Expert warns of food consumption habits amid rising prices
A new survey by Dalhousie University's Agri-Food Analytics Lab asked Canadians about their food consumption habits amid rising prices.
Canadians with the lowest credit ratings repaid the most credit card debt in the first year of the pandemic as part of a wave of non-mortgage debt repayments, Statistics Canada said Monday.
Overall non-mortgage debt fell by a record $20.6 billion from the start of the pandemic to January 2021, including a $16.6-billion drop in credit card debt as household incomes hit record levels, the agency said in a report.
Mortgage debt, however, rose by a record $99.6 billion over the same period.
Credit card balances declined across income levels but were most pronounced for those with lower credit ratings.
"The largest reductions in debt loads were among those with the lowest credit ratings, suggesting that Canadians most vulnerable to financial hardships were able to use savings prudently during the pandemic," the agency's report said.
The total balance owing for those with credit scores below 640 dropped from almost $15 billion in the fourth quarter of 2019 to under $10 billion in the first quarter of this year. For those with a credit score above 800 the balance went from about $16 billion to $14 billion.
For those with the lowest scores, it meant an overall drop in balances of more than 35 per cent, while those with credit scores between 641 and 800 saw declines of between 15 and 20 per cent, and those in the over 800 level had declines of about 13 per cent.
"Those with lower scores repaid their debt at a faster rate than those with higher scores throughout the pandemic," the agency said.
The drop in credit card debt marked a sharp reversal for a category that has seen average annual growth of 20.7 per cent over the last two decades, rising from $13.2 billion in 2000 to $90.6 billion in February last year.
The change came as household consumption spending dropped significantly, down 14.7 per cent in the second quarter last year compared with a year earlier for the largest year-over-year decline since the agency started tracking it in 1961.
"Households had few places to spend, and many used the pandemic lockdown as an opportunity to save and pay down existing debt," the agency said.
The debt repayments have also come about as government support programs helped prop up incomes and in some cases paid more than what people had been earning before, said Nathan Janzen, senior economist at RBC.
"During the pandemic there was a significant increase in household disposable income, and that was government support payments more than offsetting lost earned wages over the pandemic."
Job losses have been heavily concentrated at the lowest end of the labour market with a large share of losses among people making less than $500 a week, which is the lowest weekly payment under the government programs, said Janzen.
"So for a lot of people there has been in some cases full, or more than full, wage offset."
People with the lowest credit scores also generally face higher interest rates, said Doug Hoyes, an insolvency trustee at Hoyes, Michalos & Associates. For credit cards, that can mean having to pay interest rates of more than 25 per cent, compared to high single digits for some borrowers.
"Any extra dollar that they have, it's a huge saving to be deleveraging and paying down that credit card."
Many people struggling with debt have also been paying down their balance as a defensive strategy, so they have more capacity to borrow in the future, he said.
Spending has already started to rise this year as restrictions have eased and the labour market has improved. Non-mortgage borrowing in March and April saw "exceptionally strong growth" compared with a year earlier, though March 2021 credit card balances were still $11.5 billion below their pre-pandemic levels, said StatCan.
Households were carrying about $2.5 trillion in outstanding debt one year into the pandemic, approximately two-thirds of which was mortgage debt, Statistics Canada said.
This report by The Canadian Press was first published Aug. 23, 2021.
A new survey by Dalhousie University's Agri-Food Analytics Lab asked Canadians about their food consumption habits amid rising prices.
It was evident to the federal government as early as last fall that Loblaw and Walmart might be holdouts to the grocery code of conduct, jeopardizing the project's success.
Royal commentator Afua Hagan writes that when King Charles recently admitted Catherine to the Order of the Companions of Honour, it not only made history, but it reinforced the strong bond between the King and his beloved daughter-in-law.
Charlie Woods failed to advance in a U.S. Open local qualifying event Thursday, shooting a 9-over 81 at Legacy Golf & Tennis Club.
When it comes to cardiovascular fitness, you may tend to focus on activities that move you forward, such as walking, running and cycling.
A recent decision to restrict consular services for fighting-aged Ukrainian men has made a Ukrainian man in Canada feel less certain of his next steps — and worried he could be pulled back to the war.
Ashley Dickey and her mother rented part of the same Coquitlam duplex in three different decades under three different landlords.
A man who fell into a crevasse while leading a backcountry ski group deep in the Canadian Rockies has died.
The practice of giving sedatives to people detained by police has spread quietly across the U.S. over the last 15 years, built on questionable science and backed by police-aligned experts, an investigation led by The Associated Press has found.
Mounties in Nanaimo, B.C., say two late-night revellers are lucky their allegedly drunken antics weren't reported to police after security cameras captured the men trying to steal a heavy sign from a downtown business.
A property tax bill is perplexing a small townhouse community in Fergus, Ont.
When identical twin sisters Kim and Michelle Krezonoski were invited to compete against some of the world’s most elite female runners at last week’s Boston Marathon, they were in disbelief.
The giant stone statues guarding the Lions Gate Bridge have been dressed in custom Vancouver Canucks jerseys as the NHL playoffs get underway.
A local Oilers fan is hoping to see his team cut through the postseason, so he can cut his hair.
A family from Laval, Que. is looking for answers... and their father's body. He died on vacation in Cuba and authorities sent someone else's body back to Canada.
A former educational assistant is calling attention to the rising violence in Alberta's classrooms.
The federal government says its plan to increase taxes on capital gains is aimed at wealthy Canadians to achieve “tax fairness.”
At 6'8" and 350 pounds, there is nothing typical about UBC offensive lineman Giovanni Manu, who was born in Tonga and went to high school in Pitt Meadows.