Study: Household debt in Canada

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Two-thirds of households had outstanding debt that averaged $114,000 in 2009, according to the Canadian Financial Capability Survey (CFCS).

Income and education were strongly associated with debt. Households with pre-tax income of at least $100,000 owed about $60,000 more than those with less than $50,000 in pre-tax income. Similarly, postsecondary graduates owed $26,000 more, on average, than those with less than a high school diploma. These results generally accord with lenders' assessments of borrowers' ability to carry loan payments.

Stage-of-life and life events also influenced debt. Debt levels generally declined with age and were much lower for retirees than for workers of a similar age. Debt levels were almost $100,000 higher for homeowners than renters. Parents with children under age 25 averaged $37,000 or more in outstanding debt compared with other family types.

The CFCS also measured financial knowledge with a series of 14 questions. People who answered more of these questions correctly were likely to have higher levels of debt, even after controlling for other factors usually associated with debt.

Self-assessed financial knowledge was also related to debt. Those who said they were "very knowledgeable" about financial matters averaged $29,000 more debt than those stating they were "not very knowledgeable," when all else was held equal.

These results indicate that individuals who were more knowledgeable about financial matters held more debt and were likely more confident in their ability to assess the purposes, risks and terms of borrowing than those who borrowed less.

Debt was also more equally distributed within groups that held higher levels of debt—high-income households, those with children and the better-educated. Among unattached individuals, renters and the less-educated—groups generally considered more financially vulnerable—debt tended to be concentrated in fewer households.

Geographically, average debt corresponded to local housing prices and income levels, ranging from $69,000 in the Atlantic provinces to $158,000 in Alberta.

Note: The article "Household Debt in Canada" examines the distribution of total household debt across key characteristics, and studies the association between financial knowledge and household debt. Data were derived from the Canadian Financial Capability Survey, which was conducted in 2009 in collaboration with the Department of Finance Canada, Human Resources and Skills Development Canada, and the Financial Consumer Agency of Canada.

Definitions, data sources and methods: survey number 5159.

The article "Household Debt in Canada" is now available in the March 2012 online edition of >Perspectives on Labour and Income, Vol. 24, no. 2 (75-001-X, free), from the Key resource module of our website under Publications.

For more information, or to enquire about the concepts, methods or data quality of this release, contact Raj Chawla (613-951-6901; or Sharanjit Uppal (613-951-3887;, Labour Statistics Division.

For more information on Perspectives on Labour and Income, contact Ted Wannell (613-951-3546;, Labour Statistics Division.