10 per cent of Canadians only making minimum monthly payment on their credit card: TransUnion

Canadians are carrying a lot of debt—about $2.4 trillion in car loans, mortgages and credit card debt.

Now a new survey by TransUnion finds there's been an increase in delinquencies and about 10 per cent of Canadians only make the minimum monthly payment on their credit cards.

"There are about nine or 10 per cent of consumers in Canada that are making their minimum monthly payment. That number is increasing as people's wallets are stressed," said Matthew Fabian, Director, Research and Industry Insights for Canada at TransUnion.

• Download our app to get alerts on your device
• Get the latest local updates right to your inbox

The survey also found that when it comes to the average consumer balance for loan products in the first quarter of 2024, the average auto loan is now $28,102. The average credit card debt is $4,276. Installment loans on average total $23,769, lines of credit $34,239 and the average mortgage balance for Canadians is $360,355.

The 90 plus day delinquency rate in Canada increased 12.67 per cent in Canada over last year and more than 16.46 per cent in Ontario. Fabian said that consumers are feeling financial stress.

"What we are seeing is the impact of inflation and higher interest rates, meaning higher cost of living, higher cost of covering your debts,” said Fabian.

As more families turn to credit cards to bridge the gap, it’s important to realize that many credit cards have an annual interest rate of about 20 per cent.

Laurie Campbell with Doyle Salewski, a licensed insolvency trustee firm, said that inflation and other pressures are causing more Canadians financial distress.

"People are becoming more and more reliant on credit cards to make ends meet and that is very concerning” said Campbell.

Campbell said it's important to make minimum monthly payments to keep your credit rating in good standing, but if you only do that you can end up in a cycle of debt.

"Those people only making the minimum monthly payment, it concerns me deeply, because it's going to take them years, if not decades to get out of debt” said Campbell.

As more mortgages come due more consumers will have to renew at much higher rates and even if the Bank of Canada cuts interest rates Campbell says for many it will provide minimal relief.

The survey also found that when it comes to bills some feel it's more important to pay their mortgage or car loan first, but missing any bill can hurt your credit score and a low score means you may have to pay higher interest rates in the future and have fewer loan options.