TORONTO - Canadians are less likely to use credit cards to pay for home renovations this year than they were in 2008, with more than three-quarters of respondents to a recent survey saying they expected to pay cash rather than increase their debt.

The Ipsos Reid survey, conducted for RBC Royal Bank, found 76 per cent of respondents planned to pay for their home improvements with cash or savings. That's up from just 70 per cent who said they'd pay in cash last year.

Conversely, fewer people say they'd use a credit card to finance their renovation. The number dropped to 24 per cent this year from 32 per cent in 2008.

"I think one of the reasons might be the downturn in the economy that we've experienced in the last year," Bernice Dunsby, senior manager of home equity financing at RBC, said in an interview Wednesday.

"So I think Canadians are getting a lot more cautious when they are taking on renovations or home improvement plans. They are being smarter about how they're undertaking the financing piece of their renovations."

Canadian consumers have been amassing debt for years and levels are now much higher than in the past, according to previous studies. As a result, some consumers have changed their spending and savings habits to reduce their risk,

However, Bruce Cran, president of the Consumers' Association of Canada, said this doesn't mean credit cards have gone the way of the horse and buggy.

"I think people would like to save, but I don't think there's a lot of people around with that ability at the moment," Cran said.

"I don't think we've seen any sign in Canada that credit cards have been given up in favour of cash at this time."

The survey contacted about 3,000 Canadian homeowners in September.

The average amount that the renovators expect to pay this year is $11,272.

Almost half of the respondents (47 per cent) say they have done more renovations because of a federal tax credit announced in January, and 63 per cent said they plan to take advantage of the credit.

The study also found that 66 per cent of homeowners plan to renovate over the next two years, down from 70 per cent in 2008.

Dunsby said the tax credit likely pushed some Canadians' home renovation plans forward by a year or two, and could result in a drop-off in renovation activity once the tax credit ceases to be available at the end of January.

"Did it accelerate Canadians' decisions to undertake renovations? I definitely think it did, especially those who may have been sitting on the fence," Dunsby said.

"I think that's why we have seen the intentions drop over the next two years."

The tax credit was one of several measures announced in the past year by Finance Minister Jim Flaherty in response to the recession that began a year ago as a result of a global shortage of credit.

The credit crunch was sparked by the failure or near-failure of several major U.S. financial companies and spread throughout much of the world's banking system, requiring several countries to bail out banks, insurance companies and lenders.

Canada's banks turned out to be among the most stable in the world, and none of them required a direct government bailout, but the impact was felt in rising unemployment as companies cut back or failed during the downturn.

"It's not surprising that Canadian renovators are getting smarter with their renovation financing and avoiding debt in light of the current economy," Marcia Moffat, RBC's head of home equity financing, said in a statement.

"Whether they plan to fix up and sell or renovate and stay, most are taking advantage of tax credits and incentives. They're also planning to use cash or lower interest credit to finance those renovations."

The online survey was conducted between Sept. 8 and 16, 2009. It's based on a randomly selected representative sample of 3,120 adult Canadian homeowners of whom 2,050 plan to renovate within the next two years.

The results are considered accurate to within 1.8 percentage points, 19 times out of 20.