Benefit payments.
    • A new Emergency Care Benefit of up to $900 biweekly, up to 15 weeks, to provide income support to workers who have to stay home and don’t qualify for paid sick leave or employment insurance (EI). This includes those who are self-employed.
    • A new Emergency Support Benefit to provide up to $5 billion in support to workers who are not eligible for EI and who are facing unemployment.
    • A six-month, interest-free reprieve on student loan payments.
    • The income tax deadline has been extended to June 1, 2020 and taxpayers can defer tax payments until August 31.
    • And more.

    Mortgage Payments Deferrals

    The Big 6 Banks announced on March 17 and 18 that they are taking measures to support customers on a case-by-case basis to provide solutions, including up to a six-month payment deferral for mortgages and the opportunity for relief on other credit products.

    This is meant to help those who are facing challenges due to COVID-19, such as pay disruption, childcare disruption, or illness.

    Customers are encouraged to reach out to their lenders to ask what assistance there is for them.

    Bank of Canada Interest Rate

    On March 13, 2020, the Bank of Canada announced an emergency interest rate cut to 0.75% — the lowest that it has been since 2017.

    “It is clear that the spread of the coronavirus is having serious consequences for Canadian families, and for Canada’s economy,” the Bank said.

    The next Canadian interest rate announcement is scheduled for April 15, 2020. Economists are predicting the interest rate will be cut again.

    The lower interest rate means that credit is easier to secure — and is especially helpful for variable-rate debts, such as variable-rate mortgages, credit cards, or unsecured lines of credit.

    Putting It All Together — and Dealing with Debt

    Let’s talk for a moment about the impact of all of this. While these are good measures temporarily, we must acknowledge that they are not necessarily long-term solutions.

    For people relying on a certain amount of income to meet their bills, $900 biweekly is likely not enough to cover their expenses.

    And then there is the matter of deferrals — whether that be deferring mortgage payments, student loans, income tax payment, or otherwise.

    These payments will still need to be made eventually. Some of the details have yet to be confirmed, but consumers need to be aware that these payments are not just disappearing. These methods are meant to give you time to get the money together, when hopefully the economy is recovered, along with public health.

    But (and there is a big but) the money will still be owed. You will still need to find the funds.

    If you are currently earning less than you usually make due to COVID-19, or have a hard time meeting your bills regardless, other measures may need to be taken to get your finances on track.

    These might include:

    • Creating a budget and tracking expenses.
    • Avoiding taking on more unnecessary debt, such as charging expenses to your credit card.
    • Consolidating debt payments and paying off high-interest debt.
    • Filing for insolvencies, such as bankruptcy or consumer proposal.

    Take the time now to make a plan for your finances during the COVID-19 pandemic. If you are on the brink, contact a debt counsellor today.

    Debt can weigh down your lifestyle, particularly when money is tight. If you have $10,000 in credit card debt, those payments can take away from your ability to pay the mortgage or rent, buy groceries, or pay utility bills. When every dollar counts, you don’t want any more than necessary going towards your debt payment.

    At DebtCare Canada, we remain available by phone, text, or online across the country. We will talk through your financial options with you and help you find the best path forward for your unique situation during the COVID-19 pandemic or otherwise.

    Contact us for a free consultation. Call or text “Help” to 1-888-890-0888 or visit www.debtcare.ca.

  • Bank of Canada Interest Rate Stays at 1.75% for March 2019

    The Bank of Canada interest rate is staying at 1.75% for March 2019.

    On March 6, 2019, the Bank of Canada (BOC) announced they are maintaining the overnight interest rate for the time being.

    Their reasons were:

    • The slowdown to the global economy has been worse than the BOC predicted – including trade tensions and uncertainty.
    • In Canada, consumer spending is down despite employment growth. Essentially, people are spending less but earning more.
    • The housing market is also down.
    • Business exports and investments have fallen short of expectations.

    The next BOC announcement is scheduled for April 24. Between now and then, the BOC will be closely watching “developments in household spending, oil markets, and global trade policy.”

    What This Means for You

    At first glance this is good news – no interest rate increase means more time to deal with outstanding high-interest debt.

    But there is some information that could be concerning.

    1. Housing Affordability

    According to the BOC, Canadians are earning more but spending less. At the same time, the housing market is softening – so many homeowners may be locked out of the market or have their home equity drop.

    Housing affordability in Toronto, Vancouver, and other major cities has been making headlines recently. Having a bigger paycheque may not mean much if your expenses are still rising.

    What to do if you’re worried about your property value or accessing mortgage financing:

    Talk to a financial counsellor about your home equity position and what your options are. For instance, at DebtCare we offer first mortgages, second mortgages, home equity lines of credit, and more.

    2. Unstable Employment

    There have also been headlines about precarious employment – meaning more people have jobs, but those jobs are not necessarily stable income. They may be temporary contracts or have fluctuating hours. In these cases, it can be hard to plan for, and stick to, a budget.

    If you’re worried about stable income:

    Talk to a financial consultant about creating a flexible budget that works for you and about financing for slower periods.

    3. Household Debt

    The third factor that might be at play is many Canadians are using any extra income to pay off debt. Canadian household debt reached a new high in 2018 — over $2.16 Trillion. When you have high levels of debt, it can be hard to pay it all down. This often causes a vicious cycle of paying for the same bills over and over, especially if you are only making the minimum payment each month.

    If you’re worried about household debt:

    Talk to a financial consultant about your debt management options. Debt consolidation, home equity, or insolvency filing options – like filing for a consumer proposal or for bankruptcy – can help deal with problem debt in a sustainable way.

    Get your finances on track before the Bank of Canada announcement on April 24. DebtCare Canada can help.

    Contact us today for a free consultation. Call 1-888-890-0888 or visit www.debtcare.ca.

  • What You Should Know to Be Financially Prepared for 2019

    Make a Personal Finance Plan for Higher Interest Rates, Mortgages, Line of Credit Payments, and More

    The new year is upon us. Do you have a personal finance plan for 2019?

    The Canadian economy is changing. We have already seen the effects of this in 2018. Canadian consumer debt is staying at high levels — Canadians owe more than $2.13 Trillion in debt —and interest rates are continuing to rise.

    The same tactics that used to work for managing your finances may not cut it for 2019.

    When interest rates were at all-time lows, if you wanted to renovate your house, it might have made sense to take out a purchase line of credit (PLOC). But rising interest rates mean both higher mortgages and line of credit payments, so this may not be a practical choice any longer.

    The housing market may continue to cool, so home value could decline — meaning it is possible that you will not be able to access as much home equity.

    Plus, if you are using lines of credit with variable interest rates, you may find yourself paying more over the long run, especially if you are already carrying other debts.

    Going into 2019, you should have a plan for your debt — a personal finance plan.

    First, ask yourself these questions:

    1. What debts am I currently carrying?
    2. Are there any that will fluctuate with interest rates (credit card debt, lines of credit, unsecured loans, etc.)?
    3. If so, is there a way that I can consolidate debt now before interest rates increase again?

    Then consider your home equity.

    And, finally, look at what is on the horizon for 2019 (and beyond):

    • What financial projects am I hoping to complete in 2019?
    • What big savings goals are coming up in the next five years? Ten years? (Retirement, kids going away to school, relocating, etc.)
    • How much will I need for those goals and what is the best way to finance them?

    When you know the answers to these questions, you can make a budget for the year ahead and stay on the right financial track.

    There have been several interest rate increases already, and economists are predicting even more in 2019. Waiting and seeing could prove dangerous if you are carrying a lot of debt.

    Even if you are not carrying a lot of debt, it may be in your best interest to think about big expenditures now rather than later. The new year is the perfect time to sit down and plan for the future. Be sure that your planning includes your personal finances!

    DebtCare Canada can help you make a personal finance plan that considers your entire financial position.

    Contact us today for a free consultation. Call 1-888-890-0888 or visit www.debtcare.ca.

  • No Interest Rate Increase for January 2019: Time to Restructure Debt?

    There will be no interest rate increase this month, or in February 2019.

    The Bank of Canada (BOC) announced on January 9, 2019 that the overnight interest rate would remain at 1.75% for the time being – at least until the next announcement, scheduled for March 6, 2019.

    Reasons for the hold include the global trade economy (especially U.S.-China trade conflict); lower oil prices; and weaker-than-expected housing investment and consumer spending. Areas affected by oil production, like Alberta, may also struggle with consumer spending in the near future.

    There’s good news, too. The Canadian economy is doing well, the BOC said, with unemployment at a near 40-year low. Inflation is on target as well.

    And, of course, the hold is good news if you are carrying variable-rate debt.

    With nearly two months to go until the next BOC announcement, now could be a good time to restructure debt. But what does that mean exactly?

    If you are carrying $5,000 of debt on one credit card, $2,000 on another, and have a $10,000 line of credit, you might owe interest on all of those amounts. If interest rates increase again, because they have variable (non-fixed) interest rates, you’ll owe even more.

    But if you take steps to restructure debt – move it around or combine it – you won’t owe as much interest. Plus, you may even be able to restructure in a way that moves your debt to a fixed interest rate, meaning it won’t change with the BOC overnight rate.

    Options for debt restructuring include:

    • Accessing home equity.
    • Obtaining a debt consolidation loan.
    • Entering into a debt relief program.
    • Filing for a consumer proposal.
    • Filing for bankruptcy.

    Whichever route you choose, it’s best to act now, before interest rates rise again. The BOC has said more increases will likely be warranted in 2019, though they didn’t specify when. The best course of action is to get prepared now so when it does happen, you won’t have to worry.

    DebtCare Canada can help. Contact us today for a free consultation to go over your debt restructuring options, find financial relief, and more.

    Call 1-888-890-0888 or visit www.debtcare.ca. 

  • 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.

    Contact us today for a free consultation. Call 1-888-890-0888 or visit www.debtcare.ca.

  • Latest Bank of Canada Interest Rate Increase: 1.75%

    The Bank of Canada (BOC) has made another interest rate increase.

    As of October 24, 2018, the BOC interest rate is at 1.75% — the highest it has been since 2008.

    The Canadian and U.S. economies, job growth, and inflation were all taken into account. The BOC also discussed household spending as part of their justification.

    “Households are adjusting their spending as expected in response to higher interest rates and housing market policies,” the BOC said.

    “In this context, household credit growth continues to moderate and housing activity across Canada is stabilizing. As a result, household vulnerabilities are edging lower in a number of respects, although they remain elevated.”

    Translation: the BOC believes that household debt is decreasing, and Canadians are spending less due to increased interest rates and new housing regulations, such as the mortgage stress test.

    They say that Canadians are taking out less credit and are able to afford the credit they do have.

    Of course, that may be true generally, but it is not always the case. Canadians may be taking out less credit, but they may also be struggling to pay off current debts.

    For example, if you have a high amount of credit card debt, your credit card interest rates will take a hit with the latest increase.

    If you had a credit card with a 20% interest rate before this raise, that would now be a 20.25% interest rate. A small hike, yes, but it could make a big difference.

    Apply that increase to all of your debt — can you afford the extra payments?

    And even if you can afford the extra payments, is that the best use of your hard-earned money?

    Whether you are carrying a high amount of debt, a low amount of debt, or want to take on more credit with a plan for repayment, we can help.

    At DebtCare Canada, we’ll help you build a plan for debt consolidation, credit repair, and more.

    The next BOC rate announcement is scheduled for December 5, 2018. The BOC said that more increases are on the horizon in 2019, and possibly sooner.

    Get in touch before then. Call 1-888-890-0888 or visit www.debtcare.ca.

  • Should You Get a Home Equity Loan to Pay Off Debt Before Interest Rates Increase Again?

    How confident are you that you could survive another Canadian interest rate increase? If your answer is “not very” perhaps it is time to consider getting a home equity loan to pay off debt.

    Since July of 2017, the Bank of Canada (BOC) interest rate has increased from 0.5% to the current 1.5%. Although the BOC held off on increasing the rate again in September of 2018, economists speculate that rates could go up as soon as October 24, 2018 — the next scheduled BOC announcement.

    Throughout the remainder of 2018 and 2019, experts predict that interest rates could reach as high as 2.25%. If that happened, would you be able to cope?

    Increasing interest rates affect all forms of unsecured debt — credit cards, lines of credit, unpaid bills, variable-rate mortgages, and more. Even some secured debts, like a fixed-rate mortgage, could be affected when it is time for renewal as Canadian mortgage rates have also increased along with the interest rate.

    This means that if you owe $10,000 on a credit card and are paying 1.5% interest, you would owe $10,150 with the interest calculated. However, if the interest rate were to increase — say to 1.75% — you would owe $10,175.

    That may not seem like much of a difference, but credit card interest rates are rarely that low, so you may be paying even more in interest. In that case, even an extra $25 could be a big burden. And many people have more than $10,000 worth of debt. Some have hundreds of thousands worth of debt; 1.75% interest on a debt of $100,000 would be an extra $1,750.

    Plus, the longer it takes to pay off a loan, especially one like a credit card debt without a repayment schedule, the more interest you will be charged. Imagine that extra $25 multiplied by 12 months — suddenly you would be paying $300 more during the year than you otherwise would have. Even if you can afford it, couldn’t that money be put to better use elsewhere?

    The solution is to deal with your debt before interest rates increase again. And you may just be standing on a way to pay it off — literally.

    If you own a house, you could potentially access financing to pay off your outstanding debts by taking out a home equity loan or refinancing your mortgage. You would likely be left with one monthly loan that you would have to repay, but you would have a fixed-interest rate. This way you would know exactly what you have to pay every month, so you could plan for the expense.

    Some debt consolidation options available through your home equity include:

    By consolidating debt through a home loan or mortgage refinancing, you could protect yourself against future interest rate increases and make sure you stay financially well no matter what the BOC decides.

    At DebtCare, we offer one of the most competitive financial programs to help people no matter their credit or income. Bad credit? No problem. Self-employed? No problem.

    Contact us today for a free consultation to find out more about using a home equity loan to pay off debt.

    Call 1-888-890-0888 or visit https://debtcare.ca/financial-products/.