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Your Mortgage – Good Debt or Bad Debt?

July 26, 2011

Have Canadians bitten off more than they can chew as it related to consumer debt? I can live with that and it is definitely worth discussion…BUT…I don’t think the culprit is low mortgage rates. The solution lies in other sectors of the financial services industry. As my colleague Kristian Harris wrote earlier this year, I think it would be good if we could stop having credit card companies hand out cards at sporting events and college and university campuses, as if they were handing out free gum.

It is credit card and retail debt that hurts Canadians (NOT MORTGAGES). Although mortgage debt has been discussed quite a bit recently, the reality is that mortgage rates have been low for years and will remain low, whereas interest on credit cards can be as high as 24% annualized. With a mortgage, you have a debt on an appreciating asset, which is not a bad debt to have.

In the case of this article, a picture (of various credit cards) is truly worth a thousand words.