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Canadian Credit Card Debt Rising, Delinquencies Falling

Canadian credit card debt risingTransUnion’s quarterly analysis of Canadian credit trends found that credit card debt is increasing while credit card delinquencies are decreasing significantly. The average consumer’s total debt (excluding mortgage) in Q4 2013 increased marginally to $27,368 from $27,355 in Q3 2013. This quarterly increase of 0.05% was the lowest observed since a (-0.04%) decrease in Q3 2011. On a year-over-year basis, total debt decreased 0.42% from $27,485 in Q4 2012, which was the highest debt level on record.

“We generally observe increases in total debt during the fourth quarter because of the holiday shopping season,” said Tom Higgins, TransUnion’s vice president of analytics and decisioning services. “Total debt in in the fourth quarter remained essentially flat, which means Canadians may have begun potentially deleveraging, utilizing less credit this past holiday season. As in the recent past, we will need to observe this variable in the coming quarters to confirm if this is a new trend.”

Canadian average credit card borrower debt (defined as the aggregate balance on all credit cards for an individual bankcard borrower) posted a quarterly increase of 1.93%, helping to post its third consecutive year over year increase (2.27%). While credit card balances have grown, credit card delinquency levels have fallen significantly year over year by as much as 20%.

“Though we observed an increase in auto captive delinquencies, these levels are very low and are not a concern,” said Chris Dias, TransUnion’s senior vice president of product innovation and analytics. “The bigger story is the continued declines observed in delinquency rates for credit cards, lines of credit and installment loans. These are significant drops, and coupled with lower debt levels in some of Canada’s major markets, this is a good story for both consumers and lenders. When both delinquencies and debt go down, we anticipate consumers may find more opportunities to gain access to better credit offers as competition for their business increases.” 

Good news for all.

TransUnion’s  full report can be found here.

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