November 14th – 18th is Credit Education Week in Canada. I’ve got some concerns with this event. Not only does the list of named sponsors, and keynote speakers raise questions about how serious they are about educating Canadians on credit, but the event has also created a counter movement led primarily by Gail Vaz-Oxlade who talks about Schooling Lenders in her blog, and making them take more responsibility for their lending practices.
Gail has also started a facebook group called School Lenders, and in many recent interviews she is asking Canadians to not use credit cards in protest during credit education week. Gail is also encouraging Canadians to letter their member of parliament and tell them how you feel about lending practices and the use of credit scoring. I think Gail makes some great points.
Here is a recording of a Skype interview I had with Gail today about Credit Education Week.
At the end of the day, credit education is really about money management and budgeting.
One of their keynote speakers at Credit Education Week is Debbie Travis; Debbie is a talent for interior design and decoration. She has a home decorating TV show and a line of products sold through Canadian Tire stores. These are activities that require buying things. It raises questions as to how an interior decorator is qualified to educate people on credit.
The sponsor list for the event is equally baffling. Credit Canada, a non-profit credit counsellor is one of the platinum sponsors, their activity is often looked upon as a kinder, friendlier collection agency for the banks. Don’t believe Credit Canada is in bed with the banks? Watch this. Money Mart, a payday loan company, makes their money by loaning short term payday loans at insanely high interest rates. Not sure the rates are high? Look here. The Ontario Lottery & Gaming Commission, a gambling board, makes money off peoples 1 in a gazillion chances of getting rich. I also notice some publically traded companies, who have a fiduciary duty to maximizing shareholder profits. Capital One, a credit card lender, and a few Canadian Banks. They earn revenue by issuing credit, and collecting interest. Again, it raises questions about the event sponsors.
I don’t think credit education week is the forum to learn money management skills from. The people that need the education would need to pay over $100 to attend. If it was, I think the event should have a serious and vocal money expert like Gail Vaz Oxlade invited as a keynote speaker.
On one hand I think consumers need to be smarter about how they use credit cards. They really do need to take responsibility. We have encountered far too many people that enrol into our program that truly believed that just making minimum monthly payments was the correct way to pay off their credit card balances fast. Not only can minimum payments take an entire lifetime (I’m not kidding) but often a “life” event happens just as people are barely keeping their head above water and they start to drown in debt. A life event is anything that limits or reduces income like a layoff, unexpected pregnancy, injury that prevents work, bad entrepreneurial decisions etc. They are unexpected, and often people don’t have a rainy day fund or lawyers for work related injuries to help deal with it.
On the other hand, I think creditors need to be more responsible in their lending practices. Just like cigarette companies disclose the true cost of their product, disclosures on the true cost of just making minimum payments need to be more bold. Creditors shouldn’t be allowed to issue credit cards to people with limits that they can’t afford to pay off.
What are your thoughts on credit education, is the event on target or misguided?
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If it weren’t for Gail’s efforts, I’d say the whole week is (almost) a total joke. Credit cards, for so many people, are like a drug– and not only are they dangerous, they’re ubiquitous.