Published December 20, 2022

Experts share tips for young Canadians finding themselves in debt for the first time

'The more money I had, the more debt I would get myself into'
Young Canadians Debt - CP

By Caitlin Yardley in Montreal

While enrolled in university, Eloho Orogun was approached on campus to apply for a $500 student credit card, advertised as a means to improve his credit score.

Met with a self-described shopping problem, it was not long before Orogun opened a second student card with a larger limit.

"The more money I had, the more debt I would get myself into," he said. 

Poor spending habits and a lack of understanding of how credit cards work led him down a debt spiral that took him seven years to break.

A report from Equifax Canada published earlier this month found that Canadians 35 years of age and younger owe the least amount of money, but are the worst at paying off their credit card balances.

The average delinquency rate among Canadians in the third quarter of this year was seven per cent higher compared with the same time last year. That number was higher among young Canadians with the 18-25 category seeing a 33 per cent rise and an 11 per cent increase for those between the ages of 26 and 35. 

Rebecca Oakes, head of advanced analytics at Equifax Canada, said there were far fewer missed credit card payments during the pandemic, whether from spending less money or with the help of government support.

While delinquency rates are still below pre-pandemic levels, Oakes said that the increase could indicate challenging times to come.

"It's not an alarm bell yet, but there is clearly some financial stress starting."

Natasha Macmillan, director of everyday banking at, said there are two main reasons for the upward trend.

The first is pent-up spending from the pandemic as many are looking to go on vacation and to the events they felt unable to attend during the pandemic.

The second is the impact of inflation, with financial pressure making more people turn to their credit cards for support.

Oakes said younger age groups tend to be a little more susceptible during periods of high inflation because their incomes do not adjust in the same way that other generations' might. She said young people are also less likely to have higher savings that can offer a buffer against high prices.   

On top of the rising cost of living are the added expenses of festivities and gifts brought by the holiday season.

It is easy to spend far more during this time of year, but Oakes said that it is important to consider future repercussions.

"Come January, February, can you make those payments? That's always a good place to start," she said.

Instead of buying extravagant gifts, Macmillan said to consider making presents or doing a Secret Santa gift exchange to cut down on the number of gifts bought.

If you do find yourself struggling to manage debt, Macmillan suggests tracking your monthly spending and creating a budget, especially to pinpoint where non-essential expenses can be trimmed.

"Calculate your average monthly budget and see what you have left over to put toward your debt repayment," she said. 

Macmillan recommends two methods to pay down mounting debt: the avalanche, paying down the debt with the highest interest rate first, and the snowball, paying off the smallest balance first for one less thing to worry about.

"It really depends on what works for people and where they get those little wins."

Orogun took an aggressive approach to finally break out of his debt cycle. 

He put all of his money that wasn't being used for essential payments towards paying down what he owed.

"[A credit card] is a tool, that means you are the one in control of it, you use it to your advantage," he said.

This report by The Canadian Press was first published Dec. 20, 2022.

Banner image via The Canadian Press

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