Too Much Debt? We’re Listening!

A study conducted by CIBC last month showed that Canadians are drowing in debt – and that we’re somewhat delusional about when we’re going to pay it off. But, even though we might have higher aspirations for our future debt than what’s realistic, there’s now a new report to show that we understand the debt that we have now; and more importantly, that we’re willing to do something about it.
The latest report comes from TransUnion, the organization that also issues credit reports and therefore, is highly knowledgeable about the exact amount of debt Canadians carry. TransUnion’s quarterly analysis of consumer debt held by Canadians shows that on average, each Canadian carries $25,603 of debt, not including their mortgage. While that may sound like a large amount, it’s not really; and it shows that Canadians have actually decreased their debt from the reported $25,709 in the last quarter of 2010, which was when the average amount of debt was at its highest. The reduced amount of debt is also significant because it’s the first time in 26 quarters that Canadians have showed this kind of repayment towards their debt.
Tom Higgins, Vice President of TransUnion, said that the decline in debt was very gradual, but that it’s the first time in several years that the debt has been reduced by so much. And while it will continue to move at a somewhat snail’s pace, the good news is that Canadians are listening and slowly but surely, we will continue to pay off our debt. Higgins points towards the Bank of Canada’s low interest rate as one of the reasons for the decline in debt. With means such as home equity loans available for such low interest rates, this type of borrowing is much more logical than credit cards that carry high interest rates and take longer to pay off.
The quarterly report also showed that Canadians don’t owe the same amount across the board. BC, perhaps unsurprisingly, carried the highest amount of debt with the average being $36,819, while those in Quebec enjoy the lowest average amount of debt per person, owing only $18,268.