With signals that more Canadians will rely on credit cards for gifts, debt experts say paying down debt will likely be harder in 2023
While some Canadians will be easing back on holiday spending this year, many more will be keen to enjoy the festivities even if budgets are squeezed.
However, debt experts are concerned that this spending will rely more on credit cards with economic conditions in 2023 making paying down this debt more challenging.
The president and CEO of the Credit Counselling Society, Scott Hannah, says that holiday season can be a tough time to try to cut back on spending.
“For many of us, this is typically a time of sharing and enjoyment, but if there was ever a year to slow down on spending and borrowing –this is it," he said.
With recent data from Equifax Canada revealing rising credit card balances and an increase in new credit card issuance, even those who may typically use cards to spread the cost of holiday spending may be under greater pressure.
Holiday debt hangover
With no clear end to interest rate hikes and inflation pressuring the cost of food and other essentials, Canadians may face damaging ‘holiday debt hangovers’ in 2023.
With younger Canadians already reporting high levels of financial impact from the rising cost of living, this cohort is at elevated risk of loading up the credit cards rather than forego a good time as 2022 draws to a close.
This is not simply a matter of a little holiday overspending.
"The added costs of the holidays, especially if you're relying on credit to cover the costs, could push many households to the tipping point next year," Hannah warned.