According to the latest TransUnion debt report, the total outstanding debt in Canada continued to rise in the first quarter of 2025 compared to the previous year. This upward trend has been primarily fueled by the financial behaviors of younger consumers, particularly those from Generation Z, as well as newcomers to the credit market.
The report highlights that Gen Z consumers experienced a staggering 30.6 percent increase in their outstanding balances compared to the previous year. This significant growth underscores the increasing reliance on credit among younger individuals, who may be navigating their initial experiences with loans and credit cards.
Overall, the report indicates that the total outstanding debt in Canada has risen by 4.7 percent, reaching approximately $2.5 trillion in the first quarter year-over-year. This growth in debt is indicative of changing economic conditions and consumer behaviors, with many individuals, particularly in the younger demographic, accumulating larger balances.
Additionally, delinquencies, which refer to missed payments, rose by 11 basis points year-over-year, reaching 2.7 percent. This increase is largely attributed to new-to-credit consumers, many of whom may be unaware of the long-term implications of accumulating debt and miss payment deadlines as a result.
The report draws attention to the challenges faced by subprime consumers, who continue to struggle with their financial obligations. The delinquency rates among these individuals have risen at disproportionately higher rates compared to those with prime or above-prime credit ratings. This trend raises concerns about the financial health of lower-income consumers and suggests that they may be facing greater economic pressures than their higher-income counterparts.
Matt Fabian, the director of financial services research at TransUnion Canada, has remarked on the implications of these findings for lenders. He points out that the increase in balances among high-risk credit consumers represents a critical juncture for financial institutions, indicating the necessity for lenders to reassess their risk management strategies. As delinquencies rise, it becomes increasingly important for banks and credit agencies to understand the specific challenges faced by different consumer segments.
As the Canadian economy continues to evolve, the insights provided by the TransUnion report highlight the changing landscape of personal debt and credit management. The rising debt levels and delinquencies among young consumers and new entrants to the credit market point toward a potential need for enhanced financial literacy resources as well as more tailored lending practices that account for the unique circumstances of these demographics.
In summary, the findings of the TransUnion report illustrate the ongoing shifts in the Canadian debt landscape, particularly among young and new borrowers. With total debt on the rise and increasing delinquency rates, stakeholders in the financial sector are encouraged to evaluate current lending processes and consider adjustments to better serve these emerging consumer groups.
