When in doubt, Canadians turn to credit cards during the holidays
Things in Canada aren’t so great right now.
Yet on the ground, where the economy’s performance is really felt, consumers have puckered up tight. We discussed Canada’s plummeting consumer confidence in this space just yesterday.
But as a new report details, we can throw all that aside during the holidays. Thanks to credit cards, today’s debt concerns will be January’s problem.
According to yesterday’s story on consumer confidence, the Bank of Canada reported Canucks were nervous about the economy’s future, not at all ready to face making major purchases – a key indicator of the shopper’s mindset – in the coming months.
Though we’re seeing at least a suspension of that conservative approach as Christmas nears.
Retail spending in Canada continues to be strong, having climbed for three months in a row, most notably on Black Friday and Cyber Monday, when Canadian shoppers saw no problem in emptying their wallets despite the bargain-happy days having been designed for the American consumer.
And by the guess of two parties, more recent holiday spending is up, too. Payment processor Moneris Solutions said Canadian holiday spending is up 4.6 per cent from 2010; the Retail Council of Canada, by contrast, estimates it’s up three per cent from a year earlier. Split the difference and we’re talking near four per cent growth, no matter how you slice it.
How are we spending? Presumably, with credit cards. Numbers for December aren’t yet available, of course, but the latest credit card figures show a whopping increase from 2010. According to the Bank of Canada, credit card debt was $62.4 billion across the country in October, nine per cent higher than the same month last year.
Really, who can blame Canadians? By the gauge of many economists, shopping is about the only way consumers can take control of the economy, so in many ways, so long as it’s done within reason, spending does just as much for us as it does Canada during the holidays.
When those bills come in the mail in January, Canadians will sober up and reign things in, sure. But in the meantime, petty debt isn’t going to ruin what makes the holidays special for millions of Canucks: giving.
By Jason Buckland, MSN Money