Canada’s credit card debt hits $124b – Swiping your way into trouble?

By Gloria Methri

Despite macroeconomic stabilisation, consumer debt in Canada continues to climb, with credit card balances reaching an all-time high of $124 billion, according to TransUnion’s latest Report. While inflation has eased and employment remains stable, consumers are increasingly reliant on revolving credit, highlighting growing financial strain.

Credit Card Debt Growth Persists, But Pace Slows

For the 31st consecutive month, credit card balances recorded year-over-year growth, rising 9.2% YoY. However, this marks a slowdown compared to the 13% growth seen in the previous year, suggesting potential stabilisation in 2025.

The surge was driven by higher revolving balances, with 64% of outstanding balances carried over from last months—a trend indicating more Canadians are struggling to pay off their cards.

Despite this, the average monthly card spending declined by 2.6% YoY, signalling a shift in consumer spending behaviour amid high living costs and financial caution. The average credit card debt per borrower climbed to $4,681, growing at 6.0% YoY, a deceleration from the 7.2% increase recorded the previous year.

Younger Consumers Driving Credit Market Activity

Gen Z remains the fastest-growing credit segment, with a 29% increase in credit participation. However, this group also experiences the highest delinquency rates, rising 26 basis points to 2.74% YoY. As Gen Z continues to integrate into the credit market, lenders face the challenge of balancing growth with risk management.

Bankcard originations declined by 3.7% YoY, with subprime borrowers seeing the steepest drop at 6.9%. Lenders have become more selective, particularly with high-risk borrowers, in an effort to curb rising delinquency rates. Despite this, prime and near-prime consumers saw a modest increase in new credit lines, growing by 3.7% and 0.4%, respectively.

Delinquencies on the Rise Despite Economic Stability

While employment rates remain solid, delinquency levels continue to increase, signalling financial strain among borrowers. Serious credit card delinquencies (90+ days past due) reached 0.93% in Q4 2024, up 9 basis points YoY. The overall serious consumer delinquency rate across all credit products hit a five-year high of 1.83%, reflecting persistent financial pressure despite economic improvements.

According to Matthew Fabian, Director of Financial Services Research at TransUnion Canada, issuers must now focus on optimising account management strategies, emphasising balance growth, customer retention, and early delinquency detection. “Strengthening customer loyalty and engaging younger consumers through financial education is key to ensuring sustainable credit market growth,” Fabian said.

What Lies Ahead for Canada’s Credit Card Market?

With economic conditions expected to stabilise further in 2025, credit card spending trends could moderate. However, the rising cost of living, continued reliance on revolving credit, and increasing delinquencies pose challenges for both consumers and lenders. Industry experts suggest that educating younger consumers on responsible credit use and leveraging advanced risk analytics will be critical for sustained financial health and market stability.

As Canada’s consumer debt surpasses $2.5 trillion, lenders and policymakers will need to address the evolving credit landscape carefully, ensuring financial inclusion while mitigating rising risks in the market.