It is obvious that credit cards are a major burden for a large part of the population. In fact, two in five credit card holders fail to pay off their monthly balance.
In order to avoid over-indebtedness, the Quebec government has implemented new rules under the Consumer Protection Act. Starting August 1st, credit card holders in Quebec must now repay a minimum of 2.5% of their credit card balance instead of the previous 2.0%. Furthermore, the repayment rate will then increase by 0.5% every year until it reaches 5% in 6 years.
The harmful effects of this new increase
Imagine you have a credit card balance of $25,000. Now you will need to pay a minimum of $625 monthly, an increase of $125 over last year. While this may seem like a small increase, it can in fact destabilize an already tight family budget.
The impact on credit scores
Using a credit card can have both positive and negative impacts on your credit score. On the positive side, not using more than 30% of its capacity is good for your credit score.
On the negative side, maintaining a high balance or not being able to make the minimum payment will negatively impact your credit score.
Consolidate your debts with a private mortgage
Consolidating your credit card debt using a private mortgage loan can be an attractive solution for reducing your monthly charges. Even though the interest rate is high compared to a conventional mortgage, payments will definitely be lower than what credit cards charge. For example, a loan of $25,000 will require monthly payments of $312.50 instead of $625.00. This is a 50% reduction in your monthly payment!
How can I apply for a mortgage loan?
Apply online via our website or call us at 1 (877) 220-7738, extension 1.