Credit Card Balances Expected to Peak in December with the Holiday Season

Core Insights - The Q3 Market Pulse report from Equifax Canada indicates a rise in missed payments, with 1.45 million consumers missing a credit payment, an increase of over 46,000 from Q2 [1][3] - The national 90+ non-mortgage delinquency rate reached 1.63%, marking a 14% year-over-year increase, while total consumer debt rose to $2.62 trillion, a 3.4% increase from the previous year [2][12] - Financial stress is particularly pronounced among younger consumers, with significant delinquency rates observed in urban centers [4][6] Consumer Debt Trends - Average non-mortgage debt per consumer increased to $22,321, up $511 from the previous year [2][12] - Younger consumers (aged 18-35) are experiencing the highest levels of financial stress, with 1 in 20 missing a credit payment in Q3 [4][5] - The delinquency rate for 26-35-year-olds reached 2.45%, a 20.51% increase year-over-year, while the rate for 18-25-year-olds was 2.11%, up 16.58% [4][5] Urban Center Analysis - Major urban centers like Toronto, Vancouver, and Ottawa reported significant increases in non-mortgage delinquency rates, with Toronto at 2.27% (+19.58% year-over-year) and Vancouver at 1.27% (+18.18%) [6][8] - Smaller cities also saw increases, but to a lesser extent, with Edmonton and Halifax showing increases of 11.23% and 12.51%, respectively [6] Missed Payments and Credit Behavior - Of the 1.45 million consumers who missed a payment, 84% (approximately 1.21 million) did not hold a mortgage [7] - The report highlights a trend of increased credit card spending during the holiday season, typically rising by $300–$500 per consumer, which may lead to a further increase in missed payments in January [3][9] - Despite a modest improvement in overall card payment health, younger consumers are increasingly paying only the minimum on their credit cards [8][9] Auto Industry Insights - The auto industry is facing challenges with rising vehicle prices and high interest rates, although new auto loan volumes increased by 4.8% year-over-year [10] - Synthetic ID fraud is becoming a significant issue, contributing to an estimated $450 million loss for auto lenders annually [11]