Households are falling further behind on their credit card bills, with delinquency rates edging past their pre-pandemic levels, according to new data from Fitch Ratings.
The rating agency reported that credit card performance deteriorated further in the fourth quarter, with both delinquencies and charge-offs rising in the quarter, “reflecting financial strain on households despite monetary easing by the Bank of Canada.”
Specifically, Fitch reported that the delinquency rate (bills that are more than 60 days past due) rose to 1.2% in the quarter, up from 1.12% in the third quarter — pushing the rate past its pre-pandemic level of 1.19% (in the fourth quarter of 2019).
At the same time, the net charge-off rate — the share of balances written off as uncollectible, generally following 180 days of delinquency — rose to 3.1% in the quarter, Fitch said. This was an increase from 2.91% in the third quarter, and also above the 3.05% pre-pandemic mark.
“Despite easing inflation and interest rate cuts, Canadian households continue to face financial pressure from high prices and debt servicing costs due to lagged effects of monetary policy changes,” the rating agency said.
And, it indicated that it expects card performance to deteriorate further in 2025, due to “elevated household debt, a softening economy, and potential impacts from U.S. tariffs and immigration curbs.”
Alongside rising credit card delinquencies consumer insolvency filings have increased too, Fitch said.
Against this backdrop, Fitch said that it expects further rate cuts from the BoC in an effort to alleviate the pressure on stretched households.
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