It’s a crude analogy, but when interest rates are low, people behave a lot like they do at an all-you-can-eat buffet: pay a little and consume way too much. It’s all in good fun until the party ends. When interest rates rise, people who’ve eaten through their bottom line and become bloated with debt are stuck with a heavy interest burden – one that can often sink their finances.
Although the Bank of Canada has maintained its ultra-low key lending rate at one percent since September 2010, the tide may soon be turning. In July, it predicted a gradual rise in this rate through 2014. That’s bad news for big borrowers. According to a recent survey by the Canadian Institute of Chartered Accountants, 48 percent of Canadians said that a significant interest rate hike would make it difficult for them to keep up with their debt and mortgage payments.
The good news is there’s still time to turn the tide on your overindulgence and whip those finances back into shape. Check out some of the things borrowers should be doing now in my new article on GoldenGirlFinance.ca: http://bit.ly/OKPXHZ