Tackling Debt A Growing Priority

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Verico Designer Mortgages Inc

More Canadians are heeding the interest-rate warnings and focusing on curbing their debt loads in 2010.

A Manulife Financial poll released Tuesday found that paying down credit cards and lines of credit is growing as a financial priority among Canadians. In fact, more than a quarter, 28 per cent, pegged debt elimination as their main goal, up from 24 per cent in 2009 and a five-year high.

The results come at a time when households are tackling post-Christmas credit card bills and struggling with record

Debt, both mortgage and consumer. With interest rate hikes on the horizon, Bank of Canada Governor Mark Carney last month cautioned Canadians against taking on more debt than they can handle.

Despite this red flag, Canadians dug deeper this December, with spending in the holiday period rising 3.44 per cent in volume over the previous year, according to Moneris Solutions, which processes credit, debit and online payments.

The central bank estimates there was nearly $1.4-trillion in total household credit outstanding in October, the most recent data available, up from $1.3-trillion a year earlier. Much of the growth stems from mortgage debt, which stood at roughly $950-billion in October, compared with less than $890-billion a year earlier.

The Manulife national survey of 1,000 people, conducted last month by Research House, found that the second most-cited financial priority among Canadians was paying down the mortgage. It was chosen by 14 per cent of respondents, up from 11 per cent last year.

The third priority – saving for retirement – was listed by 11 per cent of those polled, down from 14 per cent a year ago.

“Paying down debts is understandably a priority, particularly at this time of year,” Paul Rooney, chief executive officer of Manulife Manulife Canada, said in a news release. “Given the economic challenges in 2009, we shouldn’t be surprised to see more Canadians focused on ensuring their financial house is in order.”

Only 5 per cent of respondents listed saving for a child’s education, through a tool like a registered education savings plan, and saving for purchasing a home, as financial priorities, on par with last year’s results.