After six-and-a-half years of rapidly increasing debt, it finally looks like Canadians are getting the message. In Q3 of this year, the average consumer debt, not including mortgages, dropped to $25,594 from $25,603 in Q2, according to a report released by TransUnion on Thursday. This is backed up by CIBC’s recent report showing that mortgage debt is also slowing down.
The graph below shows the different types of credit held by the average consumer, excluding mortgage debt, over five years. Lines of credit are the most commonly held debt by consumers, accounting for 42% of their debt load, said Tom Higgins, vice-president of analytics and decision services for TransUnion. This is because it is the most flexible credit vehicle and offers low interest rates compared to the other options.
Credit use usually increases at the end of the year thanks to holiday spending, but Higgins says it’ll likely only be a small or non-existent bump and won’t have a long-term effect.