Household debt at all-time high in Canada, study finds

Many Canadians appear to be riding out the recession on the backs of their credit cards. Here is a report on the root cause and some simple strategies for getting your finances under control.

CTV News Channel: Laurie Campbell, Credit Canada, on the high debt levels

A credit and debt expert discusses the results of a new survey which found that Canada's household debt load is at an all-time high.

Canada AM: Rock Lefebvre, CGA-Canada, discusses why household debt is at an all-time high

Household debt is at an all-time high in Canada, according to a new report. Find out how overspending creates record debt in Canada.

Watch: See all Videos in the Player

A A | Email This Email | Print | Comments (59) Tweet

CTV.ca News Staff

Date: Tue. May. 26 2009 11:09 PM ET

Household debt is at an all-time high in this country with Canadians in the red for a whopping $1.3 trillion, according to a new survey.

Mortgage debt accounted for $900 billion of the nation's debt-load, while consumer debt was $400 billion of the total.

The new survey from the Certified General Accountants Association of Canada finds that Canadians are borrowing more to stay afloat during tough economic times, said Rock Lefebvre, the author of the report.

"We took a look at those numbers about a year and a half ago and we were at $1 trillion, and we would have hoped to see something different, and that was before the big hit," Lefebvre, the CGA's vice president of research and standards, told CTV's Canada AM.

"So we've managed to escalate to $1.3 trillion, and alarmingly, people continue to borrow even in this time of recession."

According to the report, 85 per cent of Canadians said they had outstanding debt on their credit cards.

Pamela Olmstead is one of those Canadians. She's a single mother, part-time student and part-time worker, and she has been carrying $4,000 in credit card debt for the past four years.

"I pay as much as I can, but with the interest, I never seem to catch up at all," she said.

Here are some other key points from the report:

Fifty-eight per cent of respondents said living expenses were the main reason for the increasing debt -- up from 52 per cent in 2007.
Credit cards and lines of credit accounted for the largest proportion of consumer debt.
One quarter of Canadians said they would not be able to handle an unexpected expenditure of $5,000. One in 10 would struggle to cover an unexpected expense of $500.
Forty-two per cent of Canadians acknowledged their debt is on the rise.

The report also said many Canadians have an unrealistic perspective on their own financial situation -- believing it to be better than it is.

While the study found that 84 per cent of Canadians are concerned that their household debt is rising, 79 per cent of Canadians who are in debt, said they can easily manage their debt and even take on more.

Lefebvre said the report reveals that people have shifted in the way they think about borrowing, in particular when it comes to mortgage debt.

"In the past, people would look at the total cost of the home and determine if that was a number they could live with," he said.

"Today, people make that purchasing decision based on the monthly costs, which tends to be a reflection of what we're earning today in good times."

As a result, a mortgage taken on in good economic times can quickly become unmanageable during a recession, job loss, or stock market crash, Lefebvre said.

Lefebvre said Canadians who are facing overwhelming debt should be honest about their situation and set realistic goals, consider all options for reducing their debt, and borrow only what they feel they can afford, not what the bank will give them.

With a report by CTV's Rob Brown in Vancouver

Comments are now closed for this story

Cutting Back
said

To Wilma Winner:
It's because of that attitude that "I want it all, I deserve it all, and I'm going to have it NOW" that the financial situation is in such a mess. Guess what--you want something? Save up for it. If you can't afford it, don't buy it. Instant gratification is ruining the system; people who want to spend beyond their means are rewarded with lower interest rates;
and people who are trying to live within their means and perhaps actually save a little get such low interest for their efforts that they barely earn enough to pay for the paper for the bank statement. It's time to smarten up, people! Necesssities are one thing, but not everyone needs the latest electronic toy or jumbotron television sets! There is no law that says we all "deserve" to have every luxury, no matter what the cost.How about working for it and saving up till you can pay cash? If this is a problem (aside from a car loan or mortgage) maybe you shouldn't be buying it .

Captailism is killing us!
said

I have words for ya'all....

That's what Captialism is about...

Ya'all can see why we can't keep up with "BUY BUY BUY BUY" nonsense....

Earth is not made for this and same goes for humans as well.... Look at us... Debt, Buy buy buy then we are slaves to captialism when all o'old good dang CEOS living off with luxuries that we will never get a taste of....

our life are meaningless to Captialism!

amanda
said

We as individuals have no one to blame but ourselves for the debt we incur. I think people need to be taught how to live within their means and it as simple as that. I think people are in need of good teaching on finances and practical applications as well b/c many of our parents and schools have dropped the ball.

Jack Mehoff
said

It sure is a good thing we have a carbon tax here in BC to make everything more expensive. And lucky us it is going up every year. Because as we all know, BC pollutes the planet far more then China, the US, or India.

Robin from Alberta
said

It is greed. Plain greed. It starts at the top with executives that feel they are entitled to $10,000,000 bonuses because they cut the wages of their workers by 10%.

As a Cnd Government worker, I have not had wage increases to keep up with inflation. I have not had the pleasure of seeing my wages go up with inflation so I am hoping that deflation hits so my wages come in line with the economy.

With the easy credit and no restrictions on the amount that could be borrowed, people had the ability to borrow more than they could pay. Gone are the days that a single income could purchase the average home. Gone are the days where your partners income would be for the extras such as a nice holiday or a new vehicle.

We need limits on the amount people can borrow. I am glad that the Conservative Government started this trend last year but it was to little to late.

I hate to say it but I feel we are in for a big dip later this year that will make the last year seem like a minor recession. The credit card debt is starting to bite as the credit card companies cancel cards, even cards for their best customers.

As long as we promote free enterprise and pay the rates that companies are charging, we have only ourselves to blame. If you don't like the price of gasoline, find a different way to get around. Don't like the cost of your cellphone package, change.

It isn't big businesses fault. It isn't the banks fault. It is our fault for not demanding things to be better. We are the controllers of our destiny. Take control.

No debit
said

Show a little self-restraint and try living within your means. Greed is driving people to do otherwise and unfortunatley it's the responsible ones who'll be left paying the difference. Perhaps, we should bring back debters prison?

island girl
said

No one has a lump sum to buy a house outright, unless they are selling one mortgage free. So of course you calculate it on a monthly basis, based on your current earnings. If you were assuming you would lose your job, you would never be buying a house at all, right?

If you lose your job, you can't even make rent payments. The problem isn't with the consumer: it's with a cost of living that is so high that when a job is lost through no fault of your own, you either rely on debt to see you through, or you go under. Mortgages take 25-30 years to pay off and a lot can change in that time.

Jamie
said

This makes me laugh because in today's society a person is forced to live with a credit card.
I cut my credit card up a year ago to see if I could live without it.

I tried to purchase a satellite receiver for my parents for Christmas and I was actually refused a purchase because I do not have a credit card!!!!

So I guess I was punished for having good credit! I was astonished.

cb
said

It's common sense over materialism, it's a pretty simple decision but some people never get it.

KJ in Kingston Ontario
said

There is ONE OBVIOUS REASON for this madness: LOW INTEREST RATES.

If the investment savings return reflected the VALUE of money and not the policy of ENDLESS GROWTH -- and STIMULATION, then people would save for the future....

As it stands now -- saving costs you money by the time tax and inflation are factored in...

Why would anyone be surprized that people turn to debt rather than saving to live!!!!!!!

What?!!
said

To Wilma Winner:

"It's my right to maintain the lifestyle I'm accustomed to". What?!! If you lose your job, dear, or have an income cut no one owes you your current standard of living. You DO have the right to go into debt to finance a standard you can no longer afford, but don't come crying to me with your bills.

Gov Employee
said

In response to DCI's "Why don't all the people in the government take a wage cut.They all make around 80 - 130.000 $ per year plus all the perks they get."

Please tell me who you know that makes that kind of money as a government employee. I am a federal employee and don't make near 80k, and as for perks, please name them, we don't get bonuses or profit share, we all have to work the same 37.5 hr week most of the general public works and were given a raise of 4.5% over 4 years. Oh yeah, the perks woohoo. Not only that, but we have to put up with the ignorant public who assume that since you work for the government you have some sort of hand in their dealings. I pay the same taxes, EI, CPP as everyone else.If you mean politicians, good luck with that since they have the ability to give themselves raises.

Billy Saw Hurruch
said

Watch the documentary Zeitgeist and you'll figure it out.

Matt
said

Rpger T,

You're missing the "issue".

People want the problem to go away without any cost, inconvenience or change to them.

This is why they are upset that the new credit card laws are all about informing the consumer, and giving the consumer advance notice of changes.
These changes are all about making things easier to understand for the consumer so they can make their own decisions and take responsibility.

Phil
said

@ James

Money has become the drug of choice in this economic system, and the system is very addicted to it. Slurp, Slurp that liquid!

Dave in Whitby , Ontario
said

OIL prices and high Gas prices created this Recession and now they are on the Rise again and I here next Year the Ontario Liberals are putting the HST
TAX on Gas . GAS effects the average person's cost of living if you Drive to work everyday . This will be a very long Recession Gasoline keeps rising .

Wilma Winner
said

Time are tough people are losing their jobs and some of us have to take pay cuts. It's my right to maintain the lifestyle I'm accustomed to. I am forced to borrow on my credit cards as my line of credit is used up. If I can't pay it off then the banks are on the hook for it. It's the goverments fault so they should bail us out when the time comes just like they did for the banks.

Brad
said

Just wait till the HST takes affect here in Ontario, then watch consumer debt balloon even higher as we struggle yet agian to give the government even more of OUR MONEY!!!!

Rpger T
said

Simple solution:

STOP buying store merchandises until those greedy retailers lower their prices especially big ticket items cars,washer/dryer,fridge,computers,laptops...etc.

Gerdi Snyder
said

Parents need to change, definitely, the way they throw money at their kids is unbelievable. What does that tell them. We need to go back in time and explain the value of a dollar, money does not grow on trees and they really do not need everything out there. Communcations has failed with cell phones, face book, etc. Young people don't even know anymore how to talk to people directly, they hide behind all those technologies. Parents - tell your kids no, it's okay instead of being in debt forever. It destroys character, and no we do not need those huge mansions just to show off. We should buy what we can afford not more. I am always amazed of what people want, a huge house which is way too big - then they have a 3 hour commute every day just to afford this house when they don't have time to spend in the house as they are sitting in traffic. I grew up in Europe, and a lot more people live in apartments there, and there is nothing wrong with that. And the myth that children need their own big back yard is ludicrous, kids are very happy with little things. They'd rather have more time with their present parents and less toys as parents have to work to afford all this crab. Wake up people.

Keith in Brampton
said

@ Mark:

The percentage of the populace with mortgage debt is much smaller than the percentage with consumer debt. Young folks living at home, people in apartments and boarding houses, and folks who have already paid off their mortgages will often still have some form of consumer debt.

So, no, the vast majority are not carrying around consumer debt that's half as big as their mortgages...

As for me personally, I'm one of those who took on additional debt this year - but it's "good" debt in that I paid off one vehicle and traded the other on a new vehicle. So while I have more debt, it's as manageable as my previous debt. The credit cards are paid off regularly, and the mortgage keeps decreasing. So not ALL of that .3 trillion increase is necessarily "bad"...

Jim-Surrey
said

I wonder how all this was found out?
One would think this sort of information would be protected by the privacy act?
Obviously NOT. Things are only private when they say they are?
Another joke of an act!

Mr. C from Saskatchewan
said

What makes me angry is that all the economists in power believe that the best way forward is .....wait for it..... "More Debt!". This is self-serving. More debt puts us further under their thumb. Here's a newsflash....banks and credit card companies are not your friends!!!! (even though their advertising would try to convince you otherwise). They are the aristocracy of the new feudalism. They are entities that control so much yet produce so little actual value. Their goal is to own more and more of your effort, your time, your life...try calculating how many days out of a month you work for yourself...it will shock you.

All great nations have been built on working-earning-saving...all great families have been built on working-earning-saving....all great companies have been built on working-earning-saving ..... all failures of the above have been due to indebtedness and consumption.

Keynsians will tell you conservative credit markets (credit based on real savings) don't work because they doen't reward the consumer for stimulating the economy (monetary velocity) ... this is not true .... people will still buy what they can afford (you can't take money with you in the end!). The only thing that will happen is that the power weilded by bankers will be reduced as we crawl out from under their thumbs. They will own less of our effort, time, and life.

Everyone give your heads a shake...we are mortgaging our childrens prosperity and freedom for the sake of human impatience. Apply more stringent borrowing rules to yourself than the lending rules the banks apply. If we do, we will be ok, if we don't, we will fail.

Amrican Iggy
said

In my America, which includes Canada, the Government will solve all these problems. Don't mess with Texas.

Here's a thought...
said

economy should NOT rely on consumerism!
when we learn THAT we will be ok.

James
said

I've never heard of a lender holding a gun to anyone's head demanding that they borrow money or else.

We need to learn to "act our wage"!

Scott
said

It's all about choices people. If you make the choice to live in debt, then so be it. It's not just about everyone's needs, wants or lack of self- control. It's a reflection of our society, we allow the banks to run our lives. Look at the interest charges on your mortgage or credit card and tell me who got you into that mess? not the bank, not the credit card company - you. If the truth hurts, then tough. Make a life choice to live debt free. If you can't pay for it outright, don't buy it. Only exception is a mortgage.

edncda
said

"....85% of Canadians said they had outstanding debt on their credit card(s)......" The other 15% busy themselves by writing smug comments on the internet about how they are smarter than the rest of us. If the ship goes down, your smugness won't keep your feet dry.

Randy
said

I don't mean this to sound insensitive, because I do know a lot of people are experiencing tough times, due to no fault of their own. On the other hand, I also know many people that are in trouble simply because they were trying to keep up with the Jones'. I don't wish anyone bad luck, but this may be a good learning experience for some?

Matt
said

Scary debt levels.
People have to simply not spend so much more than they make. There are lots of nice shiny things I'd like to buy, but I'm an adult and know when I can't afford them. I think some people need to grow up.

Sometimes it's unforseen expenses, I can appreciate that, but people really need to save more, build an emergency fund, save up for that vacation.
Much better to have an emergency and lose your vacation savings, than to have an emergency and bury yourself under a debt you can't afford.
If you can't handle credit cards, don't use them.
If you need it for some reason, only use it when necessary, or TELL them to lower the limit.

Socialism is killing us
said

Typically of the Liberals on this blog. Blame Harper and Flaherty. Expand government so the government can take care of you.

Work hard and pay your bills. Pay your mortgage and car loans. Stay off the credit cards. They're meant only for if you get into trouble.

Take some responsibility for your lives and don't depend on the government to save your a$$.

JD in Ottawa
said

"One in 10 would struggle to cover an unexpected expense of $500"... Does anyone else find that staggering? That's roughly about 3 million people!

While I have my personal opinion that the next 10-25 years, regardless of economy, will see a mild return to the "bourgeoisie/proletariat" world of times past, what I do think must be done is that the government and banks must educate the people on how to save and spend strategically during a recession. Given the notion of this article, combined with the slack afforded to banks from the government, is there any doubt that this debt will rise, either minutely or sharply?

I think everyone needs to be reminded that bliss is ignorance and ignorance, especially now with this debt and the state of many economic sectors, is a dangerous road to travel.

Cambob
said

Correction:

Household TAX at all time high.

richie
said

That's strange, the IMF seems to think we should increase our national debt and that we can handle way more. Gotta love those European elitist masters of ours'. And our American credit masters as well.

Gary - Edmonton
said

It's not surprising. Take a drive to any new residental area and look at all the HUGE homes newly built that have bedsheets hanging on the windows because the owners can't afford blinds. Also take note of the 'toys' in the driveways - new cars, boats, motorbikes, quats, etc.

Right now people are surviving (barely) because the interest rate is low. Consider what will happen if interest rates start to rise. We're living in a time where everybody needs everything right now - it doesn't work that way. Unfortunately, some folks have blinders on and can't see what has recently happened in the states.

John in Borden
said

Our biggest problem is not being able to tell the difference between what we want and what we need... We all want those nice big TVs, new cars and more clothes that we will only keep until the next big fad. It only makes things worse when we are bombarded with all the comercials for products that want us to keep up with the Jones'... We just have to stop spending beyond what we earn.

Getting 'more' credit when we already have so much should be harder not easier.

DCI
said

I HAVE AN IDEA. Why don't all the people in the government take a wage cut.They all make around 80 - 130.000 $ per year plus all the perks they get. That would save the taxpayers about 5 million per year.
Everyday we hear about all Canadians must be fiscaly responsible. Why doesn't the government set the example???
All the people out of work; the govn't tells us to back to school. Why go back to school, when there are no jobs when you get out!

Andrew from NB
said

this is not surprising, the system we have today is a debt based system. Cash used to be and should be king today. We have a rating system that basically sets a dollar value on how much we can borrow. What ever happened to working hard, and saving money. The world is guilty of taking a shortcut, and then forgetting that its not good to have debt. Since when was a plastic card better than the real thing. cash means its money you have, theres a reason $-22,498 has been placed by $(22,498) removing that little - which means negative for those who dont know, with brackets kinda makes your debt not look so bad.

Look banks want you to owe them and they make it as easy as possible because it makes them major cash, usually around ONE BILLION a year, meanwhile just to use there cruddy service they charge you annually over $100 and heaven forbid you go over the serices you paid for, or how bout just to get $20 bucks of your hard earned cash there gonna ding ya $1.50, have a bill comming out thats 30 cents more than ur balance, cost ya $35 dollars, meanwhile joe blow with a credit card just swipes, swipes, swipes his life away in comfort and east with a month phone call of would you like us to increase your balance. Ya you have to pay your monthly minimum, but it is no where near as costly as cash.

what im tryin to say is our debit rises because our system is broken, debt is easier and looks cheaper in both the short and long term, return our system to cash and we will flourish

GWinnipeg
said

Let's blame credit!

It certainly has nothing to do with being robbed of 30% of our income even before we see it in our bank accounts.

Marc in Ontario
said

900 Billion = mortgage debt.

400 Billion = personal debt.

Doesn't anybody see what's wrong with this picture?

How can personal debt be almost half of mortgage debt? If your mortgage is $300,000 statistically your personal debt is almost half of that? Even if you have student debt + car debt it still doesn't add up. Maybe people should live within their means and not their wants. I have no pity for those people.

Udo Rosenberg
said

Household debt increasing to 1,300,000,000.00 from 1,000,000,000.00 in 1.5 years tells me it is not only our government that is trying to �borrow us� out of these economic uncertainties.

Jim in Ottawa
said

I suppose this is the Finance Minister's fault somehow. People who can't do basic Grade 6 mathematics don't have right to throw stones at anyone but themselves.

Jay
said

Well the government is helping us out all around in these hard times right? Minimum wage is below poverty line. Credit cards can just tack on more and more intrest eventhough there is a yearly cap on how much interest can be chared on a loan... ohhh we are all headed for hard times just has not cough up to us yet.

Ohhh and hey lets keep oil on the stalk market so that the price can just be driven up by greedy people for no other reason then to make more money. Hope you loose it all people

Shay- One of Those People in Debt
said

In the past it has been way to easy to borrow money. My ex husband has a problem with credit cards and it has affected me. He, like many others cannot control the urge to NOT SPEND, if there is credit available he will spend it, then he will go get a loan to pay off the credit card and the credit companies INCREASE his credit limit, which he then spends. It is a vicious cycle in which the consumer and credit companies/banks are both responsible for. My debt which I have incurred from his irresponsibility is something I take FULL RESPONSIBILITY FOR- I work a second job (very humbling), but the debt total is slowly going down. When it's paid off in full, I will have no use for credit cards, if I can't afford it I won't buy it. I've learnt my lesson the hard way. More people should step up and accept responsibility for their debt, you bet it SUCKS, but one has to remember who incurred the debt in the first place.

Jack
said

With salaries being reduced or frozen and prices all around us going up (e.g. gas), this is not news. I don't believe everyone is out for "instant gratification", but you can only go for so long without being able to enjoy some fruits of labour.

Doug BC
said

"Remarkable" makes some very salient points.But,I also think consumers were piling up debt long before this recession even started.
I find it troubling that a nation that takes pride in it's education system has failed to teach either it's citizens,or it's government about the hazards of using debt to finance every day living expenses on a regular basis.Or even teach people who to calculate the "real cost",and how long it will take to pay off items bought on credit.
Times are about to change in a big way.What is already starting to happen with credit in the USA,is surely going to happen here too.Our addiction to debt financing MUST come to an end.Though I'm not sure a recession is the best time to turn that corner.
No person,or nation,can be described as "free" as long as they are constantly mired in debt.

Rick in AB
said

Well DUH!!!
The economy tanks, our living expenses go up substantially, especially the price of gas for our vehicles, and the government doesn't see it as gouging by the oil companies?? It's no wonder that Canadian's are further in debt.

Now look at the only two groups in Canada that are insulated from this economic crisis, MP's and Gov't workers who all have their faces in the public trough, and it's easy to see why we are facing worsening times and pissed off tax payers. They should be forced to roll back wages and pensions etc. just like everyone else, i.e. the auto workers.

Time to give the middle class worker a break Mr. Harper. Quit beating the work horse's of the economy before you kill them off and the economy collapses entirely.

Scott Crawley
said

Very disturbing..

I think it's only going to get worse. A lot of it is due to the media. It's a cell phone-talking, Ipod-listening, SUV-driving, burger-eating, PS3-playing, blackberry internet-surfing, reality TV show-watching generation that we've become. And we are willing to go into debt for it.

CREDIT CARD IS NOT YOUR ID CARD
said

Problem is many places forced people to have Credit Card as second ID...

Government need to step in and help people.

We are held hostage with Credit Card....

I am also in debt but I'm paying it down however I am complaining about how our society require credit card to able live the life....

I don't see any how this will get solved unless government start step in.

mike in Etobicoke.
said

People need to consider the total cost of ownership when making a purchase. Just because you can afford the BMW doesn't mean you can afford the repairs. When making our first home purchase my wife and I decided to stay in the 416 as opposed to the (905). Sure we could have bought twice the sqft for the same price but along with that comes twice the maintenance upkeep, heating costs as well as higher property tax. Not to mention the increased commuting costs. As a young couple you don't need 2500sqft with a pool. You work towards those things and get them when you can truly afford it.

Juliann
said

We are not only placing a large amount of finacial pressure on ourselves by living a life of instant gratification but we are putting a burden on our children, our grand children and their children....when will we start living within our means �nd not continue to expect everything served to us on a silver platter

JLK
said

Increasing household debt in any form is like stretching and elastic - eventually it will snap.

Bumpy Ride. Fasten your Seat Belts!
said

Don't Worry! Be Happy!
The fundamentals of our economy are strong.

Steve
said

What's going to make the economy even worse is Big Oil. For as long as oil companies keep gouging consumers, we'll never recover from this recession. High gas prices means less discretionary income. That means debt won't get paid off and people won't spend. If people don't spend, the economy will remain toast.

GP
said

The government and "experts" tell us to borrow. Now it�s a major problem.

We are in fact stumbling around in the dark, aren't we.

Here's a thought, fix the markets by creating an honest and balanced system that does not simply transfer the average person's hard earned income into the hands of a few wealthy and privileged. Then regulate the greed in the Corporate Boardrooms. After that there will be real and sustained growth.

The rest will sort itself out as part of the natural course of a FAIR free market.

Plabo
said

85% of people have outstanding credit card balances. No wonder banks are still making profits when charging 18%+ on these balances.
C'Mon Flaherty... work for the people for a change.

Roger T
said

Looks like we've been down graded to become a thrid world country while the developing nations are pushing forward and excelling.

We've enjoyed life beyond our means this is why we ALL are in debted to ourselves.

Remarkable
said

It is so easy to borrow money and when people want to buy something, they're willing to take on a large amount of debt, to purchase what they want, to give them that sense of instant gratification.

We have become such a nation of buy, buy, buy because we are after all a consumer based economy, that many of us in the good times take on a lot of debt, thinking that spend today, pay off the debt tomorrow.

But this time, tomorrow became a very deep recession and with people losing their jobs or having their wages and hours cut, things are becoming more and more difficult to pay for.

With inflation down, interest rates from the BoC at an all time low, interest rates on things like credit cards and lines of credit are going up, as well as other everyday items.

No wonder why people are going into deeper debt. In tough times like these with little cash flow, some people really have no other choice but to borrow now and to hopefully pay later.

KJ in Kingston Ontario
said

It's like dieting: having more beats accepting less 10 out of 10 times!

Anyone else see a problem ahead....

Pick your location

Top Stories -

News Sections

News Programs

Features

Browse: