Question

Theortical background of credit culture in canda

Answer 1

Credit culture has rightfully earned its place in becoming one of the hottest topic of discussion. According to the data available, it is to be believed that 75% of the total families in Canada own some or the other kind of debt. The same trend has been seen at the global level as well where its debt exceeded GDP by a fair margin.

In Canada, especially amongst the younger generation, it has become an addiction to the debt. & the primary driver of it? - credit cards. Access use of credit cards only indicates one thing - lack of financial literacy. Because of the way higher interest rates (>20%), consumers aren't realising that they're being trapped in the name of not having to pay anything upfront.

Debt viz a viz household income is going higher & higher. According to one research report, their debt to disposable income ratio is more than 150 - meaning they have >150 debt viz a viz 100 disposable income. & certainly, this isn't a good sign for a country which is aiming at the long term stability.

The only visible solution to it is an introduction of financial literacy from the primary education & that's the only way out. Debt management services is just the short term solution to this. Though, usage of credit is very useful when used sensibly - which can only be brought by educating people.