Debt: a four-letter word

Canadians are holding $78 billion in outstanding credit card debt

Seventy-eight billion dollars! That is the level of outstanding credit card debt in Canada, according to a recent report. That is the reason, I explained to my son, that I am unhappy with his bank.

My son turned 19 this year, and returned to UBC this week for his second year. Prior to leaving we had financial matters to deal with and stopped by the local branch of one of Canada’s big banks (where he has an account).

This was our first visit since turning 19, and it occurred to me after the fact that it was their first chance to solicit business from him directly.

And they wasted no time.

On our way out I saw someone I knew. As I was talking to this person they took him aside and suggested to him that he should apply for a credit card.

He explained that he saw no reason to have a credit card, since there is really nothing he can’t do online or with his debit card that he can do with a credit card (except of course to spend money that he doesn’t have).

Their response was to tell him that he should still get a credit card, since it would help him to build a credit rating which would presumably help him when the day comes that he does need credit to buy a house, for example.

Luckily my son doesn’t take financial advice from his bank.

He told them he would talk to me about it and let them know.

When he asked for my advice I asked him some questions:

Do you have any friends who have credit cards? Yes, he answered — a good friend who upon receiving his card promptly bought a car with it.

Do you think that was a good decision? No, he said, since he is now having problems paying it off.

So do you think that in the end having this credit card will more likely help his credit, or hurt it?

In his friend’s case, probably hurt it, he conceded.

I went on to explain to him that despite the bank’s warnings, if he completed his engineering program without ever having a credit card or borrowing money, went out and got a good job, and saved enough for a healthy down payment, that in my opinion he would have no problem getting a mortgage if he wanted to buy a house.

He decided that for now he would not apply for the card. But I do worry that he might change his mind if he decides that he wants to buy a car.




Jim Grant, CFP (Certified Financial Planner) is a Financial Advisor with Raymond James Ltd (RJL). This article is for information only.  Securities are offered through Raymond James Ltd., member Canadian Investor Protection Fund. Insurance and estate planning offered through Raymond James Financial Planning Ltd., not member Canadian Investor Protection Fund.  For more information feel free to call Jim at (250) 594-1100, or email at and/or visit



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