Ten years ago, credit cards in Canada were novel. Issuers were confined to offering only one brand. The “big five” (RBC, Toronto Dominion, Bank of Nova Scotia, Bank of Montreal, and CIBC) dominated the issuance market, and the options were generally limited particularly to US banks seeking to add scale to their portfolios. Things have changed in the past few years.
“Credit growth continues to be unusually high relative to GDP in several Asian economies as well as in Canada,”
Canadians have been very innovative in their approach to payment cards. The market uses Interac, a fee-free debit network similar; EMV has been in place several years before the US; and up until recently, have been relatively conservative with credit, favoring debit cards.
“Economists in Canada have sounded the alarm on household debt growth for a number of years now. Statistics Canada released data last week that showed the ratio of household credit market debt to disposable income rose from 165.2 per cent in the first quarter to 167.6 per cent in Q2.”
With the US and Canadian markets tied so closely, it is important to watch developments on either side of the border. A surge in debt always warrants a watchful eye!
Overview by Brian Riley,Brian Riley, Director, Credit Advisory Service at Mercator Advisory Group
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