Credit Card Users in Canada Experience Financial Strain
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In recent times, there has been a significant increase in credit card delinquencies in Canada, particularly among younger consumers. This trend is predominantly driven by rising cost-of-living pressures and mortgage payment shocks.
According to Equifax Canada, one in 22 Canadian consumers missed at least one credit payment during Q1 2025. This figure represents a notable increase compared to previous quarters. Young consumers (ages 18 to 25) have experienced a 15.1% increase in delinquency rates, and consumers under 35 saw the most significant drop in average payment rates, from 62.9% to 58.9%.
The delinquency rate in Canada rose nearly 20% year-over-year, reaching 1.43%. This increase is primarily due to mortgage payment shocks from rising interest rates, economic uncertainty, and increased reliance on credit cards for basic expenses amid high cost of living.
Around 27% of Canadians report being unable to pay all their bills on time, with 68% of those unable to pay total credit card payments. Many consumers, particularly those who purchased homes during the low-interest period of the COVID-19 pandemic, now face higher mortgage payments — an average increase of 25% since 2022 — causing them to prioritize mortgage payments over credit card debts, resulting in higher delinquencies.
High Credit Card Usage and Balances
Canada has over 101 million credit cards in circulation (for about 40 million people), with 46% of cardholders carrying balances. Young Canadians under 35 have shown a decline in average payment rates from 63% to 58.9% in early 2025, with delinquencies highest among sub-prime and new-to-credit consumers.
Mortgage Renewal Payment Shock
Around 60% of Canadian mortgages are up for renewal in 2025-26, with many borrowers experiencing substantial monthly payment increases (from $1,527 to $1,908 on average), which leads to increased credit card debt accumulation at double the rate of those without mortgage increases.
Economic Uncertainty
Over half of Canadians cite recession concerns, and financial optimism is at a low since early 2020. This environment makes consumers more likely to take on additional credit to cope with expenses, which can exacerbate debt and delinquencies.
Compared to the U.S., while the search results don't provide detailed direct comparisons, the Canadian situation is notably shaped by the large segment of consumers facing mortgage payment shocks due to low-rate purchases during the pandemic and now rising interest rates—not a factor that has played as uniformly or heavily across all U.S. regions. Young Canadians specifically show lower repayment rates and higher vulnerability due to entering credit markets newer or with sub-prime status.
In the U.S., delinquent auto loans (at least 90 days past due) climbed to 3% in Q4 2024, the highest level since 2010. However, Canada's auto loan delinquency rate is currently at 1.08%, but it represents a 15.3% increase over the previous year.
In conclusion, the rise in Canadian credit card delinquencies, particularly among younger consumers, is largely influenced by mortgage payment shocks from rising interest rates, economic uncertainty, and increased reliance on credit cards for basic expenses amid high cost of living. These factors combine to make Canada’s credit environment distinct from others such as the U.S., where mortgage pressures and credit penetration patterns may differ.
- The increasing reliance on credit cards among younger Canadians for personal-finance management, exacerbated by the high cost of living and mortgage payment shocks, is a significant concern within the business and finance sectors.
- The high delinquency rates among young Canadians in their personal-finance management, coupled with an increased usage and balance of credit cards, indicate a critical need for comprehensive financial education and debt management strategies in Canada's business and economic landscape.
