Total consumer debt in Canada stood at $2.4 trillion in Q3 2023, an increase of $80.9 billion from the same period last year, according to Equifax® Canada’s latest Market Pulse Consumer Credit Trends and Insights report. Despite the impact of high interest rates and a slowing economy, mortgage debt rose by 1.7 per cent compared to the second quarter while non-mortgage debt growth was slightly lower at 1.2 per cent.
The rise in non-mortgage debt was primarily due to credit cards. Total card balances reached $113.4 billion in the third quarter of 2023, an all-time high, representing a 16 per cent increase from the same period last year. More than 6 million new cards were opened in the last 12 months, up 13.7 per cent from 2022.
“The increase in credit card debt is being driven by several factors, including the rising cost of living, higher interest rates, and the economic slowdown,” noted Rebecca Oakes, Vice-President of Advanced Analytics at Equifax Canada. “These factors are putting a strain on household budgets, making it difficult for many Canadians to make ends meet.”
Population growth continues to be a key contributor in the rise of credit card balances, with over 1.3 million new card holders compared to 12 months ago, but the report indicates that increased financial strain may also be to blame. The average balance of credit card holders rose to $4,119, up from $3,727 in the third quarter of 2022, exceeding the averages seen pre-pandemic. Notably, consumers with credit scores below 620 saw a substantial 13.9 per cent increase in credit card balances this quarter compared to Q3 2022, up 9.4 per cent from pre-pandemic. While average monthly credit card spend per consumer rose by 2.2 per cent compared to 12 months ago, average payment only increased by 1.7 per cent.
“Even if we take into account the increased costs of goods due to inflation, the growth in card balance compared to last year is still substantial,” added Oakes, “Monthly spend levels on cards have stabilized in recent months, so changing payment levels are contributing to that balance growth.”
Source: https://assets.equifax.com/assets/canada/english/q3-2023-Consumer-Trends-Report-EN.pdf