There’s a debt crisis brewing, economists say, and it’s pushing cash-strapped Canadians, now carrying an individual average debt load of $21,128, to the brink.
That’s how Doug Hoyes describes the amount of debt Canadians are carrying. And he would know: the licensed insolvency trustee spends his days working with people who are drowning in debt, at a time when consumer insolvencies are hitting the highest levels since the start of the pandemic.
Between new lending as demand for credit rises and higher spending linked to inflation, consumer debt in this country — excluding mortgages — has climbed to $591.4 billion. That’s an increase of more than five per cent compared to the same time last year, according to a recent report from Equifax, a credit reporting agency that tracks credit scores and debt.
Hoyes, who is co-founder of debt counselling firm Hoyes Michalos, anticipates a worsening situation as people watch their mortgages become more expensive or see the cost of living continue to rise. Wages, though rising overall, have not spiked at the same speed as inflation, meaning money doesn’t go as far as it used to when it comes to covering the cost of essentials.
There has been a higher than usual demand for new credit cards, said Rebecca Oakes, vice-president of advanced analytics at Equifax Canada. And it’s people with lower credit scores whose card balances are seeing the biggest increase, according to the Equifax data, indicating they’re likely charging small, everyday purchases to their credit cards to navigate the high cost of living, Oakes said.
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