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Credit card balances pile up as oil rout hits Western Canada

A consumer pays with a credit card at a store in Montreal in this file photo.

Ryan Remiorz/THE CANADIAN PRESS

Consumer delinquency rates soared 25 per cent in Alberta last year amid slumping oil prices, even as Canadians overall are still managing to handle their debts.

The number of consumers who were at least 90 days late in making payments on their credit cards and loans increased 25.1 per cent from a year earlier in the fourth quarter of 2015 in Alberta, and rose 14 per cent in Saskatchewan, according to a new analysis by credit-rating agency Equifax Inc. (The figures exclude mortgage debt.)

The trend is a swift change for consumers in the region, where delinquencies had been steadily dropping for years until 2015, the agency said.

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Both provinces have been hard hit by the slump in resource prices. Consumers in the region also have the highest average debts of all Canadians, with Albertans carrying an average of $27,576 in credit-card debt and other non-mortgage loans in the fourth quarter, compared to a Canada-wide average of $21,458. In Saskatchewan, the average consumer credit balance stood at $23,941. Average outstanding debt balances rose in both provinces in the fourth quarter.

Despite a rise in the number of consumers who are struggling to pay back their debts in energy-sensitive regions, delinquency rates in Alberta and Saskatchewan remain the lowest in the country. "Most people are still finding a way to pay back what they owe," said Regina Malina, senior director of decision insights at Equifax Canada.

Among major cities, delinquency rates rose 21.3 per cent in Edmonton, and 20.5 per cent in St. John's. In Calgary, where consumers carry an average of more than $28,400 in debt, the most of any major city in the country, delinquency rates climbed 17 per cent. By contrast, delinquencies fell 7 per cent in both Toronto and Vancouver.

Bankruptcy rates also rose in the oil-sensitive provinces of Alberta, Saskatchewan and Newfoundland, even though overall bankruptcies fell 2.6 per cent across Canada in the quarter from a year earlier.

Nationally, the delinquency rate was unchanged in the fourth quarter from a year earlier at 1.09 per cent of outstanding debt. It remains near its lowest level in seven years, down from a peak of 1.66 in 2010.

Overall consumer debt has continued to rise. Total outstanding consumer debt rose 6 per cent from a year earlier to $1.621-trillion, Equifax said, led by a 7.5-per-cent surge in instalment loans and a 5.7-per-cent jump in auto loans, as Canadians shifted away from credit cards.

"Low interest rates continue to help consumers to responsibly maintain increasing debt levels and make a positive contribution to GDP growth," Equifax said.

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Delinquency rates rose the most for Canadians under the age of 26, while overall consumer debt balances increased the most among Canadians aged 65 and older.

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About the Author
U.S. Correspondent

Tamsin McMahon is a U.S correspondent for The Globe and Mail, based in California. She previously covered real estate for The Globe. Prior to joining the paper in January 2015, she worked at Maclean’s magazine covering business and the economy, where she was nominated for two National Magazine Awards. More

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