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The way Canadians manage their money has changed dramatically over the last 18 months. When the COVID-19 global pandemic was first declared, Canadians felt an immediate economic impact and many lost their jobs. <\/span><\/p>\n Those who were able to work throughout the pandemic saw their savings increase. According to Statistics Canada, Canadians saved $212 billion in 2020 compared to 2019, when Canadians saved only $18 billion. <\/span><\/p>\n However, for those who are unemployed and whose work has been stopped and started due to the economic downturn, there is a lack of money. Millions of people have been forced to rely on government support such as <\/span> Canada Emergency Response Benefit<\/span> and others are concerned about their future career prospects. <\/span><\/p>\n All this has led to a change in payment priorities. <\/span><\/p>\n A new report by the TransUnion rating agency entitled <\/span> Exploring the global payment hierarchy<\/span> looks at where residents of five different countries, including Canada, prioritize their payments. They found that in Canada, consumers prioritize mortgage payments over car loans, <\/span> credit cards<\/span>installment loans and lines of credit.<\/span><\/p>\n Traditionally, Canadians are very good at repaying their mortgage on time. The latest data shows that as of March 2021, just 0.22% of Canadian loans were outstanding. mortgage loans \u2013 according to the data <\/span> Canadian Bankers Association.<\/span><\/span><\/p>\n Focusing on mortgage debt and ignoring high-interest loans can be a more expensive method of dealing with debt. If you have high-interest debt, such as credit card debt or a balance on an unsecured line of credit, you’ll save more money by paying it off first. <\/span><\/p>\n TransUnion has been tracking payment hierarchy dynamics in Canada for over a decade, as well as in many other countries where they have encountered local financial challenges. The study included consumers who had at least one credit card and one personal loan. They also selected profiles for which no arrears had been reported at the time of selection. The credit reporting agency’s study then examined these consumers’ payment records 12 months later to see which consumers were at least 30 days delinquent on their credit card and personal loan payments.<\/span><\/p>\n The study indicates that mortgage borrowers were able to maintain good balance status, thanks in part to pandemic-related mortgage payment deferrals. The program allowed borrowers to delay payments for up to six months while keeping their accounts. This came at a cost to borrowers as interest was charged on the deferred amount, but for many it meant increased cash flow at a time when their financial situation may have been precarious. <\/span><\/p>\n \u201cThis study is unique because it shows how and why payment dynamics have changed across countries as a result of the Covid-19 pandemic, a global crisis that has impacted consumers around the world,\u201d says Matt Fabian, director of services research and consulting financial at TransUnia<\/span><\/p>\n In Canada, as in the United States, personal loans remained a priority, while in South Africa, credit card repayment was a priority during the pandemic. <\/span><\/p>\n \u201cThese insights will better equip both financial institutions and consumers, supporting more trustworthy interactions between them as the world begins to normalize and emerge from the pandemic,\u201d says Fabian. <\/span><\/p>\n Even though personal loans (e.g. mortgage loans) have become a priority, Trans Union has also seen credit card delinquencies decline year over year. This, they say, shows how Canadian consumers are prioritizing keeping their credit cards in good standing, especially during the pandemic when so many transactions are taking place exclusively online using credit cards. <\/span><\/p>\n This demonstrates Canadians’ commitment to keeping all accounts active. Despite job losses and an economic downturn, the focus remained on paying off personal loans while keeping credit cards in good shape. It also means for those who have prioritized debt in this way that their personal finances will not suffer post-pandemic as a result of lower credit scores and unmanageable debt. <\/span><\/p>\n The study shows that Canadian consumers realize there will be consequences <\/span> miss a credit card payment<\/span>with almost three-quarters (72 percent) of respondents saying that even one late payment could have a negative impact on their credit score. <\/span><\/p>\n In Canada, credit scores range from 300 to 900. The higher the number, the greater your creditworthiness. Your credit score depends on many different factors, including outstanding debts, payment history and spending behavior. <\/span><\/p>\n As Canadians pay more attention to their personal loans while also keeping their credit cards in good standing, credit scores are sure to increase. Lenders will view these consumers as more creditworthy. A higher credit score also makes it easier for consumers to secure mortgages and other loans <\/span> lowest possible interest rate<\/span>. <\/span><\/p>\n \u201cThe pandemic has changed a lot around the world, but understanding why consumers make important credit decisions will only serve to better help the lending ecosystem in the future,\u201d says Fabian.<\/span><\/p>\n Trans Union’s research gives us insight into Canadians’ spending habits during the pandemic, but it may also be a predictor of how we will behave honestly once the pandemic is over. <\/span><\/p>\n You will undoubtedly maintain the good standing of your credits, including yours <\/span> credit card payments<\/span> improves your financial condition. Many Canadians will be ready for credit success once the pandemic ends, according to a TransUnion survey. <\/span><\/p>\n However, many Canadians have become accustomed to a new way of managing their money and no extra activities to spend on, such as restaurants, travel and children’s activities. Because of this, there will be some budget “relearning” that will need to occur as we return to the new normal. Once everything is fully open and safe, there will be a temptation to go out and hang out after a year and a half of being unable to do so. <\/span><\/p>\n Interest rates remain at historic lows, and as rates rise, we will also see the cost of borrowing rise. By reducing your debt now, you will make it easier to manage your personal finances in the future, especially in the event of an economic downturn. Some good habits of saving, paying off debt and living more frugally will serve Canadians long after the pandemic ends. <\/span><\/p>\n <\/p>\n","protected":false},"excerpt":{"rendered":" The way Canadians manage their money has changed dramatically over the last 18 months. When the COVID-19 global pandemic was first declared, Canadians felt an immediate economic impact and many lost their jobs. Those who were able to work throughout the pandemic saw their savings increase. According to Statistics Canada, Canadians saved $212 billion in […]<\/p>\n","protected":false},"author":1,"featured_media":714,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"om_disable_all_campaigns":false,"_monsterinsights_skip_tracking":false,"_monsterinsights_sitenote_active":false,"_monsterinsights_sitenote_note":"","_monsterinsights_sitenote_category":0,"footnotes":""},"categories":[39],"tags":[244,119,245,246,243],"class_list":{"0":"post-713","1":"post","2":"type-post","3":"status-publish","4":"format-standard","5":"has-post-thumbnail","7":"category-personal-finance","8":"tag-changed","9":"tag-consumer","10":"tag-pandemic","11":"tag-report","12":"tag-spending"},"aioseo_notices":[],"yoast_head":"\nWhat to pay first?<\/h2>\n
Payment tracking <\/h2>\n
Government benefits <\/h2>\n
The level of arrears has decreased<\/h2>\n
Healthy credit scores<\/h2>\n
Ready for financial success <\/h2>\n
The most important thing<\/strong><\/h2>\n