A recent study from Genworth Financial Canada indicates that despite tough economic times, Canadians are managing to make their credit card payments. In fact, most Canadians describe their financial fitness as being good or very good — only 11 per cent feel it is poor or very poor. Even more surprising is the fact that there is a very strong correlation between home ownership and financial health.
The financial fitness study reports that six-in-10 (59 per cent) of Canadians say they pay their credit card balance off each month. Thirty per cent have spoken to a financial planner or coach about ways to save or invest.
Better yet, among mortgage owners, a quarter (23 per cent) have either made a lump-sum payment or accelerated their mortgage payments. In fact, those more likely to pay off their credit card balance include those aged 60-plus (67 per cent), those with incomes over $100,000 (75 per cent), and those who own their homes with no mortgage (74 per cent).
“Those aged 60-plus are in later life stages with greater wealth that has been generated over previous years,” says Henrietta Ross, chief executive officer at the Canadian Association of Credit Counselling Services. “This group typically has the means to pay credit card balances in full and have discerned the advantage of not carrying balances at the typically high rate of interest for most credit cards.”
Nevertheless, there are indications that Canadians could be doing a lot more to improve their financial situation. For example, survey results also showed 30 per cent try to save but don’t seem to be getting ahead, and another 11 per cent said they haven’t been able to achieve their goals or that they’re always falling behind.
“These findings indicate a need for more education about how to get in better financial shape,” says Ross.
What’s more, just 22 per cent of recent homebuyers say they were preapproved in the past year. As for those in poor financial shape, they are more likely to be struggling to pay their bills or are forced to borrow to get by.
While paying your credit card balance off each month is a constructive step towards enhanced financial fitness, one more step Canadians could be taking is requesting their credit report. The Genworth Financial Canada study reports that only 14 per cent have received their credit report.
“Many Canadians are unaware that they most likely have a credit report,” says Ross. “It is beneficial to know how one’s credit activity is reflected over time, including how debt has been managed. Establishing good credit is key to ensuring long-term financial fitness.”
