Due to the pandemic, Canadians are paying off non-mortgage debt at the fastest pace since the 1980s.



Canadians have paid off their non-mortgage debt at the fastest pace in 30 years during the pandemic, according to new figures from Statistics Canada.

The data agency said on Monday that credit card debt fell 18 percent in a year from February 2020 to the end of January 2021.

This is important because, almost without exception, credit card balances have grown steadily since 2000, increasing at an average of more than 20 percent per year. At the turn of the millennium, Canadians owed a total of $ 13.2 billion on their credit cards. By February 2020, that figure had grown to $ 90.6 billion.

But as of January, it fell to $ 74 billion, more than $ 16 billion. This is the largest drop in credit card balances since at least 1999.

“Despite stable household incomes and the rollout of government support for Canadians, households had few places to spend on and many used pandemic isolation as an opportunity to save money and pay off existing debt,” the agency said in a statement.

Other forms of debt have also declined to such an extent that from May 2020 to May 2021, there was the first annual drop in total non-mortgage debt in more than three decades.

Most encouragingly, people with the worst credit ratings are most likely to pay off some of this debt at high interest rates.

People with a credit rating of less than 640 managed to cut their credit card balance by more than a third. Those in the upper tier, with grades above 800, now have a balance of about one-seventh less than they did before.

“Those with lower scores paid off their debt faster than those with higher scores throughout the pandemic,” the news agency said.

“With the economy pushing for full reopening, many Canadians are likely to find themselves carrying less non-mortgage debt balances than they were during the pandemic.”

While the decline in all forms of debt other than mortgages is encouraging, overall Canadians still owe more than they did before the pandemic, largely due to the rapidly growing demand for mortgages.

In April alone, mortgage debt increased by $ 18 billion. Statistics Canada reported earlier this summer, the largest monthly growth ever, and more than enough to wipe out all of these diligent credit card payments.

Overall, Canadians owe more than $ 2 trillion for their homes. This is more than the value of Canada’s entire GDP.


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