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Province's debt binge slowing down

Still racking it up, but now at a rate that's the slowest of all provinces

By: Murray McNeill

Posted: 12/1/2010 1:00 AM | Comments: 0

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Linda and Ed Tomczak aren’t fearful about debt during the holiday shopping season. ( PHIL.HOSSACK@FREEPRESS.MB.CA)

The numbers:

Here are some of the highlights from TransUnion's third-quarter consumer debt report:

Manitoba had the smallest year-over-year increase in overall household debt at 2.6 per cent. Quebec had the largest, at 6.6 per cent, while the national average increase was 4.3 per cent.

The average debt per Manitoban in the third quarter of this year was $18,579, compared to $25,163 for Canadians.

Total credit card debt in Manitoba was down by 3.1 per cent to $2.4 billion.

Credit card delinquencies were up two per cent year over year.

Question: Are you concerned about going deeper into debt at this time of year, And what are you going to do about it?:

"We just pay cash for what we buy. We're budget-conscious"

-- Mabel Pheenade

"The thing is I don't shop throughout the year. I do it all at once and I always know what I'm going to spend"

-- Maggie Flett

"Everything is overpriced until after Christmas, so, yeah"

-- Jocelyne Doucet

"We don't go over our limits.'

-- Linda Tomczak

"I think people are conscious about their shopping habits. If I were younger, I'd be concerned, too, in this economic climate"

-- Ed Tomczak

"Always. I try not to use credit cards and I only use cash, so there's a limit. We watch for sales. I like gift cards for young adults. They can go after Christmas, when the sales are on"

-- Val Owen

Related Items

Polls
- How has the debt situation changed in your household over the last year?

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Jocelyne Doucet says she’s not concerned about debt while hitting the mall. ( PHIL.HOSSACK@FREEPRESS.MB.CA)

Manitobans have become the poster children for fiscal prudence this year after having piled up debt at a double-digit pace in 2009, according to a new report from the TransUnion credit agency.

The Toronto-based firm said although Manitobans have continued to take on more debt over the past year, they've done it at a slower pace than anywhere else in the country.

It said overall household debt here increased by 2.6 per cent between the third quarter of last year and the third quarter of this year, while the national average increase was nearly two percentage points higher, at 4.3 per cent. And in the province with the biggest year-over-year gain -- Quebec -- it was 6.6 per cent.

TransUnion spokesman Thomas Higgins said Manitoba's third-quarter growth rate is a big improvement from last year, when household debt was increasing at one of the faster paces in the country -- 13 to 15 per cent.

"You were way up there with the big boys," he said, "and now you're being much more prudent and conservative."

Higgins, TransUnion's vice-president of analytics, said while household debt grew at a slower clip in every province over the past year, the slowdown has been most pronounced in Manitoba.

And it began right from the start of the year, when the year-over-year growth rate was 8.2 per cent. And by the second quarter it had dropped to four per cent.

Higgins and Don Beall, senior credit counsellor and general manger of The Credit Pros in Winnipeg, said last year's global recession probably put a scare in most Canadians and got them thinking about reining in their spending.

Beall said a much greater percentage of his clients are also taking a more aggressive approach to debt management than they used to.

He said five years ago, most of his clients never sought help until they were already behind in their monthly payments or had a collection agency hounding them for money.

"But nowadays I'm seeing more clients that are being proactive rather than reactive. They're trying to take steps before they get into serious financial difficulties."

Beall said The Credit Pros only deals with unsecured debt -- things like credit card debts, personal lines of credit and payday loans. It doesn't deal with secured debt -- mortgages and car loans.

He said the two most common steps they take to better manage their debt is to take out a lower-interest-rate loan and consolidate their debt, or borrow against the equity they have in their home to pay down their debts.

If the can't find a conventional lender who will give them a debt-consolidation loan, he'll try and help them obtain one from a private or subprime lender. They may have to pay a higher interest rate, but it will still be a lot lower than the rate they're paying on their credit cards, he added.

With the Christmas shopping season now upon them, Beall said consumers need to be more vigilant than ever because this is the time of year people tend to overspend.

"That's a common problem. They just spent the last 11 months trying to pay that down (the debt from last Christmas) and then they run it right back up to where it was."

He said he advises his clients to use cash whenever possible, so it's easier to keep track of how much they're spending. Also, set a budget and stick to it.

"And if they're planning to put something fairly big on their credit card, they save up half (of the money) first. If they know how long it took them to save up half the amount, then they should know how long it will take them to pay off the rest."

TransUnion said the main source of non-mortgage debt for Canadians was vehicles, with credit card purchases a distant second.

It said despite the increase is the amount of debt, Canadians seem to be managing their debts better than they were, with delinquency rates and past-due balances dropping across the country.

-- with files from The Canadian Press

Republished from the Winnipeg Free Press print edition December 1, 2010 A7

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