Credit card balances were rising in the first quarter, a time when non-mortgage debt usually reduces
Canadians bucked the trend in the first three months of 2023 by increasing their non-mortgage debt burden.
Equifax Canada reveals that along with higher levels of debt, boosting overall consumer debt by 5% year-over-year to $2.4 trillion, missed payments are becoming more common, a trend also seen in the previous quarter.
Canadians are spending almost 22% more on their credit cards each month compared to pre-pandemic levels and the average spend per customer is now $2,200 per month, up $400 from Q1 2020.
Those customers who pay less than 90% of their credit card balance each month account for the largest increase in credit card spending and the average minimum payment is almost 17% higher than a year earlier.
Overall credit card balances are up nearly 15% resulting from new credit customers and the higher cost of living is also driving up credit card usage.
"We normally expect to see a drop in non-mortgage debt during the first quarter of the year as consumer spending slows following the holiday season. However, despite this seasonal trend, we've observed a continued increase in credit card balances during Q1 2023, which is keeping consumer debt high," explained Rebecca Oakes, Vice-President of Advanced Analytics at Equifax Canada.
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Missed payments
The data shows a 19% spike in customers missing payments, totalling 175,000 more doing so than in Q1 2022.
While delinquencies at the end of last year were led by those without a mortgage, the latest stats reveal an increasing number of mortgage holders missing payments on non-mortgage products, reflecting a 15.7 per cent increase from Q1 2022.
"Increased missed payments on products like credit cards and auto loans are a concern but pockets of the population have been impacted more than others during this uncertain period," Oakes explained. "At the end of last year, younger and lower income individuals were showing increased difficulty in making payments. We are now starting to see more homeowners struggle as well, especially following mortgage renewals where payments have risen significantly."
