(NC) Although we are often consumed with goals to be healthier, save money and budget better, paying down debt also remains top priority for many Canadians. For the sixth straight year, a Canadian Imperial Bank of Commerce survey revealed that 26 per cent of us named debt reduction as our top financial goal for 2016. Coupled with predictions from the parliamentary budget officer that the debt-to-income ratio will hit its highest level since 1990, more so than ever, we need financial tools such as prepaid cards to help manage our finances.
With the growing popularity of open loop prepaid cards, many consumers are using these relatively new financial tools to alleviate their financial conundrums. The cards look and function like traditional credit and debit cards at the point of sale and provide the same fraud and loss protections offered by the card network with a significant difference — they access funds that have been pre-loaded by the consumer, government or business.
Those of us looking to budget better and pay down debt this year should know the benefits of prepaid solutions, including:
• Set spending limits. Prepaid cards are excellent tools to manage family budgets because only pre-loaded amounts of funds are available for use, unlike credit cards that can lead to significant debt accrual.
• Access online services and apps. Highly attractive to the 88 per cent of millennials who want to avoid visiting a bank branch, prepaid cards give consumers the tools to manage their finances online or via a mobile app.
• Avoid fees and charges. Open loop prepaid cards eliminate the risk of overdraft, NSF fees and interest charges. The majority of Canadians (82 per cent) want a payment card that does not charge those fees.
While Canada shapes up to have more debt than ever this year, the proliferation of open loop prepaid cards offers us the convenience, stability and flexibility we need to meet financial obligations and pay down debt. More tips and information are available at www.cppo.ca.