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Personal debt rising, but cards put on ice

Personal debt went up substantially across the country during the fourth quarter of 2010, despite a drop in the amount borrowed on credit cards, a credit analysis firm reported yesterday.

Personal debt went up substantially across the country during the fourth quarter of 2010, despite a drop in the amount borrowed on credit cards, a credit analysis firm reported yesterday.

TransUnion said average debt per Canadian consumer, excluding mortgages, was $25,709, up 5.6 per cent from $24,346 in the same period of 2009.

Only a small portion of the total in either year was drawn on credit cards. In fact, credit card debt in the fourth quarter dropped by 2.7 per cent from a year before to $3,688.

Lines of credit were the biggest form of consumer debt tracked, and rose to nearly $34,000, up 8.8 per cent over the year.

“Many Canadians have learned to use credit cards in their initial purchase and then pay off or down the balance using their line of credit,” said Thomas Higgins, TransUnion’s vice-president of analytics. “This allows them to take advantage of both the loyalty programs many credit cards offer and lower interest rates of their line of credit.”

Auto loans were the second-biggest form of non-mortgage debt and TransUnion found the average rose to nearly $16,200 per borrower in the fourth quarter, up 11 per cent from a year before. But total auto debt declined to $45.8 billion from $48.3 billion in the same period of 2009.

“This means Canadians are purchasing either higher-end vehicles or newer ones,” Higgins said.

 
 
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