Hello, time traveler!
This article was published 13/12/2021 (239 days ago), the information it contains may therefore no longer be up to date.
Dear Silver Lady,
I check my credit all the time – do you think it will go down in December?
Ken
Dear Ken,
December is when Canadians spend the most, from food and household items to the Christmas season and family gifts.
Spending more shouldn’t lower your credit Ken, unless you plan on not paying it back in full and carrying a debt balance into the new year. One thing that we had not anticipated this end of the year was the higher level of inflation. that will hit everyone’s wallet now and into 2022.
According to a survey conducted by Equifax Canada, 64% of Canadians have checked their credit report in the past year.
“While there are still a lot of people worried, it’s encouraging that consumers are taking the time to better understand their relationship with credit,” said Julie Kuzmic, senior compliance officer, consumer advocacy, at Equifax Canada.
Credit has always been something most Canadians use in December and this year will be no different. Although we have recovered most of the jobs lost during the height of COVID, unemployment is still too high, which will make life extremely difficult for many Canadians this Christmas season.
In addition, supply chain issues have driven up business costs and have now constrained the supply of daily consumer goods. Add to that the high prices we’re seeing at the gas pump and it’s understandable to see higher than expected inflation numbers, now at nearly five percent (the fastest increase since 2002 and 2003).
Those who will be hardest hit this season are those on low or fixed incomes whose incomes have remained stagnant, meaning their purchasing power has dropped significantly with price increases. When disposable income gets tight, it doesn’t take long before it starts to force people to resort to credit to maintain their lifestyle.
Be very careful here. Carrying over credit balances from month to month forces you to fall into a revolving credit cycle, and over time this will lower your credit rating. Additionally, going over your credit card limit every once in a while will also lower your score.
To learn more about how credit works, you can visit the Equifax Canada Education Center. My husband recently had trouble with his credit and used Equifax to monitor his score. He had a dispute with a credit provider that was eventually rectified, but the incident literally dropped his credit rating by 70 points. Even though it wasn’t his fault and the credit provider backed out, the damage was already done.
Cybercrime and credit fraud have all increased since the start of the COVID-19 pandemic. It’s good to see that Canadians are now much more credit savvy, want to be in the know, and even though we are entering “spending season”, I know that most Canadians will still be conservative with their credit.
So, rather than going deeper and deeper into debt this Christmas, why not celebrate the true meaning of the season?
It’s the only time of the year when we are supposed to “give of ourselves, think of others and bring happiness to others”. You could also do yourself a favor this year by not going into debt.
Christine Ibbotson
ask the lady for money
Christine Ibbotson is the author of How to Retire Debt Free and Wealthy. Visit her website at www.askthemoneylady.ca or send a question to info@askthemoneylady.ca
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