Withstanding Ravages of Debt in America and Canada: Differences and Similarities

The global economy is slowing, decelerated by the continuing trade war between the United States and China and Trump’s threat of additional sanctions against Iran. The ongoing Brexit saga is not boosting the economy either, and neither do multiple elections and political tensions in the Middle East. Faced with the negative effects of the trade war and Brexit, the International Monetary Fund was recently obliged to cut its global growth outlook. According to the calculations of the IMF, the world economy will expand only by 3.2 percent in 2019. This is the weakest level since the notorious 2009, when the GDP rate was -2.5 percent. But many independent analysts consider the IMF’s prediction excessively optimistic. They think that this year’s resemblance to the worst economic times of this century will be stronger.

Little wonder is, then, that in such unfavorable economic times people get more and more burdened by financial debts. Financial dire straits in which people find themselves are a phenomenon present not only in developing countries and Africa but across Europe and South America as well. North Americas are not an exception to this sad reality: citizens of both countries place the absolute trust in banks, credit cards, and charitable bankruptcy laws and, in so doing, fall into budget deficit.

Indeed, Americans and Canadians start their debt-accumulating career in their mid-twenties and become experts in juggling mortgages, car payments, and student loans by their early thirties. And as if their salad-days predicament was not depressing enough, North Americans continue struggling with debts throughout their entire lives. The latest statistics show that in America, every living generation is in debt: 80.9 percent of baby boomers, 79.9 percent of Gen Xers, and 81.5 percent of millennials owe money to banks. Although Canada was always appreciated for sound financial management and emerged unscathed from the global financial crisis, it does not fare much better financially now. The debt ratio has recently climbed in Canada to 14.9 percent, almost reaching the 2007 record high. A total of 31,900 Canadians has lately filed for bankruptcy. Credit growth is the slowest in the country since 1983.

Conscious of their citizens’ worsening financial situations, America and Canada take measures to lighten their monetary burdens. Some solutions to people’s debts are offered by banks in both countries; some are specific to only one of them. A zero percent balance transfer credit card, for example, is provided by banks on both sides of the American-Canadian borders. In effect, when a bank issues you a 0% balance transfer credit card, it lends you its own money free of charge. It allows you to transfer your higher interest credit card and store card debt to a balance transfer credit card with a lower interest rate for six or twelve months. A usual interest rate on such cards are either zero percent or 2.99 percent maximum.

If you are American interested in a 0% balance transfer credit card, you may choose among Citi Simplicity® Card, Bank of America® Cash Rewards Credit Cards, or Discover it® Balance Transfer Card. These cards have no annual fees and a low transfer fee, no higher than 5 percent. Equally popular are balance transfer credit cards in Canada. Canadians are attracted to a 0% interest rate to make large savings, reduce monthly payments, and get rid of debts faster. As is the case in America, in Canada, there is also a large choice of the best balance transfer credit cards that have a $0 annual fee and whose balance transfer intro rate is ether 0 percent or not higher than $1.99. Like Americans, Canadians are offered these low rates for six or twelve months.

Banks and credit unions in both counties also allow people to consolidate their multiple debts. The truth is that the majority of Americans and Canadians pay numerous loans with various interests. To help them avoid this financial nightmare, banks offer people an option to take a new loan with which to pay off a number of their unsecured debts . This process is called debt consolidation. When people consolidate their debts, they combine whatever loans they have into a single, often larger piece of debt, usually with lower interest rate and lower monthly payment. In both countries, debt consolidation is applicable to all types of debt. A student loan debt, a car loan debt, and credit card debt can easily be brought together. Among the best American companies that offer good debt consolidation loans are Credible, LendingTree, LendingClub, 5KFunds, and AmOne. Canadians can apply for credit consolidation loans at such Canadian credit unions and banks as BMO, CIBC, RBC, TD, and Scotiabank.

While debt consolidation loans and balance transfer credit cards are available in both North Americas, there are programs offered only to Canadians. The Orderly Payment of Debts is one of such programs open to residents of Alberta, Saskatchewan, Prince Edward Island, and Nova Scotia. Quebec residents have access to a similar program called voluntary deposit. The OPD is a debt payment alternative to bankruptcy in Canada, offered under the Bankruptcy and Insolvency Act. If you are eligible for the OPD program, most of your unsecured debts will be consolidated. You will also have only one monthly payment, which will be based on what you can afford to pay. Under the OPD, you will also keep your assets – your house, car, and other valuable items. Interest rate will be reduced to 5 percent. Above all, the Orderly Payment of Debts will prevent you from resorting to more extreme solutions such as filing for bankruptcy. It will also let you quickly rebuild a good credit rating and repay your debts in less than three years.

Living in the United States, people can pay off their debts by borrowing some part of their retirement plan, provided they have a 401 (K) retirement plan at work. But before they decide to do so, it is advisable to check their company’s policy and rules. Different companies allow their employees to borrow different percentage of their investments. Some employers also ask their employees to repay the money they borrowed through a payroll deduction, usually within several years. Like banks, companies may oblige their employees to pay specified interest on their loans. If you plan to borrow money from your retirement plan, you should check first what interest rates other non-profit debt consolidation companies offer. It may be more profitable for you to borrow money from them rather than touch your 401 (K) retirement plan.

The global economy is downshifting, dragging more and more people into the debt pit. Yet some countries are more sympathetic to their citizens’ financial troubles than others and offer them satisfactory solutions to alleviate their financial burdens. Even though America and Canada are economically weaker in 2019 than they were a few years ago, they give a helping hand to those people who have succumbed to the ravages of debt. By providing their citizens with debt consolidation loan plans and balance transfer cards, the two countries prove to them that debts should not be a lifetime curse and that any financial problems, however severe, are surmountable.