The average Canadian’s non-mortgage debt fell 2% in the first three months of 2013, the first quarterly decline since 2011, according to TransUnion. The findings TransUnion reinforce trends the Bank of Canada released earlier this year that suggests households are reining in their expenses after years of free spending.
TransUnion, however, says it’s too early to suggest the decline is likely a harbinger of things to come as the average non-mortgage consumer debt level is still 3.5% higher than a year ago.
From The Wall Street Journal:
“It’s too soon to tell if we are in a deleveraging trend where balances start dropping consistently over consecutive quarters,” says Thomas Higgins, TransUnion’s vice president of analytics and decision services.
While the decrease in consumer debt is a national trend, Canadians in the Province of British Columbia bucked it. They increased their non-mortgage debt 3.7 percent in 2013, making them the most indebted Canadians with an average of C$38,619 (USD $37,363) per person. Despite the high debt, the number of delinquencies fell 0.84 percent in 2013, which alleviate concerns over potential burst of the credit bubble. Sal Guatieri, senior economist at BMO Capital Markets highlighted the importance of decreased delinquencies and spending overall:
“Canadians are paying a little more attention to their debts and that’s eased our concerns about Canadians eventually hitting a debt wall.”
Though reining in credit card spending is not good news for credit card issuers, the new debt conscious consumers are likely to turn to debit and prepaid cards for additional budgetary control rather than abandon payment cards entirely.
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