Canadians are paying off more of their credit card debt and borrowing less as they cope with a weaker economy and some restrictions on credit expansion.

The latest national credit trends report from Equifax Canada, released early Tuesday, says the average credit card debt fell in 2011 by 3.4%.

Despite that improvement and a reduction in consumer bankruptcies last year, overall debt continues to rise — though much more slowly than before.

“The only product that has shown a reduction in balances over the course of 2011 are credit cards,” says Nadim Abdo, vice-president of consulting and analytical services for Equifax Canada.

“That in large part is due to changes in legislation and some restrictions placed on credit card issuers.”

As the economy slows and consumers become more nervous about the future, Canadians are curbing spending and paying down some debts.

Gordon Nixon, president and CEO at Royal Bank, told a banking conference Tuesday that consumer lending has slowed, dropping to single digit growth from double digit expansion in the last few years.

Nixon said he is already seeing a slowdown in consumer borrowing, but added he expects growth in commercial loans to “pick up some of the slack.”

But he said given that household debt-to-income levels sit at an historic 150% — that means mortgage and other debts are 1.5 times a Canadian household’s average income — it would be risky for borrowing to rise further.

He said if debt-to-income ratios flatline and Canada’s economy grows, debt levels will naturally come down.

He said recently introduced changes to mortgage borrowing standards and other credit rules have already helped.

“A lot of the steps that have been taken by the Department of Finance and some of the ‘moral suasion’ by the Bank of Canada has been helpful to sort of manage down the level in a reasonable fashion.”

It appears consumers may be heeding warnings from Bank of Canada governor Mark Carney, Finance Minister Jim Flaherty and others about the perils of taking on too much debt as household debt loads hit record highs last year.

The Equifax report says the average outstanding balances for all credit products in the fourth quarter of 2011 rose about four per cent — half the rate for the same 2010 quarter.

Still, Canadians are deeply in debt and rising mortgage debt and other credit could strain household spending if interest rates rise or if the economy weakens further from the impact of a European recession.

The Equifax report found a “remarkable” improvement in consumer delinquencies, or non-payments, and bankruptcies in 2011 from record numbers in the prior two years.

The proportion of delinquencies is down to 1.4% from 1.8 during the height of the recession, which amounts to a $1.9 billion difference. Consumer bankruptcies also dropped to what appear to be normal volumes prior to the recession.

Abdo said the decline in bankruptcies “appears to be a good news story for Canada, (but) there remains some concerns about the high level of debt Canadians carry on average.”

“The main concern is how the Canadian economy may react to stressed global markets while our GDP is projected to grow at a very marginal rate in 2012. Canadians are at record-high levels of indebtedness with little room to manoeuvre. If there is to be another financial crisis, we can expect losses from serious delinquencies and bankruptcies.”

Equifax provides credit data on consumers and businesses around the world.

Just as this data shows Canadians are beginning to clamp down on borrowing and debt repayments, a report released Monday suggests Americans are feeling confident enough to start borrowing.

Average Canadian debt loads surpassed those in the U.S. last year as consumers north of the border rebounded more quickly from the recession than their U.S. counterparts.

They began to take advantage of low interest rates sooner to take on more mortgage and consumer debt, which helped stabilize the Canadian housing market and domestic spending.

Statistics from the U.S. Federal Reserve showed consumer borrowing surged in November by $20.4 billion. It was the third straight increase and the largest monthly gain in a decade.

The jump in borrowing was largely because people took out more loans to buy cars and swiped their credit cards frequently to purchase holiday gifts.