Bankruptcy Kitchener Blog

Today Ted Michalos and I appeared on Ask the Experts on 570 News in Kitchener. We spent the hour discussing credit cards, and how to deal with credit card debt. I added that they can help you earn rewards and air miles, and you get a nice summary of your spending at the end of each month.

Ted started the show by explaining that credit cards are a convenient way to make purchases so you don’t have to carry a lot of cash.

Douglas Hoyes on 570 News

Unfortunately, there is a very big negative with credit cards: the high interest rate. That’s why we made the following point two or three times on today’s show:Credit cards should be a substitute for cash, not a substitute for borrowing.

In other words, if you have the cash to make a purchase, using credit cards is fine; just be sure to pay off your balance at the end of the month. If you don’t have the cash, try to get a loan at the bank, or a line of credit, to keep the interest you are paying as low as possible.

Beware of the “low introductory rate” offers that get you to transfer your balances on other cards, only to increase your interest rate six months later.

Ted then talked about one of his “pet peeves”: people who have two many credit cards.We both believe that having one or two credit cards is fine, but if you have more than two credit cards, you run the risk of spending too much, and even worse, carrying a balance and paying a very high interest rate.

Ted Michalos on 570 News

When you consider that there are over 50 million credit cards in use in Canada today, that’s a lot of credit cards! Even worse, 32% of Canadian carry a balance on their credit cards, so that’s a lot of interest being paid each month.

What’s the solution?

If you have more credit card debt than you can handle, take action now.

Start by working out a monthly budget to determine how much you can afford to pay on your debts each month. By cutting some expenses you may be able to pay your credit cards off yourself. If you need some help, the credit counsellors at Catholic Family Counselling Centre in Kitchener can help you work out a budget, and even negotiate with your credit cards on your behalf.

On today’s show we discussed consumer proposals, a great alternative to bankruptcy where professionals such as Ted and I work out a plan where you repay a portion of what you owe, based on your income.

Of course if your credit card debt is overwhelming, a personal bankruptcy may be necessary to stop the collection calls and help you get your life back.

As we said on the show, if you have too much credit card debt, give our office a call in Kitchener at 519-747-0660 or 310-PLAN (310-7526, no area code required) or E-mail us to arrange a free initial consultation.