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Dale Jackson

Your Personal Investor

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It’s bad enough Canadians continue to pile on consumer debt, but the kind of debt is astounding.

According to credit rating agency, TransUnion, the average non-mortgage consumer debt load is $21,912 – up 2.2 per cent from last year. That includes financing for consumer items like furniture or vehicles.

It also includes credit card debt, which attracts interest rates between 18 per cent and 30 per cent. That’s right; credit cards from retail chains like The Bay charge 29.9 per cent on balances owing. Conventional credit cards like Visa and MasterCard typically charge a more modest – but still shocking – 18 per cent. Those rates have remained constant for at least a decade while global borrowing rates hit rock-bottom in the wake of the 2009 financial meltdown.

TransUnion says the average balance owing on credit cards is $4,094 – up 2.3 per cent from last year. At 18 per cent, interest on that amount - compounded annually - will more than double in five years to $9,366.

As the balance grows, the compound interest grows; burying the card holder deeper and deeper in debt.

If you’re paying interest on a credit card balance talk to your bank about a low interest consolidation loan. Depending on your credit rating, something in the single digits should be available.

Every dollar less in interest payments is a dollar more against the principal.