Equifax Canada just released the latest survey numbers on credit card balances, and the picture isn’t rosy. The average credit card balance across Canada is just over $2,100. This may not seem like much, but Canadians generally have very good credit, pay their credit cards down, and clear their balances. 70% of Canadians pay all of their credit card balances off each month, and pay no interest, but the worsening economic environment is putting pressure on more and more people. There are almost 80 million credit cards circulating in Canada, that’s basically 2 for every Canadian. Through the pandemic, credit card debt was paid off and savings rates soared as folks peeled back on spending and built up their financial storehouses to get through the crisis. All of that progress is being whittled away by inflationary pressures and rising prices. Total non-mortgage debt is up to over $21,000 per person. This is a number not seen since Q1 of 2020, just before the COVID-19 pandemic kicked in with a force.
The evaporation of savings and the overreliance on debt is being matched with a fall in home equity values and in the average net worth of Canadian households. Inflation is biting into wallets, but also biting into consumer confidence. Equifax’s data shows that 53% of Canadians said they had a lot of anxiety over their level of debt and only half said they felt comfortable with their personal economic outlook, down from 61% from last year. The recent surge in gas prices and persistently high food prices continue to take a severe toll on people. The bad news is that these credit card balances are likely to keep rising. Interest rates are going to keep going up, we don’t know how many more rate hikes are in the cards, but we know that the inflation rate is still stubbornly high. Higher interest rates means more expensive money for banks and lenders, and that means higher interest rates on debt products. Anyone anxious about their credit card balance should know that there is a way out of that anxiety, high interest costs, and pressure on your credit score; the answer is a debt consolidation loan from Tembo!
A Tembo debt consolidation loan is a great option if you have multiple debt products that you need to clear (lines of credit, credit cards, car loans, etc.). You can exchange multiple payments and products into one simple, clear, and convenient payment. Your credit score can improve greatly, and you can save on interest payments – especially as rates keep rising! It’s not just credit card rates and debts that are rising, HELOC balances are going up too. In June, HELOC debt nationwide passed the $170 billion mark, that’s more than the entire annual economic output of a country like Kuwait or Hungary. HELOC debt peaked in early 2013, when it hit $200 billion, and Canadians have been paying down their HELOC balances, but amounts are going up again. A Tembo debt consolidation loan can help you clear your credit cards and HELOC in one go. Another debt product is student loans. A federally guaranteed student loan is not the worst line of debt, and has less of an impact on credit scores, but can also slow a young person’s financial situation down. If you are a student with multiple debt products, or a child that needs help, a Tembo debt consolidation can be enlarged to clear those balances down as well.