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Latest credit card numbers

July 25, 2019

The latest credit card numbers are finally out from the Canadian Bankers Association. They show how Canadians use credit cards.  You can follow the link to see for yourself but here’s the highlights and some considerations.

In 1977 the average charge on a credit card was $30.46, which back then would have been enough to buy two tanks of gasoline. In 2018 the average charge was at $94.76 when adjusted for inflation, using the Bank of Canada’s Inflation Calculator, that would be about equal $23.76 in 1977.  Nonetheless, that would barely be enough to buy one tank of gas in 2018.

What those numbers are telling us is that the way we spend has changed significantly.  In 1977 we used credit cards for larger, more costly, purchases.  Since the bank bailout of 2008, the value of the average purchase on credit cards has steadily decreased.  By 2018 we are using them for everyday items, a loaf of bread or a bag of milk.

In 1977 there were 8,200,000, bank issued, credit cards in circulation by 2018 that figure had exploded to 75,800,000 almost a tenfold increase, and up by about 1,500,000 in just one year. 

The total amount charged on all bank issued credit cards in 1977 was a mere $4,040,000,000.00 contrast that with the astronomical $547,980,000,000.00 charged in 2018 an increase equal to 13,600% more spending, on a straight-line basis, or a 400% increase after adjusting for inflation.  Yes, our population has increased in that time, but it has not quadrupled.

Delinquency rates are lower than they were in 2009, the record year for insolvency filings, but the increase in mortgage debt is probably masking a deeper underlying issue as people refinance credit card debt into real estate mortgage debt.

The ratio of accounts paid off each month remains steady at almost 50% but don’t let that number mislead you, many accounts are paid off through balance transfers to zero interest cards or lower interest lines of credit.

The bottom line is that credit card use is getting out of control.  If we assumed every working Canadian had a gross income equal to the median individual income the total Canadian, before income tax, income would be about $858,000,000,000.00 or $701,513,280.000.00 after income tax.  In other words, Canadians are charging almost as much on their credit cards each year as they earn.