Varun Kohli June 14, 2024 No Comments

Inflation and higher prices continue to prompt more Canadians to rely heavily on credit cards, loans, and lines of credit to manage their daily expenses. The increased interest rates are escalating debt servicing costs, causing even more financial strain. Surveys indicate that Canadians are cutting back on luxuries, streaming services, and clothing, with many postponing or canceling vacations. Among the hardest hit are Millennials, who are accumulating the highest levels of debt. In 2022, over one million Canadians reported missing or being late on mortgage or rent payments. That number is growing with higher rates now. The combination of rising debt and more frequent missed payments poses greater risks for lenders, who have responded by hiking interest rates on their products.

A private Tembo debt consolidation loan can offer a safeguard against these rising rates and economic uncertainties. Our debt consolidation loans allow you to merge multiple debts into a single, manageable transaction. Instead of juggling several monthly payments, you can consolidate them into one with a Tembo loan. This can help you eliminate high-interest credit card balances, clear your line of credit, reduce pressure on your credit score, and most importantly, often save money by avoiding the steep rates on many unsecured debts. Financial analysts widely predict more rate hikes in the U.S. in the coming months in the early fall if inflation continued to pick up there.

In Quebec, financial regulators have increased the minimum monthly credit card payments borrowers must make. Last year, these minimum payments rose from 3.5% to 4.5%. Equifax reports that the issuance of new credit cards surged by over 31.2% in Q1 2022 compared to Q1 2021, and the latest monthly credit card spending data shows an increase of over 17.5%. As of late last year, credit card debt topped $113 billion, an all time high. A Tembo private debt consolidation loan can help you manage high credit card balances, avoiding the impact of higher interest rates on lines of credit due to increased prime bank rates. Rising interest costs can add hundreds of dollars to your annual expenses.

With a Tembo Financial debt consolidation loan, you can access a quick, easy, and cost-effective solution to free up cash flow and improve your credit score by combining high-interest debts into a single, simple payment. As interest rates rise everywhere, the Bank of Canada has acted swiftly to increase the cost of borrowing. In the U.S., the interest rate for a fixed 30-year mortgage is now approaching 7%, up from nearly 2% not long ago. Inflation remains persistent; prices may stabilize or fall for some goods, but they continue to rise for others. As higher prices and inflation erode wage gains, more people are left with less disposable income, especially those with large mortgages, credit cards, lines of credit, and car payments. Debt costs will keep rising as long as inflation persists and central banks continue to hike rates. Higher prime rates lead to increased lending rates, affecting mortgage costs, credit card interest, and more. The next major economic challenge on the horizon is likely a recession.

Employment declines are beginning to reappear in Ontario, suggesting that a recession could bring job losses. The duration and severity of a potential recession are hard to predict, with experts divided on the issue. Regardless, the current environment of higher rates and uncertainty makes it wise to consolidate multiple debts into a straightforward, single transaction. Turn five monthly payments into one with a Tembo debt consolidation loan. Eliminate high-interest credit card bills, clear your line of credit, and alleviate pressure on your credit score. Save money by avoiding the higher rates that big banks and lenders will implement if the Bank of Canada raises rates again.

A Tembo debt consolidation loan can provide protection and security against potential job losses or the harsh effects of a recession, freeing you from worries about credit card balances or lines of credit. In addition to central bank rate hikes, other factors are increasing debt costs. For instance, Telus has proposed a 1.5% surcharge on monthly phone bills for customers who pay with credit cards, adding to the overall cost. For a customer with a $100 cellphone bill, this surcharge would increase the bill to $106.66. Telus aims to offset the high fees charged by credit card companies by passing these costs onto consumers. As costs rise across the economy, using your housing equity to consolidate debts, pay down liabilities quickly, and simplify your payments can be a prudent move.

Take advantage of your increased housing equity to consolidate your debts, pay down liabilities fast, and simplify your payments. Visit Tembo Financial’s Debt Consolidation Services and give us a call at 1-844-238-6717.

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