BMO: Keep a Close Eye on Debt Levels During Holiday Shopping Season
TORONTO, ONTARIO--(Marketwire - Dec. 14, 2011) - Following the comments Monday by Bank of Canada Governor Mark Carney, BMO offered Canadians tips on how to keep debt levels in check over the holiday season.
"With the holiday shopping season in full swing, consumer spending is likely higher than normal among Canadian households," said Su McVey, Vice President, Customer Communications & Marketing, BMO Bank of Montreal. "Especially at this time of the year, consumers need to be prudent and watchful in regards to their finances and keep in mind the importance of proper debt management, including credit card spending, to avoid any harsh surprises in the New Year."
"Canadian households continued to amass more debt in the third quarter of 2011, now totalling more than $1.6 trillion or 151 per cent of personal disposable income - both record-high levels," said Michael Gregory, Senior Economist, BMO Capital Markets. "Abnormally low interest rates have kept these elevated debt burdens very manageable, for now. But, Bank of Canada Governor Mark Carney has been warning Canadians to be cautious with their credit demands as 'more normal' interest rates will eventually return."
BMO Bank of Montreal offers these 4 tips to avoid over-spending over the holiday season:
- Create a budget and stick to it - Spend less than you make. Develop a budget that establishes how household expenses will be paid and how spending will be managed. Take advantage of free online tools, such as BMO MoneyLogic™, to help stay on top of everyday household spending and saving.
- Manage credit card debt - Pay down credit cards, beginning with those that carry the highest rate, and consider using a low rate card for purchases. For instance, the BMO Preferred Rate MasterCard offers a low rate of 11.9 per cent for an annual fee of $20 per year.
- Have a back-up plan - Plan ahead and develop a fall back plan in case you are unable to meet your financial obligations due to unexpected circumstances, such as loss of work, or damage to personal property, including your home or vehicle.
- Invest to save - Set up a Tax Free Savings Account (TFSA) or high interest savings account such as the BMO Smart Saver Account to set aside extra cash in case of an emergency.
BMO experts are available to discuss ways Canadians can deal with debt and manage spending and savings.
For more information, please visit www.bmo.com/smartsteps.
Matt Duffin, Toronto
Sarah Bensadoun, Montreal
Laurie Grant, Vancouver