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Time of India
4 days ago
- Business
- Time of India
Credit cards are feeding young Canadians more than actual food; As wages stagnate and rent soars, debt becomes the only thing they can afford
Young Canadians are increasingly struggling with debt as the cost of living rises and job prospects remain uncertain. Delinquency rates among 18-25 year olds have surged, particularly on credit cards, fueled by unemployment, stagnant wages, and a lack of financial literacy. Experts advise budgeting, debt repayment strategies, and seeking financial guidance to avoid the debt trap. Tired of too many ads? Remove Ads Tired of too many ads? Remove Ads Rise in unemployment Stagnant job market Lack of financial literacy Tired of too many ads? Remove Ads How to dodge the debt trap? As the cost of living continues to rise and job prospects remain uncertain, an increasing number of young Canadians are finding themselves ensnared in a cycle of debt they struggle to data from Equifax Canada reveals a troubling trend, individuals aged 18 to 25 have experienced a 15.1 percent increase in delinquency rates compared to the previous 90-day or more delinquencies on credit cards for this age group have surged by 21.7 percent, reaching a delinquency rate of 5.38 percent, significantly higher than the overall population's rate of 3.76 percent."Being able to balance the cost of living with debt levels is more difficult and more challenging, which is why through the numbers we are seeing that stress come through," said Kathy Catsiliras, vice-president of analytical consulting for Equifax Canada. "They are finding it more challenging to stay current on their debt obligation, married with the fact we're seeing unemployment rates increase."Canada's unemployment rate rose to 6.9 percent in April, according to Statistics Canada. This uptick in unemployment, coupled with stagnant wages, has left many young Canadians without sufficient income to manage their some are resorting to credit cards or loans to cover essential expenses like food and challenges are further compounded by a stagnating job market, partly attributed to the ongoing trade tensions with the United States. Due to President Donald Trump 's tariff policies, some companies have had to scale back hiring plans or lay off Terrell, a personal finance expert with NerdWallet, highlighted the multifaceted pressures facing young Canadians:"All of these factors combined can definitely make for a challenging financial situation in which your credit card is being used to bridge the gap, especially if you're someone who's living paycheque to paycheque," she situation is exacerbated by the fact that many young individuals are new to credit and may lack the financial literacy to manage it effectively. Matt Fabian, TransUnion Canada's director of financial services research and consulting, noted:"They're getting used to the fact if they charge a lot, those payments go up and they're going to owe a balance. Some of them, they're able to adapt and do just fine. Some of them, it's a bit of trial by fire, so we do see sometimes heightened delinquency."However, Fabian also pointed out a silver lining:"We do see a high 'cure' rate, however, with youth who may have a 'trip and fall' eventually understanding how debt works and not missing payments."A TransUnion Canada report showed youth are among two groups driving up the total debt of Canadians, with the group seeing their outstanding balances grow by 30.6 percent compared to the previous experts suggest that young Canadians facing debt challenges should consider developing a debt repayment strategy, exploring options like balance transfer credit cards or debt consolidation loans, and seeking guidance from financial is also crucial; ensuring that one can afford more than the minimum payment can prevent interest from accumulating and making debt repayment more difficult.
Economic Times
4 days ago
- Business
- Economic Times
Credit cards are feeding young Canadians more than actual food; As wages stagnate and rent soars, debt becomes the only thing they can afford
TIL Creatives With the cost of living outpacing incomes, a growing number of young Canadians are turning to debt to cover daily basics As the cost of living continues to rise and job prospects remain uncertain, an increasing number of young Canadians are finding themselves ensnared in a cycle of debt they struggle to data from Equifax Canada reveals a troubling trend, individuals aged 18 to 25 have experienced a 15.1 percent increase in delinquency rates compared to the previous year. Specifically, 90-day or more delinquencies on credit cards for this age group have surged by 21.7 percent, reaching a delinquency rate of 5.38 percent, significantly higher than the overall population's rate of 3.76 percent. Also Read: Canada's economy grows by only 1 percent in 2025, unemployment hits 7 percent "Being able to balance the cost of living with debt levels is more difficult and more challenging, which is why through the numbers we are seeing that stress come through," said Kathy Catsiliras, vice-president of analytical consulting for Equifax Canada. "They are finding it more challenging to stay current on their debt obligation, married with the fact we're seeing unemployment rates increase." Canada's unemployment rate rose to 6.9 percent in April, according to Statistics Canada. This uptick in unemployment, coupled with stagnant wages, has left many young Canadians without sufficient income to manage their debts. Consequently, some are resorting to credit cards or loans to cover essential expenses like food and rent. The challenges are further compounded by a stagnating job market, partly attributed to the ongoing trade tensions with the United States. Due to President Donald Trump's tariff policies, some companies have had to scale back hiring plans or lay off Terrell, a personal finance expert with NerdWallet, highlighted the multifaceted pressures facing young Canadians:"All of these factors combined can definitely make for a challenging financial situation in which your credit card is being used to bridge the gap, especially if you're someone who's living paycheque to paycheque," she said. The situation is exacerbated by the fact that many young individuals are new to credit and may lack the financial literacy to manage it effectively. Matt Fabian, TransUnion Canada's director of financial services research and consulting, noted:"They're getting used to the fact if they charge a lot, those payments go up and they're going to owe a balance. Some of them, they're able to adapt and do just fine. Some of them, it's a bit of trial by fire, so we do see sometimes heightened delinquency."However, Fabian also pointed out a silver lining:"We do see a high 'cure' rate, however, with youth who may have a 'trip and fall' eventually understanding how debt works and not missing payments."A TransUnion Canada report showed youth are among two groups driving up the total debt of Canadians, with the group seeing their outstanding balances grow by 30.6 percent compared to the previous experts suggest that young Canadians facing debt challenges should consider developing a debt repayment strategy, exploring options like balance transfer credit cards or debt consolidation loans, and seeking guidance from financial advisors. Budgeting is also crucial; ensuring that one can afford more than the minimum payment can prevent interest from accumulating and making debt repayment more difficult.
Global News
4 days ago
- Business
- Global News
More Canadian youth are taking on debt — and low wages mean many can't pay
As Canadian youth face a difficult job market and low wages, those taking on debt for the first time are finding it difficult to pay it down and new data shows some are already missing payments. A new report from Equifax Canada shows there's been a significant increase in delinquencies among Canadians under 26, with those 18 to 25 seeing a 15.1 per cent increase compared to an 8.9 per cent rise among non-mortgage holders overall. This includes a 21.7 per cent rise from this time last year in 90-day or more delinquencies of credit cards among those under 26. The overall population with this type of delinquency rose 15.8 per cent. A big factor, Equifax says, comes from wages entering the job market not matching the amount they may need to pay off debt. Story continues below advertisement 'Being able to balance the cost of living with debt levels is more difficult and more challenging, which is why through the numbers we are seeing that stress come through,' said Kathy Catsiliras, vice-president of analytical consulting for Equifax Canada. 'They are finding it more challenging to stay current on their debt obligation, married with the fact we're seeing unemployment rates increase.' 1:58 Young Canadians struggling most to pay bills: Equifax The report also showed delinquency rates for younger drivers rose by 30 per cent on auto loans, compared to the overall rate which saw an increase of 15.3 per cent. Get breaking National news For news impacting Canada and around the world, sign up for breaking news alerts delivered directly to you when they happen. Sign up for breaking National newsletter Sign Up By providing your email address, you have read and agree to Global News' Terms and Conditions and Privacy Policy Catsiliras added with unemployment rates rising — Canada's rose to 6.9 per cent in April, according to Statistics Canada — some youth are without an income to pay off debt, but also have to resort to their credit card or loans to afford things like food and rent. Story continues below advertisement Some of that difficulty comes from a job market that is stagnating amid the ongoing trade war with the U.S. As a result of President Donald Trump's tariff policies, some companies have had to dial back plans for hiring new workers and others have had to lay off employees. The increase in the cost of essentials, shelter and a competitive job market are all factors that put added pressure on Canadian youth trying to pay for basic needs, said Shannon Terrell, a personal finance expert with NerdWallet. 'All of these factors combined can definitely make for a challenging financial situation in which your credit card is being used to bridge the gap, especially if you're someone who's living paycheque to paycheque,' she said. Some of the delinquencies, however, may also be a result of more youth entering the credit market and taking on a new credit card or loan, but due to them having debt for the first time, they may make a misstep. 1:37 Credit card debt rising in Canada 'They're getting used to the fact if they charge a lot, those payments go up and they're going to owe a balance,' said Matt Fabian, TransUnion Canada's director of financial services research and consulting. Story continues below advertisement 'Some of them, they're able to adapt and do just fine. Some of them, it's a bit of trial by fire, so we do see sometimes heightened delinquency.' Fabian said they do see a high 'cure' rate, however, with youth who may have a 'trip and fall' eventually understanding how debt works and not missing payments. A TransUnion Canada report released Wednesday showed youth are among two groups driving up the total debt by Canadians, with the group seeing their outstanding balances grow by 30.6 per cent compared to the previous year. Fabian explained outstanding balances is taking a look at the overall outstanding debt Canadians owe, though the report showed youth also make up 10.3 per cent of new accounts opened. With more youth entering the debt world by opening new credit or taking on loans, financial experts say there are still things that can be done to avoid missing payments. 'It's often this challenging balancing act,' Terrell said. 'They're (youth) trying to build their financial foundations while they're facing, in reality, some of the steepest affordability challenges Canadians have faced in recent memory.' Terrell said if facing difficulty with debt, it can be worth having a debt repayment strategy, looking into a balance transfer credit card, debt consolidation loan or working with a financial advisor to determine the best options. Story continues below advertisement Budgeting can also come into play, Catsiliras said, including making sure you can afford more than the minimum payment to avoid interest building that could make paying down debt more difficult. 'Make sure from an affordability perspective before engaging into some form of new credit that you understand the obligation, you understand sort of payment requirements, and you're able to hold true to your commitments so that you don't fall into the groups we're seeing a lot of people fall into, which is a lot of delinquency,' she said.
Hamilton Spectator
4 days ago
- Business
- Hamilton Spectator
Ontario's record-setting mortgage delinquencies ‘enormously concerning'
More Ontarians are missing mortgage payments than at any time since Equifax started tracking them in 2012, according to new data from the credit agency. 'Delinquencies are really still rising on the mortgage side,' said Rebecca Oakes, vice-president of advanced analytics at Equifax Canada. 'We're still very concerned about those.' Ontario's 90-plus day mortgage delinquency rate rose 71.5 per cent since the first quarter of 2024, to 0.24 per cent from 0.14 per cent. Alison Kemper, an associate professor at Toronto Metropolitan University's Ted Rogers School of Management, called this 'enormously concerning.' There's not enough missing middle housing in between larger detached homes and small condo units, prices are still very high, and what is being build is aimed at investors, she added. So people end up taking on huge debts to find a decent place to live. 'The first thing you make sure you do in life is to pay your mortgage, but people aren't doing that, because the whole system is so broken now,' she said. Nationally the mortgage delinquency rate is at the highest level since 2016-2017. The mortgage stress test introduced starting in 2016 brought down missed payments, but now those numbers are creeping back up again despite the fact it's still in place, Oakes said. This is because of all the mortgages opened during the pandemic with high balances and low rates. 'Now you're seeing people coming off those low rates. And it's a challenge,' Oakes said. She added Ontario is likely dealing with more missed payments because of high home prices, particularly in the GTA, and a rising unemployment rate. Due to its close ties to the U.S., the province is also more vulnerable to economic uncertainty around the ongoing trade war. The mortgage delinquency rate is always a relatively small number, she said, because mortgage payments are typically the last thing to go when Canadians face financial hurdles. They will miss other payments on things like credit cards and cars before putting their homes at risk. Nationally, missed payments continued to rise on credit cards, and more than 1.4 million consumers (1 in 22) missed at least one credit payment during the first quarter of the year. New mortgage originations were up 66 per cent in the first quarter of 2025 compared to the same time last year in Ontario, and about 58 per cent nationally. But Oakes said this reflects people shopping around for better rates, as part of the 'Great Renewal' of pandemic era mortgages. More than a million mortgages are set to renew in Canada this year and borrowers are facing much higher monthly payments. Victor Tran, a RATESDOTCA mortgage and real estate expert, said it's worth it to look for a better rate as even a small difference means you'll save money. With sales down, banks and brokers are all competing for the best renewal rates, even offering incentives like cash back or credit card points. 'It's almost a race to the bottom,' he said. Interest rates are down somewhat but mortgage rates are also tied to the bond market, which has been impacted by the economic uncertainty surrounding the U.S. Trump administration and the ongoing trade war. As bond yields increase, fixed rates will follow suit, Tran said. That's why it's a good move to lock in a pre-approval, whether you're renewing, or planning on buying a home. As for those looking to purchase their first home, the picture is still not exactly rosy, Oakes said. New mortgages for first-time buyers in Ontario were up about 38 per cent in the first quarter of 2025, but that's more of a recovery from losses over the last two years. 'You know, 12 months ago, it was at very low levels. So it's up, but kind of from a low point,' said Oakes. 'Yes, the interest rates coming down means payments are coming down a bit. But actually the average loan size is still increasing. So it's not great if you're first-time home buyers still at all.'
Toronto Star
4 days ago
- Business
- Toronto Star
Ontario's record-setting mortgage delinquencies ‘enormously concerning'
More Ontarians are missing mortgage payments than at any time since Equifax started tracking them in 2012, according to new data from the credit agency. 'Delinquencies are really still rising on the mortgage side,' said Rebecca Oakes, vice-president of advanced analytics at Equifax Canada. 'We're still very concerned about those.' Ontario's 90-plus day mortgage delinquency rate rose 71.5 per cent since the first quarter of 2024, to 0.24 per cent from 0.14 per cent. Alison Kemper, an associate professor at Toronto Metropolitan University's Ted Rogers School of Management, called this 'enormously concerning.' There's not enough missing middle housing in between larger detached homes and small condo units, prices are still very high, and what is being build is aimed at investors, she added. So people end up taking on huge debts to find a decent place to live. 'The first thing you make sure you do in life is to pay your mortgage, but people aren't doing that, because the whole system is so broken now,' she said. Nationally the mortgage delinquency rate is at the highest level since 2016-2017. The mortgage stress test introduced starting in 2016 brought down missed payments, but now those numbers are creeping back up again despite the fact it's still in place, Oakes said. This is because of all the mortgages opened during the pandemic with high balances and low rates. 'Now you're seeing people coming off those low rates. And it's a challenge,' Oakes said. She added Ontario is likely dealing with more missed payments because of high home prices, particularly in the GTA, and a rising unemployment rate. Due to its close ties to the U.S., the province is also more vulnerable to economic uncertainty around the ongoing trade war. The mortgage delinquency rate is always a relatively small number, she said, because mortgage payments are typically the last thing to go when Canadians face financial hurdles. They will miss other payments on things like credit cards and cars before putting their homes at risk. Nationally, missed payments continued to rise on credit cards, and more than 1.4 million consumers (1 in 22) missed at least one credit payment during the first quarter of the year. New mortgage originations were up 66 per cent in the first quarter of 2025 compared to the same time last year in Ontario, and about 58 per cent nationally. But Oakes said this reflects people shopping around for better rates, as part of the 'Great Renewal' of pandemic era mortgages. More than a million mortgages are set to renew in Canada this year and borrowers are facing much higher monthly payments. Victor Tran, a RATESDOTCA mortgage and real estate expert, said it's worth it to look for a better rate as even a small difference means you'll save money. With sales down, banks and brokers are all competing for the best renewal rates, even offering incentives like cash back or credit card points. 'It's almost a race to the bottom,' he said. Interest rates are down somewhat but mortgage rates are also tied to the bond market, which has been impacted by the economic uncertainty surrounding the U.S. Trump administration and the ongoing trade war. As bond yields increase, fixed rates will follow suit, Tran said. That's why it's a good move to lock in a pre-approval, whether you're renewing, or planning on buying a home. As for those looking to purchase their first home, the picture is still not exactly rosy, Oakes said. New mortgages for first-time buyers in Ontario were up about 38 per cent in the first quarter of 2025, but that's more of a recovery from losses over the last two years. 'You know, 12 months ago, it was at very low levels. So it's up, but kind of from a low point,' said Oakes. 'Yes, the interest rates coming down means payments are coming down a bit. But actually the average loan size is still increasing. So it's not great if you're first-time home buyers still at all.'
