Get out of debt, expert warns as interest rates climb
Benchmark rate hit 1.25 per cent with the most recent interest hike
It's not new to anyone who has been keeping an eye on the Bank of Canada over the last few months: interest rates are up again.
Interest rates have slowly been creeping up from record lows, and experts say the hikes won't end anytime soon.
Wednesday's quarter point increase to 1.25 per cent marked the third time since the summer the bank has moved its benchmark rate.
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"This is a bit of a tough hit," Laurie Campbell, CEO of Credit Canada, told The House.
"People have to buckle down right now."
The average Canadian, complete with consumer debt and a hefty mortgage, will slowly start to feel the financial squeeze, she said.
It's getting so bad, in fact, that one third of Canadians can't make their monthly debt payments, according to MNP's consumer debt index.
But Campbell warned it's not just the interest rate threatening to catch unwary consumers off guard.
"It's not the creep in the interest rates that's going to put people over the edge. It's that on top of the fact that they're carrying record debt levels," she explained.
To avoid a personal financial crisis, Campbell advises paying off your debt as soon as possible and educating yourself about the economy.
What Canada needs now, she said, is a national campaign on how to get rid of your debt. If the problem isn't addressed, she continued, young Canadians will grow up into a vicious cycle of debt.
"There's a lack of financial literacy in Canada, we've got a whole group of young people growing up who really don't understand the basics of financial management."