Credit Canada

If Queen's Park is serious about helping kids avoid becoming credit junkies, personal finance would be a mandatory course taught in our schools.

Bottomline is if parents don't talk about money at home and with credit shoved down our kids' throats (my daughter Skye, now 16, has received more than 20 pre-approved credit card applications just in the past year) -- it's so easy for young consumers to fall prey to the debt trap.

So let me applaud Samantha DeCouto, who yesterday bravely stood up to tell her story of how she went from financial ruin to debt-free, when she helped launch this year's Consumer Awareness Week in Ontario.

SERIOUS PROBLEM

Also, let me applaud Ontario's consumer minister Ted McMeekin for realizing this is a serious problem in a world where debt is king and Canadian families are drowning in record household debt of $1.1 trillion.

Samantha was 17 and at college studying fashion merchandising and office administration when she was first introduced to credit cards.

"Scotiabank held an information session on campus and they approved me for a Visa with a $500 limit," she recalled. "I didn't even have a job."

When she received the card, she also got a contract outlining fees and interest. Not understanding its importance, she didn't bother reading it, so little did she know she was paying 18.5% on unpaid balances.

It didn't take long for Samantha to wrack up debt, buying groceries, clothes and books for school. But her biggest mistake was signing up for a 30-day free trial at a gym, using her credit card. Even though she notified the gym she did not want to join after the trial, the gym kept taking $50 a month. And even though she was over her $500 limit, the payments kept coming off.

Queen's Park clamped down on gyms in its new consumer protection laws with 10-day cooling off periods and banning automatic renewals of memberships.

Soon, Samantha owed $1,200 and was in collections.

But meanwhile, she secured other cards. One a retail card at 28.8%, and another a HSBC card -- both with $1,000 limits. These cards, she said, came in handy after she gave birth to a daughter.

It wasn't until she landed a job at a car dealership that the single mom realized she was in trouble. "I wanted to lease a car, but they wouldn't let me because my credit was so bad," she said.

She now owed more than $8,000, with late payment penalities, fees and interest.

Collection agencies were hounding her.

The dealership's finance manager suggested debt consolidation, and Samantha ended getting counselling at Credit Canada (www.creditcanada.com)

"The first thing they did was make me cut up my credit cards," she said. Credit Canada also negotiated with her creditors to have penalties and interest waived, and set her up on a repayment plan she could handle.

She was now working as an office administrator for a sportswear company, earning $32,600 year, and she managed to pay off all her debt in just two years. Credit Canada also taught her how to budget, to avoid getting into the debt trap again.

"I have this great weight lifted from my shoulders. No collection agencies. No debt. And I'm still enjoying life living within my budget," said Samantha, now 24. Her credit rating has improved from R-9 to R-7, and she's now saving to buy a home.

Laurie Campbell, Executive Director of Credit Canada, warns more and more young consumers are falling into this debt trap.

"We're proud to join this campaign," she said.

The campaign includes a new outreach program and new education modules for secondary schools. Also young consumers can interact at www.ontario.ca/consumerprotection. Consumer Awareness Week runs until April 4.

*Reproduced with permission - Sun Media Corp."