Cdn. credit card debt shrinking at fastest pace since '90s: CIBC
Hey, Canadians … give yourself a round of applause!
At the same time we continue hearing about how $14.3 trillion over budget isn’t enough for the U.S. to run itself, a bit of intriguing news comes from Canada.
According to a new report, consumer credit debt among Canucks is no longer outpacing income.
It’s a simple statement – and one you’d teach a second-grader if financial literacy was something we considered seriously in this country – but after a nasty recession, one that many say was caused by our own misspending, it’s nonetheless a step in the right direction.
By the CIBC study, inflation-adjusted non-mortgage consumer credit is rising at the slowest pace since the early 1990s.
“We are seeing some early signs of softening in the credit markets, and that’s a good sign given the fact that our debt load is relatively high and we have to do something about it,” said Benjamin Tal, CIBC’s senior economist.
Of course, just because we’re cutting back on our credit card borrowing (“borrowing money for consumer goods has slowed so much, it is on the verge of deleveraging,” the Globe and Mail writes) doesn’t mean we totally get the picture.
If we include mortgages into the fold, we’re still a bit underwater. Total debt, accounting for home loans, continues to outpace income – in the first quarter of 2011, total credit outstandings rose by 1.8 per cent, income rose only by 0.7 per cent, says the CIBC.
Last month, the Certified General Accountants Association of Canada reported household debt had hit a record $1.55 trillion, meaning our nation’s debt-to-income ratio rose to 147 per cent.
So it’ll be interesting to see where we go from here. All throughout the recession, or at least as the downturn began to ease, we all swore, “Never again.” We would change our habits, and we would learn from our mistakes.
With credit cards, we may have. We have not gotten there with our mortgage debt yet.
From a credit card standpoint, at least, do you carry a lower balance now than you did two, three years ago (use an anonymous name in the comments if you like)?
By Jason Buckland, MSN Money