Many Canadians who buy holiday gifts this year will end up paying for them well into the new year.
That's one of the findings in our latest consumer survey. We asked 1,378 Canadians about their holiday spending habits and found that 63% of them expect to buy presents this year with their credit card, while just over half of those say they will carry a balance on their credit card into the new year.
Here's a look at some more of the findings in our report — and what we think of them.
Canadians not sticking to their budgets
The first question asked whether Canadians set a budget before they go holiday shopping. We found that a surprising 84% do. The only problem is that 66% said that they go over that budget sometimes or all the time. Add the 16% of Canadians that don't have a budget and you're looking at 82% of Canadians either blowing their budget or not having one at all.
Last year, we did a survey that found most Canadians overestimate their financial literacy, so the stats above are not that surprising.
What is surprising is that Canadians are not following budgets during a time when warnings about overspending are everywhere. The Office of the Superintendent of Bankruptcy Canada warned this week that consumer proposals and bankruptcies in Canada are seeing a spike.
One-in-10 Canadians always has credit card debt
Our survey also asked Canadians how long they keep debt on their credit cards when they don't pay them off. We found that 20% pay off their debt within one to two months, while 12% pay off their debt within two-to-four months.
The most concerning stat was that 11% of Canadians say they never pay off their debt — they're always carrying a balance on their credit card.
That's definitely a no-no if you can help it. The average credit card in Canada has an interest rate of 19.99% — making credit cards the financial product with the highest interest rates in the market.
Our data reflects something experts have been saying for a while: Canadians have a lot of debt and they're not doing enough to tackle it.
If you find yourself carrying a credit card balance, the first step you need to do is set a plan on how to pay it off. A low balance transfer card is a good place to start: they offer low interest rates and often have promotional periods where you pay as little as 0% on your balance.
But before any of that, start by putting together a budget. Even if it doesn't go according to plan the first few months, sitting down and figuring out how much you take home every month, how much you spend, and where you can cut back on costs to save more will go a long way.
That way your holiday debt will get paid off a lot sooner than next Christmas.