Borrowing money is a common tool for most Canadians. We borrow money to pay for an education, buy a car or purchase a home. But for many Canadians, dealing with debt can become a real challenge. Excessive amounts of debt hinder choice and add undue emotional and financial stress, but how can you tell if you owe too much? To help, we analyzed earnings and spending across Canada. Using data from a variety of sources, including Statistics Canada, Equifax Canada, Princeton University, and the Canada Mortgage and Housing Corporation, we examine how much debt is owed by the average Canadian consumer, how much debt is normal for each age group and how this compares to the average annual earnings for Canadians in 2022. The result is a snapshot of Canada’s household debt, which includes how much Canadians owe, household debt statistics and the impact of Canadian consumer debt. There are also tips for helping each Canadian consumer to identify when their high debt ratios are a problem, and what they can do about it.
How much do Canadians owe on average?
A recent report released by Equifax Canada(1) shows that total consumer debt climbed to $2.32 trillion by mid-2022 — an increase of 8.2% compared to 2021 and a 24% increase when compared to 2020.(2)
Rising debt makes sense, given the astronomical cost of residential real estate in most Canadian cities. But strip out non-mortgage debt — a term used to describe all types of personal debt in Canada, including credit card debt, overdrafts, store cards, payday loans, in-store financing debt, student loans and so on — and Canadians’ debt loads are still significantly high. What’s worse is that non-mortgage debt levels are increasing. From mid-2021 to mid-2022, non-mortgage debt in Canada rose 5.2% to $591.4 billion, in part due to the rising cost of living expenses.
How much is the average household debt in Canada?
Based on the most recent data, the average consumer debt in Canada is now $21,128. This excludes mortgage debt — and the calculations are for each Canadian above the age of majority. This means the average Canadian consumer debt is closer to $42,250, for couples and families.
How has household debt changed over the years?
The fluctuation in household debt, and the average consumer debt in Canada, changed significantly over the last few years.
Prior to 1990, the average debt-to-income ratio in Canada was approximately 88.77% — meaning the average consumer in Canada owed $0.89 for every $1.00 of income earned.
By mid-2021, the average debt-to-income ratio in Canada was just over 173% — increasing the amount owed by the average consumer in Canada to $1.73 for every $1.00 of income earned.
In just three decades, Canadians almost doubled their average household debt — and this doesn’t factor in higher housing costs.
That does not mean that every Canadian spends — and owes — the same amount. Debt fluctuates over a person’s lifetime, and the type of debt also varies based on where a person lives, what they earn and how they spend.
What is the average debt in Canada by age?
To get a better idea of how debt accumulates over a lifetime, it’s best to benchmark what you owe with the average debt in Canada by age.
According to data released by Equifax Canada, consumers between the ages of 46 to 55 have the highest average debt by age in Canada.
In a Nobel-prize-winning study(3) of the American consumer life-cycle of saving,(4) authors Franco Modigliani and Richard Brumberg found that younger people and parents with children at home were more likely to hold debt. When this study was updated in 2005 by Princeton University professor Angus Deaton,(5) he found that individuals under age 45 accounted for 45% of the American population but 54% of all borrowers. Couples with kids fared worse when it came to taking on debt, as parents held more than 50% of all household debt in America. While this data only studied American households, the overall results appear to reflect reports from middle-aged millennials — Canadians who are entering their 40s and debt-burdened with housing costs, childcare, and taking care of elderly parents.
But lifestyle milestones — such as purchasing a car, buying a house or paying for a child’s education — are not the only factors that impact how and when we take on debt.
What is the average debt in Canada by province?
Where you live also impacts debt levels. According to the Equifax Canada report,(6) residents in Calgary, Edmonton and Fort McMurray and residents in other Alberta cities had the highest average debt. The average debt for Alberta residents was just over $25,000 in 2022. Following behind, with slightly less average consumer debt, were residents in Newfoundland ($22,909), Saskatchewan ($22,582) and Prince Edward Island ($22,239).
Canadian cities with the highest average debt in 2022
Going deeper into the data, it appears that residents living in specific Canadian cities are struggling more than most when managing their budgets. The result can be significantly higher levels of personal non-mortgage debt.
For instance, the average debt for residents in Fort McMurray, Alberta, was $37,640, compared to the average debt for Toronto residents, which was $20,361 in 2022.
Turns out Albertan residents currently have some of the highest debt loads in Canada in 2022. The average debt for Calgary residents was $24,912, down 1.71% from the previous year. Not too far behind were Edmonton residents with an average debt in 2022 of $24,345 — almost $4,000 higher than the average debt owed by Toronto residents and more than $1,500 more than the average debt owed by Vancouver residents, two of the most expensive cities to live in Canada.
Link between income, spending and debt
The national delinquency rate — the percentage of Canadians who’ve missed at least three debt repayments — was 0.88% in 2022, a drop of 7.92% from 2021.(7)
At a provincial level, the debt delinquency rate was highest in Saskatchewan, at 1.26%, followed by Alberta, with a debt delinquency rate of 1.25% in 2022.
The province with the lowest debt delinquency rate was Quebec, at 0.59%, followed by B.C., at 0.77%.
Drill down to specific Canadian cities, and we can see that debt delinquency rates dropped significantly in 2022. Residents in St. John’s, NFLD; Halifax, NS; Vancouver, BC; Toronto, ON, and Fort McMurray, AB, all led the way in declining delinquency rates, with year-over-year debt delinquency rate drops of 17.26%, 14.05%, 10.52%, 10.45% and 10.18%, respectively.
This drop in debt delinquency rates is a critical factor when assessing the relative strength of the nation’s economy and the ability of individual Canadians to earn and spend responsibly.
Impact of rising debt
There are significant consequences to rising average consumer debt in Canada. On a national level, an increase in household debt can translate into a boost in economic growth, but this boost doesn’t last forever. According to an International Monetary Fund (IMF) report,(8) this fiscal boost starts to falter within three to five years. In fact, the IMF study found a correlation between the increase in household debt ratios and a country’s gross domestic product (GDP), the ratio that captures a country’s economic output. For every 5% increase in the debt ratio, there’s a 1.25% decline in economic growth.
For individuals, slower economic growth translates into higher unemployment, slower wage growth and, overall, a drop in disposable income.
Debt-to-income ratio
Determining whether you can manage your debt is a critical step in assessing your financial health and well-being.
To determine if your annual income is sufficient to meet your debts — and to clarify whether you’re on track to paying back your debts — you can use a simple calculation known as the debt-to-income ratio (DTI).
The DTI compares how much you owe each month to how much you earn. Specifically, it’s the percentage of your gross monthly income (before taxes) that goes towards rent, mortgage, credit cards, or other debt payments.
If your DTI is too high, then more of your income goes to repaying debt.
It’s why banks, lenders, credit card companies and stores use the debt-to-income ratio (among other factors) to determine if you qualify for a loan. In general, lenders want to see a debt-to-income ratio of 40% or less. This means that no more than $0.40 of every pre-tax dollar you earn goes towards repaying debt. This is based on the federally regulated gross debt service (GDS) ratio, which is the percentage of your monthly household income that covers your housing costs. Under federal regulations, your GDS cannot exceed 39%. (You can read more about this on the Canada Mortgage and Housing Corporation site.(9))
The formula to calculate your DTI is monthly debt ÷ monthly income = debt-to-income ratio
(In most cases, Canadians learn about their debt ratios when applying for a mortgage; however, your DTI ratio is used to determine your eligibility for all types of loans and credit applications. To learn more, read the Finder guide on the 5 C’s of Credit or find out how your credit score impacts your chance for loan approvals.)
What is the average salary in Canada?
There’s a tremendous amount of data collected when it comes to the average Canadian salary and annual household income. You can find a report with average earnings every few months. Why do we care so much about the average salary in Canada? Probably because it helps us assess whether we’re “keeping up.”
For most Canadians, the basic goal is to maintain a middle-class lifestyle. While researchers struggle to define what middle class is — some use household income, while others add in milestone achievements, such as buying a car, or a house, completing education or saving for retirement — the general consensus is that being middle class means being financially comfortable without being rich.
Why is the middle class important?
Academic studies(11) show that a strong middle class leads to more engaged communities, higher disposable income levels, and ongoing economic growth for all. In other words, a strong middle-class results in a country with stable, committed residents who spend and grow the economy, both in the short- and long-term.
Who is Canada’s middle class?
The most straightforward way of determining whether a person or household is middle class is to compare income thresholds.
If your annual income, or your average household income, falls somewhere in the middle of the salary range for all income earners in Canada, you are middle class.
The Organization for Economic Co-operation and Development (OECD) defines the middle class as anyone who earns between 75% and 200% of median household income after tax.(12)
Based on the most recent data from Statistics Canada, that means anyone with a median income in Canada between $45,000 and $120,000 is considered middle class.(13)
Key statistics for average salary in Canada in 2022
$80,834 — Average annual earnings (including overtime) of salaried employees
$42.11 — Average hourly rate (including overtime) of salaried employees
36.9 — Average number of hours worked each week, by salaried employees
$46,726 — Average annual earnings (including overtime) of employees paid by the hour
$28.96 — Average hourly rate (including overtime) of employees paid by the hour
31.1 — Average number of hours worked each week, by employees paid by the hour
Average salary in Canada by province
The average salary on a national level, however, doesn’t reflect how far the average income in Canada can stretch based on where you live. To appreciate regional differences, we need to compare the average salary for specific places, such as Toronto, Vancouver and other regional centres. To do this, we can examine the average salary residents in each province and territory can expect, based on Statistics Canada data from mid-2022.
The debt-to-income connection
Borrowers with high debt-to-income (DTI) ratios face greater challenges when trying to get out of the cycle of debt.
While there are a number of factors that impact whether or not you qualify for a loan or lending product, in most cases, a high DTI can mean you don’t qualify for low-cost loan products.
For instance, if your DTI is greater than 44%, almost all mortgage lenders will decline your mortgage loan application.
Strategies to get out of debt
If you notice an increase in your living costs and spending, you’re probably not alone.
To help, consider these four strategies for getting out of debt.
Pay more than the minimum payment. Paying more than the minimum will save you money on interest and help you get out of debt faster. Why does this work? Because a minimum payment only repays the interest you owe. Pay more than the minimum, and you start to pay back the debt. The faster that amount goes down, the less interest you pay and the faster you get out of debt.
Schedule extra payments. Before the due date, schedule an extra payment towards your loan or credit card payment. This extra payment goes directly to paying down the principal debt (what you owe). The faster you reduce what you owe, the less interest you pay.
Get motivated. There are a few well-known debt repayment strategies, and one of the most popular strategies is the debt snowball method. This strategy requires making only the minimum payments to all debts and then maximizing the payments on the debt with the lowest total balance. Once that debt is repaid, use the strategy on the next debt with the lowest total balance. Continue until you are debt-free.
The debt snowball method helps motivate people to get out of debt. The satisfaction of paying off the first and then the rest of your debt is reinforced each time you cross the loans completely off your “to-pay” list.
Refinance debt. Getting out of debt can be hard when so much of your income goes to paying interest. To help, consider refinancing your debt. This means shopping around and talking to lenders to find a loan at a lower interest rate.
One way to do this is through a debt consolidation loan, a personal loan specifically used to consolidate high-interest debt and reduce payments from many to one while lowering your overall interest rate.
Another way to do this is to transfer the debt to a balance transfer credit card or a lower-interest credit card. Look for 0% promotional rates and then pay as much as you can within that low-interest period. Just be sure you can afford to pay more than the minimum once the promotional rate is over.
Refinancing debt helps because it reduces how much interest is charged. If you reduce the interest but maintain or increase the amount you pay, you pay more toward the principal debt and become debt-free faster.
To compare personal loans, and determine whether or not you can save money by refinancing your debt, check out Finder’s comparison of personal loans.
Finder is a personal finance comparison site with a mission to help Canadians save, invest, spend wisely and grow their wealth. Each month, Finder provides half a million Canadians – and more than five million globally – with independent and trustworthy financial information. Our goal is to help people make better financial decisions by providing objective, comparative insight on thousands of products and services.
As a global fintech website and app, Finder provides consumers free access to smart money content. Whether it's expert insight, product or service comparisons or independent reviews, Finder helps consumers stay on top of their finances while saving time and money.
Finder is available to consumers in Canada, Australia, America and the United Kingdom. Initially launched in 2006 by three Australians – Fred Schebesta, Frank Restuccia and Jeremy Cabral – Finder's global reach now includes thousands of products and services in hundreds of financial categories and provides expert content and independent reviews to more than five million users each month.
Romana King was the Canada group editor at Finder and a personal finance expert. As an award-winning personal finance writer and real estate expert, she has spent almost two decades helping Canadians make smarter money management decisions. Her first book, House Poor No More: 9 Steps That Grow the Value of Your Home and Net Worth, launched in November 2021, continues to be an Amazon bestseller and won the Excellence in Financial Journalism Book Award in 2022. See full bio
Romana's expertise
Romana has written 34 Finder guides across topics including:
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