Canadians are borrowing more on their existing credit cards, but are using fewer cards, according to TransUnion’s latest Canada Industry Insights Report released March 8.
The report revealed that during 2016 the number of active credit cards declined by over 800,000, while total outstanding balances increased by 3.3%, going from $91.2 billion in Q4 2015 to $94.2 billion in Q4 2016.
Less demand for cards
Despite fewer cards, the average credit card balance owed went up 2.3% to $4,094 in Q42016 from $4,001 a year earlier. The number of Canadians using credit cards went up as well, going from 20.3 million in 2015 to 20.6 million in 2016.
"Consumer loyalty is a cogent dynamic in the marketplace. We see it illustrated by the weakening demand for new credit cards in conjunction with the increasing use of the cards consumers already carry," says Chris Dias, senior vice president of product innovation and analytics at TransUnion Canada.
Lenders capitalize on loyalty effect
Dias added that the rise in card usage was seen across all consumer credit risk tiers. “As a result, some lenders appear to be increasing credit lines to their customers to capitalize on this loyalty effect. We may expect more lenders to evaluate increasing credit lines to cardholders in response to this higher demand."
Delinquency rates rise in the oil patch provinces
The TransUnion report also found that serious credit card delinquency rates rose modestly in each of the four quarters of 2016 compared to prior years. This increase can be attributed to the oil patch provinces, “as both Alberta and Saskatchewan experienced yearly increases of more than 22%, while non-energy provinces such as Ontario and British Columbia saw declining delinquency rates.”