Statistics Canada has fresh data out that indicates that the MAJORITY of Canadian relying on credit to manage their finances.

According to Statistics Canada, Canada’s household debt-to-disposable income ratio rose to new high of 163.3 per cent in fourth quarter of 2014.

StatsCan said total household credit market debt, which includes consumer credit, mortgage, and non-mortgage loans, came in at more than $1.8 trillion at the end of December, which is an increase of 1.1 per cent from the third quarter last year.

Consumer credit debt was $519 billion, up 0.8 per cent, while mortgage debt advanced 1.2 per cent to about $1.2 trillion.

So to put that in perspective, the average debt held by Canadians, excluding mortgages, increased by 2.9 per cent to $20,967.

There are concerns that high debt loads leave Canadian households vulnerable to financial shocks, such as a loss of income or employment, or a sharp rise in interest rates and that the reality is at some point interest rates ARE going to increase.

Financial experts say the best course of action for consumers is to take advantage of the low interest rates to pay down their debts instead of taking out new loans and mortgages.

On the other side of the coin are the economists however, who say that things are not as negative as they may seem .  They say it is far from shocking that debt levels are at record highs when borrowing costs have sunk to record lows and that assets in households are actually going up.

They also say  the focus on debt paints a needlessly negative picture of Canadian household finances, which have proven incredibly resilient this cycle .

SOURCE: statistics canada, yahoo

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