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Many Canadians Face Increasing Debt and Multiple Loans

Many Canadians Face Increasing Debt and Multiple Loans

For the past few years, credit has been easy to come by for most Canadians. However, for every individual who manages their credit well, there are horror stories of monster loans and mountains of debt. According to an annual report by credit agency TransUnion, individual debt among Canadians is increasing.  

Our increase in debt is led by more instalment loans (short-term loans with high interest rates) being granted, as well as higher credit card use. The type of debt you have varies based on your age and generation as well. Once we factor in mortgages, our financial profile closely fits what is happening on the global scale.

Here is a breakdown of the average debt by age in Canada, according to the latest from Statistics Canada:

Age Amount of Debt
<35 $69,500.00
35-44 $105,100.00
45-54 $130,000.00
55-64 $80,600.00
65+ $49,900.00

*PLEASE NOTE: The total debt measured includes mortgage debt, lines of credit, credit card debt, student loans, car loans and other debt that does not fit in a category. *

Why are we living on credit?

Due to the historically low interest rates in 2009-2022 in Canada, this had made it affordable for many people to obtain credit products (credit cards, lines of credit, and loans). With the continued rise of interest rates, this has left many Canadians in a financial scramble. A report from TransUnion states, “Based on the growth seen over recent quarters, we forecast an incremental opportunity for over $13 billion in credit to be issued to these new consumers by 2025, highlighting the need for lenders to adapt their strategies to offer appealing products, convenience, and benefits, along with appropriate credit lines and pricing.”

We also have an increasing disconnect from our money. “Tap to pay” services, for both debit and credit, have been widely accepted by Canadians. Again, millennials lead the way with over 67% of consumers in that age bracket embracing contactless payment; 56% of individuals aged 35-44 are using the technology, while 48% of those aged 55+ tap their cards at checkout. People are most likely to cite convenience and speed for choosing this payment method, while security concerns seem to be in the past. Other ways technology is removing the cash from our transactions include services such as Apple Pay and Google Wallet, as well as the many store-specific apps that allow you to pay directly from your smartphone.

Is your debt keeping you up at night?

In this environment, less-than-perfect credit is a reality for many people. If you’re worried about your level of debt, there are a few things you can do to take control of your finances:

  • Make a budget and track it. Knowing where your money is going will help you to see where you’re going further into debt; you’ll also see potential areas for savings so that you can repay more of what you owe.
  • Know your credit report. You are entitled to a free copy of your credit file once a year from either Equifax or TransUnion. 
  • Sit down with your financial advisor. It is important to have regular meetings about your finances with a professional you trust. They can help you to create a plan to deal with your debt and make sure your goals are on track.

If buying a home is in your plans, our team can help make sure your credit is ready to buy when you are. Contact Auxilium Mortgage today for a free consultation with one of our brokers: call Toll-Free 1-855-590-6520 or visit us at unit 211-2840 Peatt Road, during regular business hours, Monday through Friday 8:30 a.m. – 5:00 p.m. We can also arrange an appointment evenings or weekends to work with you.

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