Aug 8, 2026
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Add us on GooglePersonal finance commentator Dave Ramsey posted on X in late July that carrying debt isn't an accident. His argument was that lenders and retailers benefit when consumers stay in debt, while everyday people are left wondering why they never seem to get ahead. The post was aimed at an American audience, but the message is certainly pertinent to Canada.
Millions of Canadians treat a revolving credit card balance like just another cost of living, rather than a financial decision with a price attached. But it’s not a price to be ignored, especially as household budgets are already being squeezed by mortgage renewals, rent and grocery bills, just to name a few.
Overspending isn't harmless
Canadian household debt climbed to 179.6% of disposable income in the first quarter of 2026. Put another way, households now owe roughly $1.80 in credit market debt for every dollar of after-tax income. That ratio has increased for six consecutive quarters, while total household credit market debt reached $3.25 trillion during the same period.
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Carrying debt isn’t necessarily a moral failure. For many households, borrowing is tied to rising housing costs, financial emergencies or simply trying to cover everyday expenses. But it does mean a growing share of income is already spent before groceries, rent or savings enter the picture.
Take control of your money. If your paycheque keeps disappearing faster than expected, your budget may need better visibility. Compare budgeting apps that help Canadians track spending, spot leaks, and plan with more confidence. Take control of your budget
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The cost of Canadian consumer debt
Equifax Canada's latest quarterly report puts total consumer debt at $2.66 trillion, with the average Canadian carrying a record $22,278 in non-mortgage debt. In some better news, the number of Canadians who missed at least one credit payment — 1.5 million — held steady this quarter, a sign of improvement for some borrower groups.
This is where Ramsey's argument begins to resonate. After all, every dollar left on a credit card after the statement due date begins generating interest for the lender, often at a rate far higher than what most savers earn on their deposits.
Minimum payments keep you in debt
Average credit card interest rates in Canada are roughly 20%, making them one of the most expensive ways to borrow money. The Financial Consumer Agency of Canada (FCAC) has a credit card payment calculator that shows just how quickly those interest charges can add up.
In one example, someone carrying a $1,000 balance who switches from an 18% credit card to one charging 12%, while continuing to make only the minimum payment, saves about $400 in interest and pays off the balance roughly two years sooner.
As you can see, even a relatively small balance can become expensive if it lingers month after month. Minimum payments keep your account in good standing, but they hardly put a dent in the principal balance while interest continues to pile up.
What to do now
Ramsey's contends that income, not luck or inheritance, is the main tool most people use to build wealth. In a video accompanying his post, he said the self-made millionaires his team studied generally built their wealth through saving and investing rather than remaining in debt, and that fewer than 10% inherited their wealth.
The bottom line is that high-interest debt deserves more attention, because every month a balance remains unpaid is another month that part of your income is working for a credit card company and not you.
Here are a few practical steps you can take to reduce your high-interest debt:
- Check the actual interest rate listed on your latest credit card statement
- Pay more than the minimum whenever possible. Even a small extra payment each month can reduce both the interest paid and the time it takes to clear the balance.
- Compare lower-rate options, such as a balance transfer card or line of credit, if you qualify, and avoid adding new debt after transferring the balance.
Ramsey's wording is blunt, but there’s truth in his underlying point. That is, debt doesn't suddenly become expensive; it's a process.
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Colin Graves is a Winnipeg-based financial writer and editor whose work has been featured in publications such as Time, MoneySense, MapleMoney, Retire Happy, The College Investor, and more. Before becoming a full-time writer, Colin was a bank manager for over 15 years.
