TORONTO, ONTARIO--(Marketwired - July 29, 2013) - According to a BMO Bank of Montreal report released today, the vast majority of Canadians with debt have a plan in place to pay it off. However, only one-third (36 per cent) of those have a detailed plan that includes fixed payments and specific timelines.
The report, which includes survey findings from the BMO 2013 Household Debt Report, revealed:
- Eight-in-ten (81 per cent) have a plan to pay down debt
- Younger Canadians (18-34 years of age) are the most likely to have a detailed plan, while those between the ages of 45-54 are the least likely (42 per cent versus 29 per cent respectively)
Debt Repayment Planning by Region
| BC | AB | MB/SK | ON | QC | ATL | |
| Rough plan | 47% | 47% | 48% | 47% | 33% | 54% |
| Detailed plan | 33% | 37% | 41% | 32% | 44% | 34% |
| No plan | 20% | 15% | 11% | 21% | 23% | 12% |
"Managing debt is a simple concept; however, establishing a detailed plan and putting it into practice can be a challenge for some," said Janet Peddigrew, Vice President, BMO Bank of Montreal. "Assessing your current debt situation with a financial professional and understanding how it affects your overall financial picture is the first step toward getting debt levels under control."
The report also revealed that among those with non-mortgage debt, 82 per cent with a detailed debt repayment plan expect to have their debt paid down within five years, compared to 71 per cent of those with a rough plan and 53 per cent of those with no plan.
Ms. Peddigrew added that differentiating good debt from bad debt will also help to prioritize which debts to pay down first.
"Good debt is debt incurred to buy things that increase in value or add to your overall earning power, such as real estate, investments or education," added Ms. Peddigrew. "Avoid debt that depreciates in value and does not contribute to your net worth. When building a plan, it's prudent to focus on these areas first to pay them down more aggressively."
BMO offers the following tips to help Canadians manage debt:
Choose a shorter amortization: If you're buying a home, consider choosing the shortest amortization possible to help save thousands of dollars in interest over the life of your mortgage and become debt free sooner.
Manage credit card debt: Pay off your monthly credit card bill. If you do carry a balance, consider using a low rate card for your purchases. For instance, the BMO Preferred Rate MasterCard offers a low rate of 11.9 per cent for an annual fee of $20.
Consolidate high-interest debt: Pay off higher interest loans by consolidating those debts into a lower-rate product, such as BMO's Personal Line of Credit , to reduce interest costs and pay down debt faster.
The BMO 2013 Household Debt Report was conducted by Pollara come from an online survey of 1,005 Canadians fielded by Pollara between July 12 and 16. A probability sample of this size would be accurate to +/- 3.1 per cent, 19 times out of 20.
About BMO Financial Group
Established in 1817 as Bank of Montreal, BMO Financial Group is a highly-diversified North American financial services organization. With total assets of $555 billion as at April 30, 2013, and more than 46,000 employees, BMO Financial Group provides a broad range of personal and commercial banking, wealth management and investment banking products and solutions.
