As quarterly profits of Canada's banks are reported, people love to gripe about the billions of dollars racked up.
It's worth remembering that borrowers in this country are going out of their way to help the institutions get fatter. It's a growing trend we're seeing of 'why wait?' More and more householders want everything now.
The Certified General Accountants Association of Canada reported Tuesday that despite jittery nerves over the recent recession, Canadians still increased their borrowing. Household debt in the country kept rising through the recession and peaked in December at $1.41 trillion.
At $41,740 on average per Canadian, that's among the greatest debt-to-income ratios, coming in at 144 per cent.
Record-low interest rates provided a lot of encouragement for people to take out loans. But low rates don't last forever, and bank officials have been warning Canadians they're about to rise and households shouldn't overextend themselves.
The accountants involved with last Tuesday's report also say households might find themselves in difficulty with a rise, tied to debt payment and having difficulty with other day-to-day expenses.
Some economists are pointing out that that was the precise reason for slashing interest rates: to avoid a shutdown in spending during precarious recessionary times. The flip side of that, however, is that households that stretch themselves too thin.
It's grand to have such cautionary advice from officials at the Bank of Canada and the accountants association. But the indication here is that Canadians generally could use a lot more education on financing and the potentially ballooning cost of borrowing.
As Certified General Accountants Association president Anthony Ariganello said, "The concern is do they understand the full cost of paying later?"
Unfortunately some are about to find out the hard way.
