How well do newcomers understand consumer credit?

Author

Geneviève Grenier

Organization

Option consommateurs

Published

2014

Summary

According to data from the National Household Survey of 2011, Canada has welcomed 819,885 new immigrants in the past three years. These people often come from countries where the concept of credit is different from ours, or where credit is nonexistent.

Within days or weeks of their arrival, they are made aware of credit offers and advertisements specifically designed for them. These offers give information on the Canadian banking system, propose opening an account in a financial institution and suggest a credit product (usually a credit card), which, they say, will permit them to obtain a good credit rating.

Option consommateurs’ study shows that while the ads and offers are tempting, they contain little (or no) relevant information and are difficult (if not downright impossible) for newcomers to understand.

They could turn to an aid agency, but since they usually acquire these credit products within weeks of their arrival, they do not have the time. They have only their relatives and financial institutions to rely on for information, with the result that they often acquire credit products understanding very little about what is involved.

It seems important that newcomers be reached by organizations that are not mandated to sell financial products before they acquire credit products. This would allow them the time to understand not only the advantages, but also the disadvantages and risks related to these products.

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OCA Funded Research
This research received funding support through the Office of Consumer Affairs' Contributions Program.


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Source: Consumer Policy Research Database

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