More financial literacy training needed for newcomers to Canada

Debt and credit card problems can affect any Canadian, but people who come to this country with little or no English and no experience with credit systems can find themselves in a lot of trouble really quickly.

Karen refugee learns painful lesson in how credit cards work

Bway Lah has sought out credit counselling to help him deal with his credit card debt. (Nichole Huck/CBC )

Bway Lah came to Regina as a Karen refugee from Burma nine years ago. Before arriving in Regina he was living in a refugee camp where he had virtually no access to money and credit cards didn't exist. 

He started English classes when he arrived and within a couple years he was also working a job where he earned about minimum wage. He signed up for a credit card without completely understanding how credit worked and used the card to pay for his classes, clothes, food and all the other basics.

Ballooning bills

Over the course of seven years, his credit card bills grew to $16,000.

"I thought if I use $2,000 ... I needed to pay back only $2,000. I didn't understand the minimum payment and if you only pay the minimum payment they charge you interest," Bway said.

I thought if I use two-thousand dollar I needed to pay back only two-thousand dollar.- Bway Lah about his understanding of how credit cards work. 

The old car he had been using to get from school to work kept breaking down, so a friend convinced him to buy a newer, dependable vehicle so he could get between school and work on time. 

Bway admitted he had no idea what he was getting himself into. He walked away from the dealership with an $18,000 Honda Accord. 

Car loan interfered with student loan application

It was a more dependable vehicle, but what he didn't realize was his new car loan meant he wasn't eligible for a student loan from his bank. 

"I wanted the car so I could go to school and work and now I can't afford to go to school," Bway said. 

He said if he could do it all over he would stick to taking the bus.  

The 33-year-old was overwhelmed by his debt and sought help from a Canadian friend who put him in touch with a non-profit credit counselling service that helps people for free. 

Cutting up credit cards was a key step

At his first appointment with the Credit Counselling Society in Regina, Bway was required to cut up his credit cards.

They helped him to consolidate his debt and negotiate a lower interest rate. 

The first step to starting a debt management program is cutting up your credit cards. (Nichole Huck/CBC)

His new plan is to work hard to pay off his car loan in the next couple of years so that he can go back and finish his schooling. 

Bway's experience is by no means unique within his community. He knows several other people who are struggling to make car payments for vehicles that are much too expensive for the salaries they earn. However, his seeking help is relatively unique. 

Limited English skills a barrier

Bway said he's told other people in the Karen community about his experience with a credit counsellor, but they are afraid to get help because they are embarrassed by their limited English skills.

Credit Counsellor Tanis Ell says many newcomers are afraid to seek help. (Nichole Huck/CBC )

Tanis Ell works as a Credit Counsellor in Regina. She estimates less than 10 per cent of her clients are new to Canada and recognizes that in addition to language, there are a lot of barriers to newcomers seeking help. 

They [newcomers]are worried about what's going to happen to them, they are worried there is going to be legal implications, they they they are going to be deported. Really they are terrified.- Tanis Ell Credit Counsellor

"They've accumulated a whole lot of insecure debt, a whole lot of credit card debt and lines of credit, and they were just unaware of what credit was and how to use it wisely.

"They were not aware that it was going to have such a significant interest rate and they are really panicked and scared that they don't know how to pay it back, and they are worried about what's going to happen to them, they are worried there is going to be legal implications, they think they are going to be deported. Really they are terrified," said Ell. 

Settlement agency offers financial literacy training

Getachew Woldeyesus works with the Regina Open Door Society, an organization that provides some financial literacy training for newcomers who are enrolled in English classes.

However, he admits it's not enough. 

Getachew Woldeyesus says the Regina Open Door Society now offers some financial literacy training for newcomers. (Nichole Huck/CBC)

He told Morning Edition Host Sheila Coles that Bway's story resonated with his experience as a new refugee in the '80s. 

"I was told by the bank that I only had to make the minimum payment on my credit card," said Woldeyesus, "My credit card bill ballooned to $10,000."

Woldeyesus said he's seen a lot of newcomers taken advantage of by people out to make money off people's inexperience. 

He told the story of one newcomer who sought out help from Open Door after he bought a vehicle from a used car lot and felt like no matter how much money he paid he still owed more.

Woldeyesus found out the man was being charged 30 per cent interest and stepped in to get the interest reduced to a more manageable amount. 

Organization paired with U of R

Woldeyesus said the Open Door Society started providing some financial literacy training three or four years ago. 

The organization has partnered with the University of Regina business school to bring bring business students to Open Door to give a 6-week class teaching various aspects of financial literacy. 

He said local banks such as CIBC, Scotiabank and RBC have also come in to give workshops.

Woldeyesus admitted even with the use of interpreters it can be very challenging to try and give adequate training to a group of people who come from a variety of different backgrounds. 

"People come from different systems, in some countries credit cards don't exist."

The Morning Edition