Oct 7, 2024
A new study reveals how the recent spike in living costs disproportionately impacted Canadians, with some residents now reporting extremely high levels of credit card debt.
“Most people will use short-term forms of credit, like credit cards, when trying to solve an immediate cash flow problem,” explains Romana King, Senior Editor at Money.ca, an online financial resource offering trending financial topics, money-saving tips, and exclusive deals and discounts.
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To assess how often Canadians relied on higher-cost lending solutions, Money.ca analyzed data from the Canada Mortgage and Housing Corporation (CMHC) to discover the metropolitan areas accumulating the most credit card debt.
Key takeaways
- Barrie, ON has been named the area in Canada where residents have the most credit card debt
- St. John’s, NL metropolitan area has the second most credit card debt per capita
- Trois-Rivières, QC residents have the least outstanding credit card debt in Canada
Barrie, ON households carry the highest average balance when it comes to credit card debt. On average, each resident in Barrie, ON owes $3,521.54 in outstanding credit card balances.
St. John’s, NL residents carry, on average, $3,451.95 in outstanding credit card balances, ranking the metropolitan area in second place.
Toronto metropolitan area has the third highest average of credit card debt in Canada, with $3,428.63 in outstanding credit card debt per capita.
Peterborough, ON is fourth in the ranking, with an average of $3,405.19 in outstanding credit card balances per capita.
The fifth highest amount of credit card debt in Canada is in Kelowna, BC. On average, the metropolitan area has $3,394.11 of credit card debt per capita.
Brantford, ON is in sixth place, with an average of $3,387.26 of outstanding credit card balances per capita.
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Kingston, ON is next in the ranking, in seventh place. Each resident in the metropolitan area has an average of $3,344.16 in credit card debt.
In eighth place is Calgary, AB, with $3,273.16 of outstanding credit card debts per capita.
Thunder Bay, ON metropolitan area has an average of $3,270.76 in credit card debt per capita, resulting in the ninth position.
Finally, Hamilton, ON residents are in tenth place, with each resident having an average of $3,264.93 in outstanding credit card balances.
Money-saving expert Romana King from Money.ca has commented on the findings: “A credit card is a powerful tool. It can help create a person’s credit history and boost a credit score – tools that are integral to achieving important financial milestones, such as buying a car or a home.”
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“However, there is a downside to credit. Digital transactions and the interest charged on borrowed money can add up, sometimes very quickly. People can get stuck in a cycle where they never pay down what they owe and barely pay the interest. This can lead to a cycle of debt.”
To stop this cycle, King suggests that people reconsider when and how they use credit cards: “There’s nothing wrong with using a credit card for an unexpected expense. The key is to have a plan on how you will pay back that borrowed money.”
King suggests three strategies:
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Use a low-interest credit card. The less you pay in interest, the more of your earnings can be used to pay off your debt.
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Consider a consolidation loan. A consolidation loan – or an installment loan with a lower interest rate – groups all higher-interest debt into one lump sum and charges a lower interest rate overall. Again, the idea is to pay less in interest and use more of your money to pay your debt.
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Go on a spending diet. This doesn’t mean don’t spend, since most people who turn to credit cards and fast loans are often using them to pay for essentials. Instead, consider a system that only allows you to spend what’s available. This can be cash envelopes or opening a no-fee bank account for each type of expense and only using the money in that account for those costs.
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Methodology
The total outstanding credit card debt in each CMA (Census Metropolitan Area) was compared against the CMA's population, to reveal the average credit card debt per capita. These figures were then ranked from highest to lowest outstanding credit card balances per capita, revealing the areas with the highest credit card debt.
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Shruti Nair is a Digital PR Manager at Moneywise, bringing expertise in brand communications for the firm. With a Bachelor's degree in Journalism and a Master's in Media and Communication, Shruti has a deep understanding of the intersection between traditional and digital media landscapes. Her professional journey has seen her contribute insightful statistics articles to platforms like G2.com, where she distilled complex data into engaging narratives for diverse audiences.
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