Canadian Credit Card Debt Study 2024

The current situation of credit card debt in Canada is becoming an increasingly pressing concern, as it not only reflects the economic pressures that the general population is facing but also its broader implications.

Rising living costs, coupled with fluctuating economic conditions, have led many Canadians to rely more heavily on credit cards for their daily expenses, creating a scenario where credit card debt is rising at an alarming rate.

A standout finding from the study reveals a notable escalation in the nation's credit card debt, marking a 3.69% increase, which translates to an increase of CAD $3.70B.

Key Findings:

Canadian credit card debt grew by 3.69% (+$3.7B)

Total credit card debt makes up 25% of the overall household disposable income

All Canadian debt (credit cards, mortgages, car loans, etc.) is more than 6.5 times larger than Canadian household disposable income, at 686%

Consumer Credit nearing $40B, currently sitting at $39.55B

All data sourced from StatCan:

• Table 18-10-0005-01  Consumer Price Index, annual average, not seasonally adjusted





• General hourly minimum wage rates in Canada since 1965





• Table 11-10-0222-01  Household spending, Canada, regions and provinces

\"Credit card debt has been growing at an increasingly quicker pace. This, paired with household disposable income not increasing at the same pace and growing inflation, puts Canadians in a difficult and fragile financial position.\"

Jack Prenter, CEO of Dollarwise

The Rise of Total Credit Card Debt in Canada

In March 1990, Canadian credit card debt made up only 9% of the total household disposable income. 

By March 2000, 10 years later, the credit card debt to household disposable income ratio had increased by 1.4%. 

The largest spike in credit card debt came between Q1 2000 and Q1 2010.

It grew by a massive 286.22% ($41.34B) in those 10 years. Comparatively, HDI grew by just 60.28% ($83.89B). 

The next large change was between Q1 2020 and Q2 2020 when the COVID-19 pandemic hit. 

By 2023, the CC/HDI ratio reached 25%.

Breakdown:

• 1990:
  
  
  
  • CC Debt: $9.36B
  
  
  
  
  
  • HDI: $100.82B
  
  
  
  
  
  • Ratio: 9.28%
  
  
  
  





• 1995:
  
  
  
  • CC Debt: $15.57B
  
  
  
  
  
  • HDI: $116.42B
  
  
  
  
  
  • Ratio: 13.37%
  
  
  
  





• 2000:
  
  
  
  • CC Debt: $17.29B
  
  
  
  
  
  • HDI: $144.92B
  
  
  
  
  
  • Ratio: 11.93%
  
  
  
  





• 2005:
  
  
  
  • CC Debt: $36.13B
  
  
  
  
  
  • HDI: $180.38B
  
  
  
  
  
  • Ratio: 20.02%
  
  
  
  





• 2010:
  
  
  
  • CC Debt: $56.89B
  
  
  
  
  
  • HDI: $232.02B
  
  
  
  
  
  • Ratio: 24.52%
  
  
  
  





• 2015:
  
  
  
  • CC Debt: $76.92B
  
  
  
  
  
  • HDI: $282.47B
  
  
  
  
  
  • Ratio: 27.23%
  
  
  
  

But what does the picture look like when it is seasonally and inflation-adjusted?

• 1990:
  
  
  
  • CC Debt: $9.36B
  
  
  
  
  
  • HDI: $403.28B
  
  
  
  
  
  • Ratio: 2.32%
  
  
  
  





• 1995:
  
  
  
  • CC Debt: $13.93B
  
  
  
  
  
  • HDI: $416.77B
  
  
  
  
  
  • Ratio: 3.34%
  
  
  
  





• 2000:
  
  
  
  • CC Debt: $14.19B
  
  
  
  
  
  • HDI: $476.38B
  
  
  
  
  
  • Ratio: 2.98%
  
  
  
  





• 2005:
  
  
  
  • CC Debt: $26.46B
  
  
  
  
  
  • HDI: $528.66B
  
  
  
  
  
  • Ratio: 5.00%
  
  
  
  





• 2010:
  
  
  
  • CC Debt: $38.28B
  
  
  
  
  
  • HDI: $624.57B
  
  
  
  
  
  • Ratio: 6.13%
  
  
  
  

We can see that the actual situation is a lot more difficult for Canadians.

With inflation, prices, credit card interest rates, interest rates for loans, and debt going up, buying power goes down. 

Based on our seasonal and inflation adjustments, it’s evident that household disposable income holds less value than even a few years ago, with rampant inflation consuming most Canadians’ financial health. 

While the CC Debt / HDI Ratio grew to around 6-7% (seasonally and inflation-adjusted), it remained roughly the same for the past 10 or so years. 

On the other hand, CC debt % increases have been more drastic and impactful year after year than HDI % increases:

• Average CC Debt Growth % Since 1990: 5.76%





• Average HDI Growth % Since 1990: 2.10%

It’s important to note that the seasonal adjustment does not mean that Canadians have more money than before; it simply removes all the recurring financial decisions (e.g. traveling) and must-do payments (e.g. taxes and loan repayments) from the equation. 

We can also see large spikes in both HDI and CC debt from 2021 onward when COVID-19 rules were loosened and people began indulging in increased financial spending.

Canadians turn to credit cards and loans to help act as either a small safety net or as a way to keep up with increasing prices. 

Unfortunately, this eventually leads to even more debt and an even greater difficulty in the financial sense, which isn’t sustainable.

On the other hand, minimum wage has been steadily increasing from 2020 onwards but not at a fast enough pace to keep up with increasing prices and the higher cost of living. 

Total Debt More Than 6.5x Larger Than Canadian Household Disposable Income

Perhaps the largest shocker to come out of our study is that the total debt (TD) in Canada makes up a whopping 686% of the current total household disposable income. 

Canadians had $424.14B in household disposable income in 2023’s fourth quarter which was an increase of roughly $4.3B compared to Q3 2023.

Total debt grew by $19B, coming up to $2.909T. 

Q4 2023 also marks the first recorded quarter to break the $2.9T total debt mark.

The good news is that it seems as though credit card debt growth is slowing down slightly while HDI is slightly increasing. 

The potential continuation of this trend may signify the beginning of a financial bounce back to healthier levels, but we will have to wait and see. 

The Steady Increase of Consumer Credit After COVID-19

Understandably, consumer credit decreased fairly drastically throughout the pandemic.

People spent less money and were more reluctant to take out new lines of credit or loans due to economic uncertainty. 

The Consumer Credit / HDI ratio was steady at around 1.4% between Q4 2020 and Q2 2022, after previously decreasing from 2.0% at the beginning of the pandemic to 1.6% the following quarter. 

Q3 2022 marked a ‘return to form’ with overall consumer credit going from $25.15B to $39.55B in Q4 2023, a staggering 57.25% increase.

However, the CC/HDI ratio stayed below 2.5%, with total ratio growth being 0.9% between Q3 2022 and Q4 2023. 

This reaffirms the fact that the general populace is taking on more financial strain to cover basic expenses like water, food, electricity, and rent due to increasing prices, loan rates, and inflation.

On a more positive note, certain reports from Canadian journalists seem to signify that the economy has started healing but very slowly. 

While we cannot currently verify these claims due to the lack of the latest data, based on the reporting of credible journalists, we are inclined to believe that when the next batch of official data is released, it will confirm these reports. 

The Canadian government has promised to prioritize getting interest rates down by adjusting the overall budget, in an attempt to reduce these rates below 5%. 

This hasn’t yet happened as the budget adjustment is expected to be presented to Parliament in March or April which means we’ll have to wait and see how this will impact the economy. 

Conclusion

Based on our findings, it’s evident that Canadians’ financial hardships are far from over.

There are semblances of good financial industry movements for consumers that may help ease these hardships but the populace at large is still heavily limited. 

However, the government has begun discussions on trying to get interest rates down which should help struggling Canadians manage the financial strain a bit easier. 

On top of that, consumer credit and total debt growth have slowed down. Between Q2 and Q3 2023, CC grew by $2.15B (5.77%), while total household debt grew by $35B (1.23%). 

Comparatively, the differences between Q3 and Q4 2023 for CC and total debt were $0.17B (0.43%) and $19B (0.66%), respectively.

While there’s no guarantee that this trend will continue, it is a good sign and perhaps a showing of positive financial growth.