Are you carrying a balance on your credit card? You’re not alone. In fact, carrying a balance on your credit card these days is as Canadian as Tim Hortons or Saturday night hockey. Two of the main drivers behind the rise in credit card debt are a push towards a cashless society and the low interest rate environment.
Despite warnings from the Bank of Canada and think tanks around the world about Canada’s rising household debt, Canadians continued to pile on debt in the first quarter of 2017. Canadians carried an average of $21,696 in non-mortgage debt in the first quarter. That’s up 1.9 percent from last year, finds TransUnion.
Another quarter has passed with household debt hitting a fresh record. Household debt hit a new record 167.3 percent of disposable income in the fourth quarter of 2016. That’s up from 166.8 percent in the previous quarter. In simple terms, that means on average for every dollar of disposable income Canadians earn, they owe $1.67 of debt.
We have the latest credit card statistics, and it’s a good news, bad news story on the consumer debt front. The good news? Canadians are carrying fewer credit cards in their wallet. The bad news? The balances on the credit cards they already have is higher.
TransUnion released its consumer debt stats for the first quarter of 2016. The credit reporting agency found the average Canadian owed $21,348 in consumer debt (excluding mortgage) at the beginning of 2016. That represents an increase of 2.71 percent from the first quarter of 2015. Installment loan (4.83 percent), auto loans (2.12 percent) and credit cards (1.80 percent) all saw increases. The sole exception was lines of credit, which declined by 0.54 percent.
We’re three week into 2016 – how are your financial goals shaping up for this year? Paying down debt is one of the top financial goals for Canadians. While setting the goal to pay down debt is a good first step, putting an action plan into place and sticking to it is a lot more difficult.