Q4 '21: Canadian Card Down Significantly

💳 The Canadian credit card balance is still down significantly.

🐢 The speed of recovery is slower than consumer spending.

Source: Globe and Mail

Reasons

👉 Restricted activities caused by the virus

👉 Higher savings from stimulus measures

👉 Alternative payment tools

Results

🔻Lower balance = lower interest income

🔺More transactors + more card-not-present transactions = higher fees

The latter cannot fully offset the former,

💸 So the overall profitability is still down.

Actions

Card issuers roll out new products to target segments with high spending growth (travel, grocery).

Consumers should take advantage of low rate/high reward offers - enjoy a break from growing high-interest debt.

Further reading:

Globe and Mail, James Bradshaw, "Big banks credit-card profits slow to recover as Canadians carry lower balances".