Canada

Canadian Credit Card Debt Tops $79 Billion, Interest Rates Hit A Multi-Year High

More Canadian consumers are carrying a balance on their credit cards these days. Bank of Canada (BoC) numbers show credit card debt hit a new high in September. The increase in credit card debt, is also accompanying a rise in the average, already high, interest rates paid.

Canadians Now Owe Over $79 Billion On Credit Cards

Canadian credit card debt reached a new record high, and there’s few signs it’ll stop soon. The outstanding balance of credit card debt reached $79.17 billion in September, up 0.57% from the month before. Compared to the same month last year, this represents a 4.07% increase. It may not seem like much, but it’s an exceptionally fast growing segment of debt in Canada right now.

Canadian Credit Card Debt

The outstanding balance of Canadian credit card debt, in billions of Canadian dollars.

Source: Bank of Canada, Better Dwelling.

The pace of growth is much higher than general consumer credit growth. The 4.07% 12-month growth in September is almost 50% higher than the total balance of consumer credit. In fact, credit card debt only saw 3 months that didn’t see double digit growth this year. That’s a teensy bit of a problem, considering how high and fast interest rates are rising in this segment.

Credit Card Interest Rates Rise To Highest Level In Years

These borrowers are also paying a lot more in interest, as rates jump to multi-year highs. The average interest rate on the outstanding balance was 19.22% in September, up 0.63% from a month before. This represents an increase of 1.47%, compared to the same month last year. This is the highest level in at least 3 years of data readily available from the BoC.

Canadian Credit Card Debt Interest Rates

The average interest rate paid on outstanding credit card debt in Canada.

Source: Bank of Canada, Better Dwelling.

Canadian household debt rising isn’t really new, but swelling credit card debt is. It’s currently rising almost 50% faster than general consumer credit. That’s slower than it was a month before, but still a bit of an issue when you consider interest on credit cards are much higher than say a HELOC or line of credit.

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11 Comments

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  • Pete 8 months ago

    How many people are just shifting debt between credit cards at this point? Because retail sales in Canada posted a “surprise” drop.

    https://www.bloomberg.com/news/articles/2019-12-20/canada-retail-sales-post-surprise-drop-falling-most-in-year

  • Tobbit 8 months ago

    Expect another bump in this stat for December with peoples holiday spending (of money they have yet to earn!)

  • straw walker 8 months ago

    That represents a 40% rise in card debt since 2015…
    These increases are really unsustainable.

  • Eva 8 months ago

    I must be missing something….how can a country of 38 million people have this much credit card debt? Does this include corporate credit card debt? Or is this how much people are charging on credit cards and the majority pay it off, leaving the outstanding balances much lower?

    • Tommy 8 months ago

      Business credit isn’t included in houeshold. Just like business mortgages and other secured lending won’t be included. Canada’s debt is really almost 2x the household debt.

    • 6ix 8 months ago

      we have ~30 million people above 18 years. i.e 79 billion/30 million = $2633.

      • Janes 8 months ago

        That’s for every man woman and child. If you look at per family basis of 2.3 person per family, that’s a lot money on average. I know many top 5% earners, most of them has credit card balance of less than $2000, and zero carry over to next month. Just imagine how much credit card balance some families are carrying to support day to day living expenses.

  • Bob Emery 8 months ago

    I wonder what percentage of that debt is carry-over from month to month.

    • Tommy 8 months ago

      “Outstanding balance,” so that’s how much is carried.

  • Ian Duncan MacDonald 8 months ago

    A rise in Credit Card debt is not the same thing as a rise in consumer collections, increased insolvencies and other signs of mismanagement of money. Everything charged to a credit card from a coffee at Tim Hortons to an Uber ride is charged to a credit card. Until the last few years, such purchases would have been paid for with cash. Now, paying cash has become the exception. Is there any wonder as we go through this transformation that credit card debt increases to unforseen levels, yet I do not believe insolvencies are reaching record highs. It is interesting that the banks who are covering this float of debt are showing record profits.

    • Liam 8 months ago

      OUTSTANDING.

      Outstanding is the remaining balance reported to the credit agency. I never carry a balance, thus my thousands of credit card spend is not reported to the agency. It shows as $0 on TransUnion.

      This is interest bearing debt.

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