Should there be more regulation on credit cards/personal debt?

Moonlight Graham · November 2, 2012

News has circled lately about the huge amount of personal debt held by Canadians:

Canadians’ average household debt-to-income ratio, a key measure of their ability to carry their loans, hit a record high last June, according to Statistics Canada. The average Canadian household owes $1.63 for every $1 earned, a level last seen in the U.S. and U.K. just before their housing bubbles burst, economists warn.

http://www.thestar.c...ecord-high-debt

I really don't care how people run their personal finances, but when it begins to affect macroeconomics and therefore affects myself and the Canadian economy in general, it means that maybe something needs to be done.

Beyond mortages, car payments, student debt etc., credit card debt is a huge issue. Credit cards are useful in an emergency, but should we let certain people use them as freely as they do and rack up ridiculous debt on non-essentials like vacations, concert tickets, restaurant bills etc. when one has no near-term prospects to pay off these items? Should there be more regulations on how much credit card debt one can accumulate, and should some items be off-limits after a certain amount of debt is achieved? Should there be a limit on the # of credit cards a person may have, say 1 or 2?

Should credit cards exist at all? Should people be forced to buy daily goods based on real money already in their bank accounts (not on credit), unless there is an emergency where a small amount of debt could be financed by banks via debit cards at a reasonable and stable interest rate. In larger emergencies (illness, funerals etc.) maybe debt deals could be approved by banks on a case-by-case basis?

What about personal debt in general? Canadians are obviously about as good at keeping a budget as the government is, so do we need to put in tighter restrictions on loans/mortgages etc.?

Edited November 2, 2012 by Moonlight Graham

Mr.Canada · November 2, 2012

We don't need more regulation for f--- sakes guys. The answer to all our problems isn't solved by more government but by personal responsibility. Man, I have had enough of people like this. People will not be happy until government is tucking us into bed at night.

Signals.Cpl · November 2, 2012

We don't need more regulation for f--- sakes guys. The answer to all our problems isn't solved by more government but by personal responsibility. Man, I have had enough of people like this. People will not be happy until government is tucking us into bed at night.

If only a few Canadians were financially irresponsible then it won't be a problem, let them drawn in debt but unfortunately if it afflicts a large segment of our population then it affects everyone else. People laden with debt will be a liability to the entire country in a financial crisis and most defiantly will be a liability when they cannot work wether through old age or disability therefore we should make sure to limit the hole they can dig themselves in so that we don't end up suffering for their problems.

wyly · November 2, 2012

News has circled lately about the huge amount of personal debt held by Canadians:

http://www.thestar.c...ecord-high-debt

I really don't care how people run their personal finances, but when it begins to affect macroeconomics and therefore affects myself and the Canadian economy in general, it means that maybe something needs to be done.

Beyond mortages, car payments, student debt etc., credit card debt is a huge issue. Credit cards are useful in an emergency, but should we let certain people use them as freely as they do and rack up ridiculous debt on non-essentials like vacations, concert tickets, restaurant bills etc. when one has no near-term prospects to pay off these items? Should there be more regulations on how much credit card debt one can accumulate, and should some items be off-limits after a certain amount of debt is achieved? Should there be a limit on the # of credit cards a person may have, say 1 or 2?

Should credit cards exist at all? Should people be forced to buy daily goods based on real money already in their bank accounts (not on credit), unless there is an emergency where a small amount of debt could be financed by banks via debit cards at a reasonable and stable interest rate. In larger emergencies (illness, funerals etc.) maybe debt deals could be approved by banks on a case-by-case basis?

What about personal debt in general? Canadians are obviously about as good at keeping a budget as the government is, so do we need to put in tighter restrictions on loans/mortgages etc.?

I was talking to an investment banker about the same thing last night...which is the better approach, the bank of canada raising interest rates at the end of 2013 to curb debt or toughen borrowing rules...raising interest rates is a job killer, tougher lending rules seems the way to go imo, the banker agreed with me...

but it isn't as simple as one or the other, there needs to be many changes made at a social level...things like dental care or post secondary education become out of reach for many without credit...

dre · November 2, 2012

What about personal debt in general? Canadians are obviously about as good at keeping a budget as the government is, so do we need to put in tighter restrictions on loans/mortgages etc.?

Well the government already controls that, and these high personal debt levels are something the government wanted. They engineered this. They eased credit and brought interest rates way down, so that people would borrow money to consume, with the hope that all that consumption would prevent a correction in the economy (a recession), and keep our housing bubble inflated.

The government isnt going to make regulations to prevent something it wants in the first place.

Topaz · November 3, 2012

Funny someone should talk about this. Last week, my son went into his bank to setup a saving plan and while he was there, the guy asked him if he had or wanted a credit card. My son said no, he didn't have one and no he doesn't want one and the guy asked why. My son said that he was taught that credit card isn't necessarily a good thing to have and its better to save up for what you want to buy. The guy told him that's the way it use to be, but, not now, a person NEEDS and credit card, but my son said no thanks.

Mr.Canada · November 3, 2012

Sounds like a reasonable son you have there Topaz, nicely done. Having credit is important for the future but he has lots of time to build his credit. When he is ready I'm sure he will do so.

wyly · November 3, 2012

Funny someone should talk about this. Last week, my son went into his bank to setup a saving plan and while he was there, the guy asked him if he had or wanted a credit card. My son said no, he didn't have one and no he doesn't want one and the guy asked why. My son said that he was taught that credit card isn't necessarily a good thing to have and its better to save up for what you want to buy. The guy told him that's the way it use to be, but, not now, a person NEEDS and credit card, but my son said no thanks.

admirable but your son is wrong...he should have a credit card with a low limit let's say $500, but use it the the way it should be used and pay off the debt each month...

it's important to build a strong personal credit rating, having debt and making payments on time builds your credit rating...I have a friend who was not going to buy into the credit economy he was 40 years oldmade $90 per hr and never had any debt, he saved and paid cash for everything...that seemed like a good idea until he wanted to make a large purchase, no bank would lend him a substantial amount of money because he no credit rating...it took a number of years before he could get a mortgage to buy a home...

Topaz · November 3, 2012

I don't think that's right, if a person has no credit problems against them, then wouldn't that show that they are reliable, epecially if they can show their income and what they are worth? I think this the just a way the Banks to make money off the credit cards. The Tories keeps tells us we are over our head in debts but the banks are right there making money from our debt.

Moonlight Graham · November 6, 2012

We don't need more regulation for f--- sakes guys. The answer to all our problems isn't solved by more government but by personal responsibility. Man, I have had enough of people like this. People will not be happy until government is tucking us into bed at night.

I can't stand government regulating individual's lives either. I get exactly where you're coming from. But what if many people, like in this case of debt, are irresponsible morons? What if them being morons is jeopardizing our entire economy and YOUR bank account, employment etc,.?

Edited November 6, 2012 by Moonlight Graham

Moonlight Graham · November 6, 2012

I was talking to an investment banker about the same thing last night...which is the better approach, the bank of canada raising interest rates at the end of 2013 to curb debt or toughen borrowing rules...raising interest rates is a job killer, tougher lending rules seems the way to go imo, the banker agreed with me...

Why is exactly raising rates considered a job killer? Do higher interest rates mean small businesses etc. are less likely to borrow, therefore fewer and smaller new businesses are created thus less new jobs created?

cybercoma · November 6, 2012

I was watching one of those pawn shows today and it was really something.

A guy walked in and pawned a PS3. He got a loan, rather than selling it.

He came back 10 minutes later because he had changed his mind and wanted to pawn something else instead.

Here's the insane part.

The pawn shop would not give him his PS3 back unless he paid them back the money they loaned him plus all of the interest. The owner said it didn't matter if it was 89 days, 7 days, 1 day, or 1 minute. As soon as the money is in his hand, he owes them interest.

Such a slimy business.