Debt level: Indicators already red ahead of a further interest rate hike

As the Bank of Canada is set to announce a fifth rate hike since March this morning, Quebecers’ financial situation continues to deteriorate.

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“People on low incomes need access to new credit cards. The reference interest rate increases for them, car loans cost more, balances are higher and monthly payments are higher,” stresses Pierre Fortin, licensed insolvency practitioner and President of Jean Fortin & Associés.

The debt expert comments on the latest Equifax numbers released yesterday. According to the lending firm, many indicators of Quebecers’ financial health are red.

No more “skipped” payments

First, the fact that new credit cards are averaging over $5,800 is the highest in seven years.

New card issuance is also up 16% and trustee Pierre Fortin reminds us that “the credit card is an excellent means of payment but the worst instrument of credit”.

People are using their credit cards more and are even ordering new ones.

Notably, Equifax saw a 4% increase in people skipping a payment.

“If you add to that the fact that 40 percent of people don’t pay their credit cards on time, it’s startling,” says the expert.


For him there is no doubt: when the outstanding balances and the average limit increase, that’s a red flag that goes up.

“It’s a sword of Damocles over people’s heads. It’s also a sign that inflation is getting in their way,” added Mr Fortin.

It’s not all black either.

Better in Quebec

Quebec has the second-lowest debt ratio in Canada, after Manitoba, when mortgages are excluded from the calculation. For example, the average debt per person in Montreal is $16,422 compared to $20,361 in Toronto and $37,640 in Fort McMurray, Alberta.

On the other hand, in Quebec, the less fortunate pay the price. “Things are going well for wealthy people, they pay on time and don’t accumulate loan debt,” observes Mr. Fortin.

When people are under 620 — the Equifax credit score ranges from 300 to 900 — you can tell right away that they’re having more trouble paying on time.

And with the highest credit limit in seven years, “people now have a greater ability to take on debt, which doesn’t bode well.”

Worrying Numbers

$21,128: Average indebtedness of a Canadian without a mortgage

$18,429: Average debt of a Quebecer without a mortgage

$2370: Average Canadian monthly credit card spend up 22%

16.2%: Increase in volume of new credit cards between 01.01ah and the 2e quarter of 2022

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