Canadians are nonetheless chalking up debt, but there is some encouraging news on the credit front. Canadians are beginning to spend down their credit cards. This is according to a current report from Equifax Canada.

The report states that the common Canadian cut back 3.four percent from their credit card debt this past year (2011).

But here’s the downside. Several Canadians are paying down that credit card debt using their line of credit, which is tied directly to the equity they have in their property.

Equifax spokesperson Nadim Abdo had his issues. Paying off a greater interest rate credit card bill with a lower rate line of credit makes sense, even so there can nonetheless be bumps in the road.

“We’re still at record high levels of debt. If there was to be an interest rate adjustment of 50 basis points… we’d see an improve in delinquencies and bankruptcies,” said Abdo.

According to The Equifax report,the typical Canadian has $ 6,000 in consumer debt, a four.five per cent rise since the end of 2010. In addition, it was noted that the growth rate is slowing – amongst 2009 and 2010, the common Canadian’s consumer debt grew 7.7 per cent.

The drop in credit card debt is a sign that men and women are finally beginning to think about how they are spending, mentioned Lewis Johnson, a finance professor at Queen’s University.

“It appears like there’s an outbreak of rationality. The a lot more you can shift balances from a credit card where the rate is 24 per cent interest to a line of credit exactly where it really is 3 or 4 per cent, the far more able you are to pay,” stated Johnson.

Consumer spending on “durable goods,” which includes everything from household appliances to automobiles, dropped by.four per cent in the third quarter of 2011, according to Statistics Canada.

The globe economy could also impact Canadian debt levels. The ongoing crisis in Europe and the slowdown in the Chines economy could also have an effect on Canadian debt levels.

If the Canadian job industry is effected, the interest rates of your line of credit could be impacted too.

Is it worth it? Outside of locating other low risk sources of paying down your credit card debt, yes. For now at least, making use of your line of credit, which normally is prime plus 1 or a half, based on the bank, nevertheless makes sense. And with this week’s announcement of a two.99 3 or four year mortgage rate, it appears interest rates are going to be somewhat low for the foreseeable future.

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