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Don T Feed The Debt Monster Slay It
Blog Post Date: Feb 21 2010
Don't feed the debt monster - slay it
By Dale Jackson
There's a new mode sweeping the US and it seems that Canada is catching up - people are laying off their credit cards and paying down debt.
In 2009 domestic purchases south of the border dropped 0.6%, the biggest decrease since 1974. According to the U.S. Federal Reserve, outstanding consumer debt declined with a record 8.5% last November. Credit card debt led the way, declining for the 14th consecutive month.
"Americans may be responding to huge losses on their houses, so they are reluctant to add to debt and are motivated to start saving again," CIBC chief economist Avery Shenfeld says.
Canadians are less excited about paying down debt because we are not as heavily leveraged, he says, but there are signs we are controlling our spending. The latest CIBC report shows growth in the domestic mortgage market shrunk to 7.8% from 12% a year earlier. "We are still willing to take on more debt given how low the cost of servicing those debts are," Mr. Shenfeld says.
Regardless, our new-found puritanism may be too late: North American consumers are choking under a mountain of debt. The average amount owed on a credit card is $5,600 usd, the average American carries $46,000 usd in total debt and 1 in 7 U.S. mortgages are delinquent or in arrears.
VIA
Keyword: credit card
By Dale Jackson
There's a new mode sweeping the US and it seems that Canada is catching up - people are laying off their credit cards and paying down debt.
In 2009 domestic purchases south of the border dropped 0.6%, the biggest decrease since 1974. According to the U.S. Federal Reserve, outstanding consumer debt declined with a record 8.5% last November. Credit card debt led the way, declining for the 14th consecutive month.
"Americans may be responding to huge losses on their houses, so they are reluctant to add to debt and are motivated to start saving again," CIBC chief economist Avery Shenfeld says.
Canadians are less excited about paying down debt because we are not as heavily leveraged, he says, but there are signs we are controlling our spending. The latest CIBC report shows growth in the domestic mortgage market shrunk to 7.8% from 12% a year earlier. "We are still willing to take on more debt given how low the cost of servicing those debts are," Mr. Shenfeld says.
Regardless, our new-found puritanism may be too late: North American consumers are choking under a mountain of debt. The average amount owed on a credit card is $5,600 usd, the average American carries $46,000 usd in total debt and 1 in 7 U.S. mortgages are delinquent or in arrears.
VIA
Keyword: credit card
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