Canadians Are $1.8 Trillion in Debt…But Here’s the Good NewsMar 21, 2018
Canadian consumer debt grew to 1.821-trillion dollars at the end of 2017, according to Equifax Canada. This is up from $1.797-trillion, and includes mortgage debt. The average Canadian debt load also increased by 3.3 per cent, to $22,837. But it’s not all bad news for Canadians.
The fourth-quarter report from Equifax found that most Canadians’ personal debt loads decreased or stayed the same at the end of last year, with 46 per cent saying it went down. And while one-third of Canadians increased their debt in the fourth quarter, many are still able to make payments. Debt delinquencies and bankruptcies were down, meaning that most of those carrying debt are paying their debts on time.
[bctt tweet=”Almost half of Canadians say their debt went down at the end of 2017.” username=”BDODebtSolution”]
Different credit bureaus, similar debt stories
These Equifax findings came a few days after the fourth-quarter report from TransUnion, Canada’s other credit rating agency. TransUnion found that Canadians’ consumer debt load increased 4.3 per cent in the quarter, to an average of $29,312. While there’s a pretty big difference between the two credit bureaus when it comes to average debt loads, they both show consumer debt rising by a similar amount.
The TransUnion report also showed it’s the younger generations piling on debt the fastest—for Generation Z, their debt increased nearly 23 per cent. They were also the only generation that saw its delinquency rate rise at the end of 2017. Equifax also noted a higher-than-average delinquency rate for Canadians from 18 to 35—but even at its peak, the rate tops out at 1.54 per cent, meaning that 98.46 per cent of people in that age group are making their debt payments on time.
How to start paying off your first credit card
Many 18 to 25 year-olds are exposed to credit and debt for the first time—this is probably why we’ve seen that generation’s debt increase substantially. If you’ve recently received your first credit card, now’s the time to start developing a debt repayment strategy, so you can build your credit history and manage your debt. Here are three things to keep in mind:
- Don’t spend more than you can afford. While your new credit card balance might look like it’s “free money,” you’ll actually have to pay back every penny—and then some. Most Canadian credit cards charge around 20 per cent interest on a yearly basis. Our debt calculator will show you how much that can add to your debt.
- Make your payments on time, every time. To start building a good credit score, you’ll need to show both Equifax and TransUnion that you can be responsible with credit. This means making all of your credit card (and any other debt) payments on time every month.
- Pay more than the minimum. If you only make the minimum payments on your credit cards, you probably won’t repay much more than the interest you owe. In order to get ahead, you’ll want to pay off as much of your debt as possible, if not the full amount owing, each time your bill comes due.
For more credit card debt solutions, visit our Credit Card Debt page.