Credit Cards

Gen Xers are the most indebted Canadian generation, followed by Millennials

By: Lisa Coxon on August 22, 2019

Generation Xers have emerged as the population segment with the highest outstanding credit balances in Canada, according to a report from TransUnion Canada on Tuesday.

Born after Baby Boomers and before Millennials, Gen Xers saw their total outstanding debt balances grow by 3.40% year-over-year in the second quarter of 2019. The demographic cohort, born between 1965 and 1979, owes a total of $767 billion.

Every Gen Xer with credit has, on average, 4.2 credit products, according to TransUnion. Non-revolving debt, which requires the borrower to pay a fixed monthly amount versus a minimum payment with the option to apply more to the balance, is proving to be increasingly attractive to them.

“Buoyed by low unemployment and recent interest rate stability, consumers in Canada continue to build debt, particularly on auto and installment loans,” said Matt Fabian, director of financial services research and consulting for TransUnion Canada.

According to TransUnion, the average non-revolving balance per consumer grew 6.2% year-over-year in the second quarter, to $31,400, whereas the average revolving balance per consumer, which includes credit cards and lines of credit, dropped slightly by 1.2% year-over-year, to $18,500.

“Originations” — also known as the number of new accounts opened — for installment loans hit 731,000 in the first quarter of 2019, according to the report. And 192,000 new auto loans were initiated in the first quarter. The average account limits were $21,619, and $31,724, respectively. Mortgage originations, however, were down 8.91% year over year (and decline was worst among those aged 18 to 25). 

Coming in at a close second to Gen Xers in outstanding credit balances are Millennials, who owe $515 billion in total. In fact, Millennials’ debt is actually increasing at a much higher rate than that of Gen Xers. 

Millennials (born between 1980 and 1994) have seen a 12.33% annual growth in their outstanding debt balances. This means they’ve now outpaced Baby Boomers as the generation with the most debt. Baby boomers’ collective outstanding debt balances total $514 billion. 

“The rise of Millennials, who have equaled and slightly surpassed Baby Boomers when looking at outstanding balances, is having a fundamental impact on the approach lenders take to how they market to and service their customers,” said Fabian.

According to the report, this is representative of a shift in lending to these generations.

“...banks and other institutions continue to adapt and evolve their business models to provide more options and more tailored customer experience for Millennials and Gen Z,” the report states.

TransUnion noted that the rise in FinTech lenders (lenders that operate exclusively online and focus primarily on personal installment loans) is having a significant effect on younger generations and the debt they’re taking on.