With Boxing Day sales rapidly approaching — or already underway — a financial expert is warning shoppers to avoid taking on more debt or payday loans.
A new poll conducted by MNP, a Vancouver-based insolvency trustee, found that most British Columbians admit they can make some bad financial decisions over the holidays.
"Every holiday season, the pressure mounts, and people are tempted to borrow money from payday lenders or rely too heavily on their credit cards," said Linda Paul, a trustee with MNP. "It’s important people are aware of the extremely high interest rates these types of credit have, because they can easily trap people in a debt cycle that becomes nearly impossible to break free of."
According to the results of the MNP survey:
• 16% of respondents said they were lured in by holiday deals, like Black Friday and Boxing Day;
• 22% said they only pay the minimum balance on their credit card;
• 15% said they only pay the minimum balance on their line of credit;
• 18% borrow money they can't afford to pay back quickly;
• 15% making major purchases on credit without paying it off right away;
• and 10% buy something on credit that requires no payments for a while.
The survey also found that 7% of people admit they have used their home equity line of credit to buy things they want but don't need, according to the survey.
Come January, British Columbians anticipate feeling the effects of a credit hangover, Paul said. Last year, more than four in 10 (43%) felt anxiety over the arrival of holiday-spending bills, and 38% regretted how much they spent. However, nearly half (45%) said they made it their New Year’s resolution to get their finances back on track.
“I can’t stress this enough: make a conscious effort to shop thoughtfully and spend less," said Paul. "The holidays are more about your presence than the presents."
@gmckennaTC
