Connect with us


Canadians are turning to credit cards for financial stress relief — and debt is on the rise – CBC News



As high inflation rates drive up the cost of essentials, consumers are putting purchases small and large on their credit cards to alleviate some immediate financial pressure. 

A Tuesday report by credit bureau Equifax Canada shows the practice is driving Canadians into debt as balances begin to outpace the ability to pay credit off. 

  • Have a question or something to say? Email: or join us live in the comments now.

The report states that in the most recent quarter, credit card balances rose to their highest level since the final quarter of 2019. There was a 6.4 per cent increase in credit balances between the first and second quarters this year — and people are buying more credit cards, too. 

“Overall consumer debt is on the rise,” said Rebecca Oakes, vice-president of advanced analytics at Equifax Canada. She added that an increase in non-mortgage debt was one of the more enlightening trends to emerge from the report.

Somewhat expectedly, mortgage debt continues to climb because of high house prices and, in recent years, low interest rates that have buoyed people to take advantage of the market. 

But it’s the debt accrued outside of the housing market that spells trouble.

“We all know that house prices have been going up over the last couple of years … some mortgage debt has also increased, but it’s really that non-mortgage component part that we’re interested in right now.”

Consumers who have a low credit score and are already at risk of missing payments are among the most likely to have seen a shift in credit balance. For those with a credit score lower than 620, there has been a 16.2 per cent increase in their credit balance since the second quarter of 2021. 

But a rise in credit card debt can be seen across the board, Oakes said. “It’s lots of people across all age groups, across a lot of different credit risk scores, across different regions.”

Equifax’s corporate headquarters in Atlanta is shown here. A Tuesday report by the company’s Canadian bureau shows a reliance on credit cards is driving Canadians into debt as balances begin to outpace the ability to pay credit off. (Mike Stewart/The Associated Press)

All the while, lenders are offering “unprecedentedly” higher credit limits, Oakes said. According to the Equifax report, the current average credit limit rests at $5,800.

The findings reflect June 2022 data released by Statistics Canada last month. The data agency said that credit card debt with chartered banks rose 1.6 per cent from the previous month.

That fifth consecutive monthly increase was a recent indicator that Canadians are increasingly relying on credit cards to manage inflated costs — as are other consumer trends, such as “buy now, pay later” services, which are used to purchase food, clothes and tech.

Prices go up, wages stay the same

Canadians are relying on their credit cards to keep pace with the cost of living. ‘I’m about to go buy a computer on my mom’s credit card because I have no other option,’ Nicolas Gislason said. (CBC)

Nicolas Gislason, an Uber Eats driver and student living in Toronto, said he doesn’t believe it’s possible to make ends meet at the current minimum wage.

“I’m about to go buy a computer on my mom’s credit card because I have no other option,” he said.

Several people interviewed by CBC News said that as inflation and interest rates have risen, and the cost of living has become more expensive, they haven’t seen wage increases to make up for the difference. 

“None of us have gotten a raise since inflation has gone up, so your cost of living is going higher and not your wage. So, of course people are going to be using their credit cards,” said Melanie McQuillan from Vancouver.

Kerry Taylor, a Vancouver-based personal finance expert, told CBC News that healthy financial habits formed out of circumstance during the pandemic — including regular debt payment — didn’t endure once inflation and interest rates increased this year. 

With interest rates going up, “anyone who has a loan, a mortgage variable rate, mortgage line of credit, home equity on credit, some student loans — they’re going to be paying more, so that’s going to add to being a little bit more cash-strapped,” Taylor said.

Analyzing a credit card bill for forgotten monthly expenses or subscription purchases is one way to save money, she says. At the grocery store, the unit price — the price per measurement — under each item is the most reliable indicator for deals, she says. 

The Bank of Canada has been aggressively hiking borrowing rates since the beginning of the year to combat high inflation, which peaked in June at 8.1 per cent. 

Russia’s war in Ukraine drove global inflation even higher starting in February, with food and energy prices skyrocketing and supply chain delays contributing to extra costs at the retail level.

In July, the central bank announced an additional considerable rate hike of 2.5 per cent. But Canadian economists are expecting yet another significant increase next week during a Sept. 7 meeting. 

Taylor notes that as pandemic-related restrictions ease up, people are paying more just to get out of the house: a road trip to see a relative that requires a full tank of gas, an expensive plane ticket for further travel, or even picking up the tab at a restaurant or bar.

She, too, says that as inflation crept up to eight per cent, Canadians noticed their wages staying the same — and these consumers are turning to credit cards to “mind the gap.”

‘I have a credit card and use it and that’s the only thing because you can’t save,’ said Esther Imafidon in Toronto. (CBC)

Esther Imafidon, who moved to Canada from Italy in 2019, said that she has been relying on her credit card and isn’t currently able to save money as she racks up interest on missed payments.

“It’s stressful,” she said. “I have a credit card and use it and that’s the only thing, because you can’t save … I’m owing a lot of money. I’m owing a lot of money on the credit card.”

Taylor says that a turn to credit cards is “really the first step that people take when they have a shortfall because it’s really easy to do.”

“There’s not a lot of friction when it comes to tapping a piece of plastic to cover that shortfall.”

Adblock test (Why?)

Source link

Continue Reading


Charted: 40 Years of Global Energy Production, by Country – Visual Capitalist





<!– View count beta – CS




Energy was already a hot topic before 2022, but soaring household energy bills and a cost of living crisis has brought it even more to the forefront.

Which countries are the biggest energy producers, and what types of energy are they churning out? This graphic by 911 Metallurgist gives a breakdown of global energy production, showing which countries have used the most fossil fuels, nuclear, and renewable energy since 1980.

All figures refer to the British thermal unit (BTU), equivalent to the heat required to heat one pound of water by one degree Fahrenheit.

Editor’s note: Click on any graphic to see a full-width version that is higher resolution

1. Fossil Fuels

Biggest Producers of Fossil Fuel since 1980

View the full-size infographic

While the U.S. is a dominant player in both oil and natural gas production, China holds the top spot as the world’s largest fossil fuel producer, largely because of its significant production and consumption of coal.

Over the last decade, China has used more coal than the rest of the world, combined.

However, it’s worth noting that the country’s fossil fuel consumption and production have dipped in recent years, ever since the government launched a five-year plan back in 2014 to help reduce carbon emissions.

2. Nuclear Power

Biggest Producers of Nuclear Energy since 1980

View the full-size infographic

The U.S. is the world’s largest producer of nuclear power by far, generating about double the amount of nuclear energy as France, the second-largest producer.

While nuclear power provides a carbon-free alternative to fossil fuels, the nuclear disaster in Fukushima caused many countries to move away from the energy source, which is why global use has dipped in recent years.

Despite the fact that many countries have recently pivoted away from nuclear energy, it still powers about 10% of the world’s electricity. It’s also possible that nuclear energy will play an expanded role in the energy mix going forward, since decarbonization has emerged as a top priority for nations around the world.

3. Renewable Energy

Biggest Producers of Renewable Energy

View the full-size infographic

Renewable energy sources (including wind, hydro, and solar) account for about 23% of electricity production worldwide. China leads the front on renewable production, while the U.S. comes in second place.

While renewable energy production has ramped up in recent years, more countries will need to ramp up their renewable energy production in order to reach net-zero targets by 2050.

green check mark icon

This article was published as a part of Visual Capitalist’s Creator Program, which features data-driven visuals from some of our favorite Creators around the world.

Adblock test (Why?)

Source link

Continue Reading


Musk faces deposition with Twitter ahead of October trial – Business News –



Tesla CEO Elon Musk is scheduled to spend the next few days with lawyers for Twitter, answering questions ahead of an October trial that will determine whether he must carry through with his $44 billion agreement to acquire the social platform after attempting to back out of the deal.

The deposition, planned for Monday, Tuesday and a possible extension on Wednesday, will not be public. As of Sunday evening it was not clear whether Musk will appear in person or by video. The trial is set to begin October 17 in Delaware Chancery Court, where it’s scheduled to last just five days.

Musk, the world’s richest man, agreed in April to buy Twitter and take it private, offering $54.20 a share and vowing to loosen the company’s policing of content and to root out fake accounts. Twitter shares closed Friday at $41.58.

Musk indicated in July that he wanted to back away from the deal, prompting Twitter to file a lawsuit to force him to carry through with the acquisition.

Adblock test (Why?)

Source link

Continue Reading


To rent or buy? What's in store for the clothing rental industry in Canada – CP24



A few weeks ago, Carly Soares needed a dress for a wedding and fast.

“I tried going shopping at the mall, but noticed there was a scarce collection of formal dresses,” the 30-year-old said. “It was actually very surprising. It’s still the pandemic-loungewear kind of vibe throughout a lot of retail stores.”

The dresses she did come across were either too casual or too expensive, so she decided to rent one from a dress rental boutique, something she had never tried before.

And after a positive first experience, Soares said she would definitely do it again.

Clothing rental has become more mainstream over the last decade with the rise of the sharing economy, but the COVID-19 pandemic wasn’t kind to these types of retailers.

As pandemic restrictions lifted, however, some Canadian rental businesses saw a boost in traffic.

While experts believe there is still more opportunity in the space, they are warning that growth might be subdued as Canadians change their shopping habits and priorities in an environment of hot inflation and rising interest rates.

There are other challenges as well, including getting more people on board with the idea of essentially sharing clothes, people’s mindset around the type of clothing suitable for rewear, environmentally-conscious consumers questioning how environmentally-friendly fashion rental truly is, and the logistics of inventory.

“We’ve been conditioned to purchase something, wear it, throw it out. Changing that to appreciate that rental opportunity is something that does take quite a lot of time,” said Daniel Drak, assistant professor at the Parsons School of Design.

One of the most prominent clothing rental businesses, if not the most, is U.S.-based Rent the Runway, founded in 2009, which quickly became a hit with women who wanted access to designer clothing but didn’t want to spend tons of money on outfits they might wear once or twice.

In Canada, a rush of new clothing rental businesses began popping up in the years leading up to the pandemic, offering everything from special occasion wear to workwear to maternity wear to everyday wear, but like many companies in the small business retail sector, getting through the last two years was a challenge.

Canadian companies like Rent Frock Repeat, workwear rental business Dresst and Montreal’s Station Service have all ended their run over the last couple of years.

It’s a “very challenging” market to be in, said Julie Kalinowski CEO of Toronto-based The Fitzroy, which offers special occasion dress rentals at a more affordable price.

According to Drak, Gen Z will be the generation that really moves the industry forward because of their excitement around shopping resale, whether it’s for economic reasons, aiming to reduce clothing waste or to find one-of-a-kind pieces.

He said now is the time for existing and emerging Canadian clothing rental businesses to lean into that popularity and make resale a part of their business model, which some have started to do.

The global resale apparel market was valued at US$14 billion last year, according to Statista, and is projected to grow to US$51 billion by 2026.

Toronto Metropolitan University (TMU) assistant professor Anika Kozlowski said making genuine efforts to reduce clothing waste and reduce emissions stemming from clothing production, and operating as a local business in order to do so, might also be a good strategy, especially considering Canada’s smaller population.

This would involve a strong understanding of the community the business operates in, the use of high-quality Canada-made items from ethical brands, finding ways to clean and repair clothes in a way that isn’t harmful to the environment, and avoiding long-distance shipping.

That’s something Blyth Gill is working on with Vancouver-based Tradle, an e-commerce baby clothing subscription business that allows parents to rent and exchange clothes for each growth spurt.

“Because babies outgrow clothes quickly, the need to have and exchange clothes has a really short cycle,” he said.

Tradle works with local, high-quality brands, avoiding fast fashion brands. And when the clothes can no longer be reused, they won’t be thrown away, but instead recycled or broken down.

The company launched right before the pandemic, which Gill said was definitely a learning experience.

“Naturally, when we didn’t know as much about COVID-19, people were probably thinking, ‘sharing clothes? I don’t know,'” he said.

But Gill said he’s happy that phase is now behind them and is excited for the next stage of the business’ growth.

The Fitzroy’s Kalinowski is quite optimistic as well.

“Since the last reopening, it’s been crazy, it’s been a boom, it’s been probably our best sales yet. It’s been a big year for weddings, all the events are back on, all the galas are back on. We just had the Toronto International Film Festival, one of our busiest weeks. So it’s been crazy busy.”

Gabriella Iamundo, 31, uses fashion rental for special occasion wear, but doesn’t really see herself using it for everyday clothing, athleisure wear or workwear, or subscribing to a service, a sentiment TMU’s Kozlowski said is likely pretty common across the board.

“I rented (special occasion wear) for the first time probably four or five years ago, maybe a little bit longer than that, and it just became something I thought was good for events,” Iamundo said.

“To be honest, it’s pretty common in my circle of friends to check (rental services) out to at least see what the options are, especially before having to go buy something.”

When looking further ahead, Parsons’ Drak sees bigger, traditional brands starting their own rental segments – which U.S.-founded Urban Outfitters has done – or acquiring existing businesses in the space, which would shake up the market.

This report by The Canadian Press was first published Sept. 25, 2022.

Adblock test (Why?)

Source link

Continue Reading