Avoid Credit Debt This Holiday Season


Dear money lady,

I check my credit all the time – do you think it will go down in December?


Dear Ken,

December is when Canadians spend the most, from food and household items to Christmas time and family gifts.

Spending more shouldn’t hurt your credit unless you plan on not paying it off in full and carrying a debt balance over into the new year. One thing we did not anticipate this end of the year was the higher level of inflation. that will hit everyone’s wallet now and in 2022.

According to a survey conducted by Equifax Canada, 64 percent of Canadians have checked their credit reports in the past year.

“While there are still a lot of people concerned, it is 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 costs for businesses and have now limited the supply of basic consumer goods. Add to that the high prices we see at gas pumps and it’s understandable to see higher-than-expected inflation numbers, now at nearly five percent (the fastest increase since 2002 and 2003).

The people who will be hit the hardest this season are the low-income or fixed-income people whose incomes have remained stagnant, which means their purchasing power has fallen dramatically as prices rise. When disposable income tightens, 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. Plus, going over your credit card limit every now and then will also lower your score.

To learn more about how credit works, you can visit the Equifax Canada Education Hub. My husband recently had problems 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 caused his credit rating to drop by 70 points. Even though it wasn’t his fault and the credit provider had given up, the damage was already done.

Cybercrime and credit fraud have all been on the rise since the start of the COVID-19 pandemic. It’s good to see that Canadians are now a lot more credit savvy, want to be in the know, and even as we enter “spending season” I know most Canadians will still be careful with their credit.

So, rather than going deeper and deeper into debt this Christmas, why not celebrate the true meaning of the season?

This is the one time of the year when we are supposed to “give of ourselves, think of others, and bring happiness to others”. You could also give yourself a gift this year by not going into debt.


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