Canadians carrying more debt and missing more payments: reports

Interest rate cuts by the Bank of Canada appear to have stimulated spending with more consumers taking on added debt, but as more people take on more credit and car loans there's also been an increase in delinquency rates.

More Canadians are taking on added debt due to the high cost of living, leading to an increase in missed loan and credit card payments, according to new reports from Equifax and TransUnion.

Consumer debt in the third quarter of 2024 hit a record high of $2.5 trillion – a 4.1 per cent increase over last year.

As consumers take on more debt, serious delinquencies – when accounts are 90 days or more past due – have increased almost two per cent since last year.

"Consumers are just not able to keep current on all their payments in all their cases so we are seeing delinquencies creep up a bit," said Matt Fabian, researcher and consultant with TransUnion.

TransUnion said high housing costs, the price of groceries and other inflationary pressures are making it harder for Canadians to pay the bills, especially for Millennial and Gen Z consumers (who range from their teens to early 40s).

"The cost of living is higher and interest rates are higher, so I think that creates a payment shock for a lot of Canadians who all of a sudden things are less affordable and the cost of covering your debt becomes a little more expensive," Fabian said.

Equifax's report says interest rate cuts are providing some relief to consumers, but notes newcomers to Canada and consumers who are new to credit are having issues making their payments.