Missed Payments and Financial Strain Are Increasing for Many Canadians, Credit Card Debt Continues To Rise
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
4 Ways to Practice Whole Home Safety
Practising whole home safety includes having proper protection against the threat of smoke, fire and carbon monoxide (CO). However, just over one in three Canadian residents who experienced a residential fire had a working smoke alarm in their home, according to Statistics Canada.
First Alert, a fire safety brand, shares the following safety tips to help you protect the moments that matter most with your family:
Prepare a home emergency kit
Being prepared in case of an emergency includes having an emergency kit on hand. In addition to basic necessities such as a first-aid kit, water, a flashlight and medical supplies, make sure your kit includes batteries, a multi-tool, blankets and non-perishable food.
Install and maintain your alarms
Proper smoke and CO alarm maintenance and replacement are essential to help keep your home and family protected. The National Fire Protection Association recommends installing alarms on every level of your home, including the basement, and in every bedroom.
Test your alarms regularly by pressing the test button and waiting for the alarm to sound. Replace the batteries at least every six months, or make maintenance easier with a two-in-one smoke and CO alarm such as the First Alert 10-Year Battery Combination Alarm, which means you don’t have to replace the batteries or deal with late-night chirps for a decade.
Equip your home with fire extinguishers
Beyond smoke and CO alarms, having fire extinguishers is an important element of home safety. Place fire extinguishers on every level of your home, as well as in common spaces like the kitchen and garage. When selecting a fire extinguisher, look for devices designed to combat common household fires caused by wood products, grease and electricity.
Create and practise a home escape plan
In the event of a home emergency like a fire, it’s important to have a home escape plan. Together with your family, identify two exits out of every room and designate a meeting spot outside of your home. Practise your plan at least twice a year to help ensure every family member remembers what to do.
