Credit card debt is at an all-time high in Canada
Canadians are swiping their credit cards at a rising rate, and racking up more and more debt.
According to a new survey from Equifax Canada, the average credit card balance held by Canadians reached a record high of $2,121 at the end of September.
The average non-mortgage debt was $21,188, a level Equifax said has not been seen since Q1 2020. Meanwhile, credit card use has increased for the sixth consecutive quarter.
Only 50 per cent of those surveyed said they felt comfortable about their personal economic outlook – compared to 61 per cent in 2021 – while 53 per cent indicated they had a lot of anxiety about their current level of personal debt.
"No matter where they live in Canada and no matter how old they are, people are clearly concerned about their financial situation," said Julie Kuzmic, Equifax Canada’s Senior Compliance Officer, Consumer Advocacy.
"Credit card usage is reaching historic highs. This can be a slippery slope for some, as it doesn’t take long to find yourself burdened by debts, which may become challenging to pay back in this economic environment."
Staying on top of monthly bills, like insurance and utilities, concerned more than half of those surveyed. The cost of food and housing were cited as major stressors, too.
Nearly 60 per cent said they were using coupons and looking for deals at the grocery store more so than they were a year ago, while 54 per cent were cutting back on grocery shopping altogether.
Meanwhile, 20 per cent indicated they can’t find an affordable apartment to rent in their preferred city or neighbourhood, and 17 per cent said they’re considering moving to another part of Canada in search of cheaper housing. The latter figure was higher amongst renters.
To help curb high inflation, the Bank of Canada has raised interest rates six times since March. The latest increase, on October 26, brought the key interest rate to 3.75 per cent.
"The demand for goods and services is still running ahead of the economy’s ability to supply them, putting upward pressure on domestic inflation," the Bank said during its most recent announcement.
"Businesses continue to report widespread labour shortages and, with the full reopening of the economy, strong demand has led to a sharp rise in the price of services."
The Bank noted that it was "resolute" in its commitment to restore price stability in Canada; a seventh interest rate hike is expected in December in order to achieve the Bank's 2 per cent inflation target.
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