TORONTO – More Canadians are taking on additional debt due to the high cost of living, resulting in more delinquencies on loans and credit cards: according to new reports from Equifax and TransUnion, consumer debt in the third quarter of 2024 hit a record $2.5 trillion, up 4.1% from a year ago. “Serious delinquencies,” or payments that are 90 days or more late, are also on the rise, up nearly 2% from a year ago.
“Consumers are just not able to keep current on all their payments in all their cases so we are seeing delinquencies creep up a bit” says Matt Fabian, a researcher and consultant at TransUnion. High housing costs, the price of groceries and other inflationary pressures are making it harder for Canadians to pay their bills, especially for young consumers in their 30-40s, according to the TransUnion report. “The cost of living is higher and interest rates are higher, so I think that creates a payment shock for a lot of Canadians who all of a sudden things are less affordable and the cost of covering your debt becomes a little more expensive” Fabian explains – according to CTV.
Equifax’s report notes that interest rate cuts are providing some relief to consumers, but newcomers to Canada and consumers who are new to credit are having trouble making payments. The report notes that 1.3 million consumers missed credit card payments in the third quarter of this year, up 10.6% from the same period last year.
“The group of consumers that entered Canada we are seeing their debt levels grow at a faster rate than we would typically expect, and we see missed payments coming faster then we would expect for that population” says Rebecca Oakes (Equifax).
As we enter the holiday spending season, both credit reporting agencies stress that it is important for consumers not to miss any of their payments, as this will ultimately lead to higher borrowing costs. “If you do go out and apply for additional credit elsewhere, you may find it’s hard to get access to credit. You may find you don’t get the best rates, and the missed payments may impact your credit score” Oakes points out.
With interest rates falling, bank loans for car purchases increased by nearly 3% over last year, but the number of people borrowing money to buy cars from “non-bank” sources increased by 12%…
Photo by Towfiqu barbhuiya on Unsplash
