Lower savings rate, higher credit card debt signals pandemic savings have been spent: Matt Davison
A growing number of Canadians have turned to their credit cards as a means to cover essential items within the past year, a NerdWallet survey released on Monday revealed.
Seven in 10 Canadians (70 per cent) said they have used credit to pay for essentials items, including groceries and utilities, within the past 12 months, the data showed. Alternatively, one in three survey respondents (33 per cent) said they have redeemed credit card rewards to pay for mandatory items.
Of those who reported a change in their credit card habits in the last year, 68 per cent said it was because of the increased costs of goods and services.
While inflation in Canada has begun to cool, the latest consumer price index read showed an unexpected rise. In April, inflation rose 4.4 per cent annually, according to Statistics. The data was hotter than economists had forecasted.
In this environment, of the Canadians who use a credit card, only 58 per cent reported paying the balance in full every month. Another 40 per cent said it will take them six months or longer to pay off all their debt while another 11 per cent said they were unsure as to how long it will take them to clear their consumer debt.
The survey showed Generation Z (53 per cent), aged 18 to 26, was less likely to rely on their credit to pay for essential costs of living in comparison to Generation X (76 per cent) aged 43 to 58.
Methodology: This survey was conducted online by The Harris Poll on behalf of NerdWallet from April 3-5, 2023 among 1,025 Canadian adults ages 18 and older. The study sample data is accurate to within +/- 3.8 percentage points using a 95% confidence level.