Have you ever paid interest on a credit card? Like, ever?
Graham Hicks hasn’t. Just ask him. (See video below)
But I’d venture a guess Graham is probably amongst the minority of adults who hold that potentially-potent piece of plastic. We all know best practice when it comes to credit cards is to pay them off in full every month. No exceptions. But let’s be honest, once in a while the balance carries over. In fact, sometimes it starts to pile up. We’ve all heard stories (often via late-night infomercials) of unfortunate souls who’ve racked up so much credit card debt they can barely make the minimum payments. In such a circumstance, basic mathematics show what amounts to a life sentence of debt. It could be 30 or 40 years before that balance is actually cleared.
If such a fate wasn’t warning enough for everyday spenders like you and I, there’s Bank of Canada governor Mark Carney’s straight talk about interest rates. Speaking to the Economic Club of Canada in Toronto on Monday, Carney cautioned low interest rates could mislead Canadians on their capacity to manage month-to-month expenses.
“Cheap money is not a long-term growth strategy,” Carney warned. “Experience suggests that prolonged periods of unusually low rates can cloud assessments of financial risks.”
In other words, when interest rates inevitably rise, those “rolling deep” could find themselves in serious trouble.
Back to Graham Hicks (and his unsolicited on-air inquiry/assessment of my personal financial situation – see video below). I find it hard to believe the majority of Canadians are wilfully driving themselves into debt. But there’s no denying the fact we’ve become a culture accustomed to options like “Buy Now, Pay Later.” I also belong to a generation that doesn’t flinch at 5-figure student loan debt and $300,000 starter homes. For the most part, it’s all we’ve known.
So…is debt inevitable?
There’s no easy answer, except to suggest “spend less than you make.” Simple, right? I guess until the car breaks down. Or Christmas hits. Or any other myriad of financial challenges arise, forcing us to search for creative ways to stretch our spending bucks.
I’m not saying I’m going hungry this month. I’m also not saying I’m flush. I count myself somewhere in the middle. My name is Ryan…and yes, I have paid interest to a credit card company before. How about you?