A NEW REASON TO PAY MORE THAN THE MINIMUM ON CREDIT BALANCES

A NEW REASON TO PAY MORE THAN THE MINIMUM ON CREDIT BALANCES

Many Canadians say they don’t have the funds to make RRSP or TFSA contributions. However, most Canadians have the funds for something else important to their financial well-being: paying more than the minimum amount on credit card balances.

And, while that kind of commitment helps pay off debt faster, it may also boost a client’s credit rating.

Fully 88% of Canadians with credit cards “often” pay a greater amount than the minimum due, reveals a survey by TransUnion, a credit reporting company. (Only 7% of those polled weren’t cardholders.)

 

TransUnion research finds that the more consumers pay beyond the minimum, the less likely they are to be delinquent in their payments.

That may seem like a no-brainer, but TransUnion’s research is the first to quantify the finding.

It’s good information for clients to know if they hope to qualify for a mortgage or other loan, because the new research is expected to influence how lenders assess borrower risk.

“Even if [clients] can’t pay the full balance [on revolving debt], they may now find that lenders view them more positively depending on the amount they pay,” says Todd Skinner, president of TransUnion Canada, in a release.

That influence on lenders is sure to interest Canadians, who appear keenly aware of their credit histories. A Leger poll finds that 83% of Canadians discuss their credit histories with their partners at least twice a year. Indeed, fully 86% know their partners’ credit histories, though that figure drops to 78% for those with annual incomes less than $40,000.

One last finding from the TransUnion survey: 39% of Canadian cardholders don’t know why it’s important to pay more than their monthly minimum payments. If that’s your client, it’s probably time for a conversation beyond a potential boost to his credit rating.

The Leger poll was conducted online between February 6 to February 9, 2017, and included 1,569 Canadians.

TransUnion’s survey was conducted from December 7 to December 16, 2016, and based on a random sample of 1,010 Canadians age 16 and older.

See the full TransUnion survey here.

 

Source: www.advisor.ca by Staff - 17-Feb-2017


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