Rising Credit Card Debt Concerns Young Canadians

A new survey by Equifax indicates that credit card debt is on the rise across Canada, particularly affecting younger Canadians. This trend is troubling, with economists highlighting rising default rates as a significant concern. The accumulated credit card debt now stands at an alarming $122 billion, a nearly 14% increase from last year. Such debt is costly to manage, with interest rates ranging from 20 to 26%. The average credit card balance for Canadians has also peaked at around $4,300, the highest level since 2007. Although overall default rates remain relatively low, around 2%, they have risen by 21% compared to the previous year, signaling growing financial distress among Canadians. Importantly, this issue isn’t exclusive to younger individuals; mortgage holders are also facing increased credit card debt, which has spiked by 12%. This suggests that those already burdened with mortgage payments are resorting to high-interest credit cards for financial relief. As total debt levels across Canada rise by over 4%, economists are keenly observing these trends in relation to the Bank of Canada’s upcoming decisions on interest rates. A reduction in rates is anticipated, which many hope will provide some reprieve for Canadians grappling with high debt levels. Scott Peterson reports on this urgent financial landscape.