Consumer debt loads inched lower in the first quarter of 2020 for the first time in more than a decade, Canada’s largest credit monitoring firm said Tuesday.
Equifax says the average Canadian had $23,386 worth of consumer debt as of the end of March. That’s down by 0.49 per cent from a year ago.
The COVID-19 pandemic that led to widespread shutdowns in the economy starting in mid-March was a major factor in the numbers, Equifax said.
“With stores and restaurants shut down, consumers were able to cut back on their spending in March as retail sales numbers indicated,” said Bill Johnson, Equifax’s vice-president of data and analytics, in a release.
“The result was a plunge in credit card spending that translated into much lower balances. That trend gained momentum in April, with few signs that consumers are looking to debt for support in the early days of the pandemic.”
A lack of demand for credit card debt, despite huge shortfalls in income because of layoffs and work furloughs, is likely a sign that massive government support programs such as the Canada Emergency Response Benefit are having their desired effect and keeping people financially afloat.
Earlier numbers from the federal government showed personal bankruptcies fell to an all-time low in April, a trend that seems to be supported by Equifax’s findings.
While the overall picture is one of slowing growth in debt loads, the situation is different across the country and among different demographic groups.
Younger people and older people borrowed less, while middle-aged people borrowed more. The average 18 to 25 year old had $8,588 in consumer debt as of the end of March, a decline of 1.03 per cent from a year earlier.
People between the ages of 46 and 65, however, borrowed more. While seniors owed an average of $16,214, a decline of 0.45 per cent from last year’s level.
By province, people from Alberta had the highest debt loads, at $28,615 on average. But while they owed the most, Albertan debt loads have fallen by 1.72 per cent. At the opposite end of the spectrum, the average person in Manitoba owed 18,449 in consumer debt, a figure that has fallen by 1.95 per cent in the past year.