Prior to the COVID-19 pandemic, credit card debt in Canada generally rose in December in tandem with the busiest shopping season of the year. During the first two years of the pandemic, however, credit card debt went down in December, as the holiday season corresponded with a spike in COVID-19 cases, which put a damper on travel, social gatherings and holiday shopping.
December 2022 therefore marked the first holiday season that Canadians could truly embrace, in every sense of the word, since 2019, and the old holiday tradition of racking up credit card debt resumed in earnest.
Credit card debt at highest level on record
Canadians added over $800 million to their credit card debt in December, bringing the outstanding debt to a record high $91.5 billion. On a year-over-year basis, credit card debt with chartered banks grew 13.8% by the end of December 2022.
Credit card debt has now risen by over one-fifth (+21.9%) from the post-pandemic low of $75 billion in January 2021, surpassing the previous high of $91 billion set just prior to the pandemic in February 2020.
Canadians spent more and paid more at retailers this December
Compared with the same month one year earlier, Canadians spent $4.2 billion (+7.3%) more at retailers in December 2022, collectively buying $62.1 billion in goods and services.
Retailers traditionally associated with holiday shopping, such as clothing and clothing accessories (+14.3%), health and personal care (+13.5%) and sporting goods, hobby, book and music (+13.2%) stores, all reported double-digit sales increases in December 2022 compared with 12 months earlier.
One factor to consider when looking at higher retail sales in December 2022 is higher prices. The Consumer Price Index rose 6.3% year over year in December, with Canadians paying more for food (+10.1%), health and personal care (+6.1%), household operations, furnishings and equipment (+4.6%) and recreation, education and reading (+3.4%).
Economically vulnerable Canadians were struggling to pay bills and adding to their debt levels prior to the holidays
Even prior to the busy holiday shopping season, evidence suggests that more vulnerable households were struggling to make ends meet.
By the end of the third quarter of 2022, Canadians among the lowest 40% of wealth holders saw their debt levels rise by 7.9% year over year.
In the fall of 2022, we asked Canadian households if they were finding it difficult to meet their financial needs in terms of transportation, housing, food, clothing and other necessary expenses over the past year.
Over one-third (35%) of Canadians told us that it was difficult for their household to meet its financial needs in the previous 12 months, with more than one in four (26%) saying they would not be able to cover an unexpected expense of $500.
Almost one in five Canadians (19%) in the lowest income quintile reported that they often had to borrow money from friends or relatives or take on additional debt to meet day-to-day expenses.
We will learn whether Canadians have started to pay down some of that credit card debt with the upcoming release on monthly credit aggregates for January 2023, which will be released on March 22.
For more information, contact the Statistical Information Service (toll-free 1-800-263-1136; 514-283-8300; firstname.lastname@example.org) or Media Relations (email@example.com).