Study Shows 60% of Canadian Credit Card Holders in Poor Financial Health
Nearly 60 percent of Canadian credit cardholders are now considered financially unhealthy, according to a recent report, which points to increasing interest rates and revolving debt as factors impacting consumer credit card habits.
In Canada, the percentage of financially unhealthy credit card users has risen to 57 percent, up from 52 percent last year, as reported in the “2024 Canada Credit Card Satisfaction” study by J.D. Power. Additionally, the number of cardholders carrying revolving debt has increased to 36 percent, compared to 34 percent in 2023. Revolving debt refers to balances not paid off in full, accumulating interest and raising overall costs.
John Cabell, managing director of payments intelligence at J.D. Power, attributes this decline in financial health to Canada’s slow-growing economy, stating, “Canada’s slow-growth economic environment is starting to impact credit card customers, leading to fundamental changes in card usage.”
On average, Canadian credit card users now spend $1,342 per month, down from $1,618 in 2023, while overall satisfaction has remained relatively stable year-over-year, influenced by the decline in financial health and reduced spending.
Financially healthy cardholders exhibit substantially higher satisfaction levels, reporting 103 points higher satisfaction on a 1,000-point scale compared to their financially unhealthy counterparts.
Healthier cardholders tend to prefer co-branded airline cards, which have seen improved benefits satisfaction. In contrast, bank-branded cards, more commonly used by financially unhealthy consumers, experienced a slight decline in satisfaction.
Changing Habits
J.D. Power’s report noted a shift in credit card rewards usage. The number of customers redeeming rewards for travel and entertainment decreased from 26 percent to 22 percent, while 46 percent now redeem rewards for cashback and 29 percent for groceries and essentials, reflecting a trend favoring practical rewards over leisure rewards.
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“As financially healthy customers in Canada decrease compared to those in the United States, cardholders are spending less and opting for rewards that focus on essentials,” Cabell explained. “The economic situation is widening the gap between financially healthy and unhealthy cardholders, emphasizing the need for issuers to cater to these distinct segments.”
The report also indicates that changes in credit card terms, including adjustments in fees and rates, have led to increased dissatisfaction among users. Financially unhealthy customers are more likely to experience changes in their card terms from issuers compared to financially healthy customers.
Regional variations were observed, with Quebec cardholders displaying a more conservative approach to credit card usage. Quebec residents generally spend $109 less per month on their cards, showing higher financial health and satisfaction with their credit card usage compared to other regions.
The study ranks Tangerine Bank as the top credit card issuer in customer satisfaction, followed by American Express and PC Financial. For cards without annual fees, the Canadian Tire Triangle World Elite Mastercard and Tangerine Money-Back Credit Card share the top spot. Among cards with annual fees, the American Express Cobalt Card leads in satisfaction.
J.D. Power’s study surveyed 11,430 cardholders who had used a major credit card in the past three months, conducted between May and July 2024.
