Why Credit Card Debt Fell During the Pandemic & Will It Rise Again?

Why Credit Card Debt Fell During the Pandemic & Will It Rise Again? | Debt Free In 30 | A recent report from Statistics Canada revealed that Canadians with the lowest credit scores led the wave of pandemic credit card debt repayment and overall non-mortgage debt fell by a record $20.6 billion from the start of the pandemic to January 2021. Incredible, right? So, will this downward trend in debt continue? Or is this temporary because most of us are still at home and collections activity is slim? On today’s podcast, Doug Hoyes and Ted Michalos examine the latest debt statistics and discuss why Canadians are paying off so much debt, who’s actually taking on more debt, and whether borrowing will rise again in the near future. They also share practical advice for managing debt and what to do if you owe the CRA. Tune in for a lively discussion!

Links:

Hoyes Michalos Straight Talk on Personal Finance Course on Credit Rebuilding: courses.hoyes.com
Trends in household non-mortgage loans: The evolution of Canadian household debt before and during COVID-19, Statistics Canada: https://www150.statcan.gc.ca/n1/pub/11-621-m/11-621-m2021004-eng.htm
Bank of Canada, Financial System Review – 2021 https://www.bankofcanada.ca/2021/05/financial-system-review-2021/
Canadians with Lowest Credit Scores Led Wave of Pandemic Credit Card Debt Repayment: https://www.reddeeradvocate.com/business/canadians-with-lowest-credit-scores-led-wave-of-pandemic-credit-card-debt-repayment/
Hoyes Michalos Bankruptcy Study www.joedebtor.ca

Time Stamps:

0:50 Bank of Canada says Canadians increased “prudence”
2:00 Household non-mortgage debt collapses
3:00 Spending dropped during the pandemic
6:00 Credit card debt collapses
9:15 HELOCS – Massive increase in Home Equity Lines of Credit
12:20 Outstanding credit card balance by credit score
13:00 Who paid down credit cards the most? Not who you would expect
13:40 How were people with low credit scores able to pay down their credit cards the most during the pandemic?
18:50 What will happen in the future?
24:30 Dubious speculation on when CRA will start aggressively collecting tax debt
28:30 Where the economy is now
28:50 Practical Advice

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