Skip to main content
The Globe and Mail
Support Quality Journalism.
The Globe and Mail
First Access to Latest
Investment News
Collection of curated
e-books and guides
Inform your decisions via
Globe Investor Tools
Just$1.99
per week
for first 24 weeks

Enjoy unlimited digital access
Enjoy Unlimited Digital Access
Get full access to globeandmail.com
Just $1.99 per week for the first 24 weeks
Just $1.99 per week for the first 24 weeks
var select={root:".js-sub-pencil",control:".js-sub-pencil-control",open:"o-sub-pencil--open",closed:"o-sub-pencil--closed"},dom={},allowExpand=!0;function pencilInit(o){var e=arguments.length>1&&void 0!==arguments[1]&&arguments[1];select.root=o,dom.root=document.querySelector(select.root),dom.root&&(dom.control=document.querySelector(select.control),dom.control.addEventListener("click",onToggleClicked),setPanelState(e),window.addEventListener("scroll",onWindowScroll),dom.root.removeAttribute("hidden"))}function isPanelOpen(){return dom.root.classList.contains(select.open)}function setPanelState(o){dom.root.classList[o?"add":"remove"](select.open),dom.root.classList[o?"remove":"add"](select.closed),dom.control.setAttribute("aria-expanded",o)}function onToggleClicked(){var l=!isPanelOpen();setPanelState(l)}function onWindowScroll(){window.requestAnimationFrame(function() {var l=isPanelOpen(),n=0===(document.body.scrollTop||document.documentElement.scrollTop);n||l||!allowExpand?n&&l&&(allowExpand=!0,setPanelState(!1)):(allowExpand=!1,setPanelState(!0))});}pencilInit(".js-sub-pencil",!1); // via darwin-bg var slideIndex = 0; carousel(); function carousel() { var i; var x = document.getElementsByClassName("subs_valueprop"); for (i = 0; i < x.length; i++) { x[i].style.display = "none"; } slideIndex++; if (slideIndex> x.length) { slideIndex = 1; } x[slideIndex - 1].style.display = "block"; setTimeout(carousel, 2500); } //

Freida Richer is a licensed trustee at Grant Thornton Ltd. in Edmonton, with experience in all aspects of proposal and bankruptcy administration.

For the first time in recollection, consumers of every generation are relying on credit to live, as it is increasingly being perceived as an additional source of income – a way of life. Credit can be a benefit to consumers when used wisely, but for the financially illiterate, it poses a dangerous slope toward debt and insolvency – and each age group faces this risk for different reasons.

Today's society has been cultivated into a culture of credit, with each generation using it to spend more freely and carelessly than ever.

Story continues below advertisement

Credit has become so accessible that it's pushing debt levels out of hand, and licensed trustees are seeing a growing problem across all demographics of clients who are seeking financial help to deal with these debts. Each generation of consumers has demonstrated different reasons for why they have come to rely heavily on credit card debt – raising warning signs for consumers who are susceptible to these spending habits.

Members of Generation Y, also known as the millennials, have grown up spending freely with credit cards and generally lack sufficient financial literacy when it comes to credit and debt. This generation actually feels more comfortable using plastic over cash for most purchases, including purchases under $5. This might be attributed to the fact that this generation was raised with digital literacy, and so online purchases are simply a normal part of their world.

Members of Generation X face pressures to pay for mortgages, vehicle loans and other store credit. However, they feel confident in their earnings, so tend to put more day-to-day and large purchases on their cards. This generation tends to carry the most debt since people are faced with their highest income-earning years and the pressures of living a lifestyle that they cannot realistically afford.

The next group running into new financial challenges is the sandwich generation – those between their early 50s and retirement. These consumers are dealing with their own finances while helping both their college children and their aging parents financially; they often use credit to cover costs.

The retired generation, despite seeing their savings dwindle, are resistant to changing their lifestyle habits. They are turning to credit to support these habits, or find themselves on limited incomes and use cards to make up the difference. Sometimes, members of this generation enter a spiral of doom where the only way to service debt payments is to incur more debt on a different credit card or line.

So how do consumers avoid running into such troubles while immersed in our culture of credit? The answer comes down to financial literacy.

Before availing themselves of credit, consumers must understand how interest is calculated on a balance and the financial impact of making just the minimum payments. They must understand how credit use affects their credit rating/score and their future ability to obtain credit for the purchase of a home, a vehicle or an unexpected expense.

Story continues below advertisement

Consumers must learn to recognize signs that they may already be financially unstable. If they are consistently late with payments, nearing their credit limit or have little to no savings, the first step toward freeing themselves from debt is to take an honest look at where they stand with their debt obligations. Then, they must make it a priority to pay off their unsecured debt as aggressively as they can. They will need to adjust their income or expenses to accomplish this. And above all, they must learn to use credit if necessary, but wisely.

Report an error
Due to technical reasons, we have temporarily removed commenting from our articles. We hope to have this fixed soon. Thank you for your patience. If you are looking to give feedback on our new site, please send it along to feedback@globeandmail.com. If you want to write a letter to the editor, please forward to letters@globeandmail.com.

Welcome to The Globe and Mail’s comment community. This is a space where subscribers can engage with each other and Globe staff. Non-subscribers can read and sort comments but will not be able to engage with them in any way. Click here to subscribe.

If you would like to write a letter to the editor, please forward it to letters@globeandmail.com. Readers can also interact with The Globe on Facebook and Twitter .

Welcome to The Globe and Mail’s comment community. This is a space where subscribers can engage with each other and Globe staff. Non-subscribers can read and sort comments but will not be able to engage with them in any way. Click here to subscribe.

If you would like to write a letter to the editor, please forward it to letters@globeandmail.com. Readers can also interact with The Globe on Facebook and Twitter .

Welcome to The Globe and Mail’s comment community. This is a space where subscribers can engage with each other and Globe staff.

We aim to create a safe and valuable space for discussion and debate. That means:

  • Treat others as you wish to be treated
  • Criticize ideas, not people
  • Stay on topic
  • Avoid the use of toxic and offensive language
  • Flag bad behaviour

If you do not see your comment posted immediately, it is being reviewed by the moderation team and may appear shortly, generally within an hour.

We aim to have all comments reviewed in a timely manner.

Comments that violate our community guidelines will not be posted.

UPDATED: Read our community guidelines here

Discussion loading ...

To view this site properly, enable cookies in your browser. Read our privacy policy to learn more.
How to enable cookies