Despite debt levels continuing to rise, Canadians are looking to a brighter financial future.
Following data released by credit rating agency TransUnion, a new Ipsos Reid/BDO poll shows that the average Canadian’s non-mortgage debt level rose to $21,348 in the first quarter of 2016. That is a 2.7 per cent increase from the average debt level this time last year. It also means that Canadians owe $1.60 for every dollar we earn per year, something that can add to the many financial stresses Canadians already have. But not everyone is worried about it.
The poll found that 73 per cent of Canadians are carrying debt, and almost a quarter say they believe they will never become debt free. Almost half of those polled find that the rising cost of living is preventing them from being able to pay off what they owe.
Despite those gloomy figures, four in 10 respondents believe their children will be better off financially than they are.
What makes up the debt:
According to TransUnion, auto and installment loans are the two largest, most common debts, pushing us further into the red. Up next is credit card debt, which had Canadians on the hook for more than $3,700 on average in the first quarter of the year. While the national average credit card balance only increased by 1.8 per cent, subprime card growth rate was up just over 0.7 per cent, a trend that TransUnion says they plan to keep a close eye on throughout the year.
Across the country:
TransUnion says there is a major divide between Canada’s oil sector provinces and the rest of the country. Provinces such as Alberta continue to see material delinquency increases – something the organization expects to remain the same throughout much of the year. However, it says consumer spending and credit performance outside these provinces still shouldn’t be ignored.
“Lenders will likely benefit from the generally healthy and well-functioning consumer credit marketplace in the rest of Canada,” says TransUnion’s Jason Wang, “particularly in those areas where the stable trend in credit usage and the sheer size of the consumer market present good opportunities for growth.”
What you can do:
The best way to combat ever-increasing debt is by doing your research first, and then coming up with a realistic financial plan to pay it off. There are also a number of methods to reduce what you owe through low-interest consolidation loans. For more advice, check out the following Moneywise posts: