What type of borrower are you?
It’s a tricky question to answer as you’ve probably never considered it.
Still, we can have a guess at what type of borrower you are based on your habits.
It all revolves around your repayment patterns.
When are you making debt repayments?
Depending on your answers to these questions, you’ll fall into the following categories:
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Pay in full
Ideally, you should strive to be this type of borrower.
When you get your credit card bill each month, you pay it all every single time.
This is highly advantageous as it eliminates any interest fees or additional charges.
So, you pay less than someone who doesn’t pay their bill in full.
A study from a few years ago found that 56% of Canadians pay their credit cards in full every month.
The key to fitting in this category is to use your credit card wisely and only buy what you can afford to pay.
Stuck in the middle
A borrower who is stuck in the middle will sometimes pay their balance off in full but are just as likely to let it run over to the next month.
Still, they may make more than the minimum payment, which reduces some of the excess fees.
You’re stuck in the middle as you’re not consistently clearing your balance every month, but you also don’t just pay the minimum and let the fees ramp up.
The minimum payment payer
It’s better than paying nothing, but you still trigger credit card interest rates and additional fees.
What’s more, you let your debt pile up, which ultimately means you fall into a debt trap.
The more often you make minimum payments, the more money you end up owing.
This is the quickest way to fall into thousands of dollars of credit card debt.
Don’t be this type of borrower!
Create a budget and use your card wisely to avoid huge bills that you can only make the minimum payment on.
The payday loan user
Lastly, you may fall into the category of a frequent borrower – or payday loan user.
You regularly take out payday loans to cover some of your other debts.
This may be to pay your credit card bill, but it leaves you with another debt and more fees to pay.
So, you end up in a cycle where you depend on payday loans far too often, creating mass amounts of debt.
What type of borrower are you?
Aspire to be in the first category, and seek out credit counselling and debt advice if you’re in any of the other categories.
Contact us for debt relief services!
We can help you become a more responsible borrower through our debt relief services.
Call us today, and we will book a consultation to go over your borrowing habits.
From here, we’ll work out a plan to help you move out of debt and be more credit-savvy.
If you can’t give us a call right now, fill in our evaluation form and we will be in touch shortly.
Information on Consumer Proposals
Consumer Proposals in Canada – An Alternative to Bankruptcy
What is a Consumer Proposal?
How to Amend a Consumer Proposal
What are the Benefits of a Consumer Proposal?
What are the Steps in a Proposal?
Consumer Proposal Eligibility
What Debts Are Erased in a Consumer Proposal?
Is There Life After a Proposal?
How to File for Bankruptcy
What is Bankruptcy?
How Does Bankruptcy Work?
What is the Cost of Bankruptcy in Canada?
How to Rebuild Credit Following Bankruptcy
Personal Bankruptcy in Canada
What Debts are Erased in Bankruptcy?