Credit cards have been around for over a hundred years but the way they are used has changed. Early credit cards were basically “charge cards” that allowed the user to charge specific goods or services to an approved account that would have been paid in full at the end of each month. An example would be for a hotel chain or a chain store. If you were a travelling salesman, you might be encouraged to use a specific hotel chain and charge your stays to be paid at month end.
Over time our view of credit, and more importantly credit cards, has changed, a lot. Today credit cards are the second most frequently used form of payment after debit. In 1977 there were only 8,000,000 bank issued credit cards in circulation in Canada, and most people paid the full balance off at the end of each month. Today there are about 80,000,000 bank issued credit cards in circulation in Canada, and less than half are paid in full each month.
Back in 1977 Canadians charged a mere $3,610,000,000 on those credit cards compared with $502,780,000,000 in 2017. Also, of statistical importance is the fact that although Canadians are charging more on their credit cards the average purchase value has been going down year over year since the bank crash of 2008.
This is significant information because it tells us that Canadians are more dependent on credit cards as a means of buying necessities (smaller purchases) than ever before. Canadians are using credit cards more frequently and the number of account holders carrying balances from month to month is growing.