Thursday, August 15, 2019

Cost of using your credit cards as credit

Cost of borrowing using a credit card

The above table appears on the back of a credit card statement showing the actual cost of using a credit card to finance purchases.

Depending on the interest rate your credit card charges carrying a balance of $2,000 on your card will cost you $33.17 to $48.00 per month for the privilege of essentially "buying" something today you really can't afford.

According to this CBC article (2017) Trans Union reported there were over 43,000,000 active credit cards in Canada and the average balance per user was nearly $4100. The total outstanding balance on credit cards was over $91 billion.

It is an over simplification to say that all credit card users carry a $4100 balance as this is an average with some exceeding this amount and some carrying lesser balances, if any at all. That said depending on the rate of interest being charged an average balance of $4100 would equate to an interest payment of $69.00 to $100.80 per month. To put this into simple terms, instead of putting the $4100 on plastic, you opened your wallet and took out 41 $100 bills to buy your stuff, you would in fact have $4200 at your disposal.

If we really need to rely on credit cards to finance our lifestyle we need to rethink our lifestyle. I know it is an old fashioned notion to only buy something when you can afford to pay for it and Canadian consumers and Canadian governments have become slaves to the masters they are borrowing from.

In addition to the cost of carrying consumer debt the average Canadian family of four needs to come up with another $7000 per year just to service the national debt. That figure is based on 2016 data which clearly is outdated and the current cost is considerably higher given the Liberal governments policy of spending more and more money we don't have.

In the end, no good will come from being enslaved by the current banking system that makes serfs of us all in one fashion or another. Anyone who thinks the current system can be maintained indefinitely is deluding themselves and not facing the reality that is the Canadian economy currently. If you took away Canadian's credit cards we would suddenly realize we have been living a lie for decades.

allvoices

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