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Tag: interest rate increase

  • 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. 

  • 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.