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This Padlet explores the critical role consumer credit plays in shaping the economy. From enabling personal spending to driving business growth, consumer credit fuels economic activity. Viewers will learn about its benefits, challenges and the policies influencing credit system in Canada. Expect insights into how consumers credit impact GDP, jobs, creation and financial stability.

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SUMMARY:

The video explains how consumer spending, accounting for 70% of the U.S. economy, is driven by confidence, low unemployment and rising wages. Its highlights how credit reliance impacts consumers behavior with recent retail data showing growth in car and gas spending while big-ticket item like electronics saw decline. It connect credit use to overall economic health.

Why I chose this:

I chose this video because it illustrate the critical role of consumer credit in the economy, demonstrating both its positive impact and potential risks.

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How consumer spending impacts the economy

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Summary:

This Page from The Globe and Mail explores the state of Canadian consumers debt, offering insights into how it has grown and its effects on both personal financial stability and the economy at large. It features expert analysis on the balance between borrowing for consumption and the economic risks of rising household debt.

Why I Chose this:

I selected this website because it provides a critical analysis of consumer credit in the Canadian context. It not only highlights trends but also offers expert commentary on how debt can influence national economic policies, such as interest rate and inflation control.

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Summary:

This Statistic Canada Article examines Canadians rising reliance on credit and its impact on the economy. It highlights key metrics like the debt-to-income ratio and explores the balance the balance between credit fueled spending and financial risks like overleveraging.

Why I chose this:

This article provides detailed Canadian-specific insights into how consumer credit impacts economic stability. It was selected for its authoritative analysis and clear presentation of risks and benefits, offering a relevant perspective for understanding credit's economic role.

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Understanding household credit measures, a joint study by the Bank of Canada and Statistics Canada

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The Bank of Canada and Statistics Canada both produce aggregate measures of borrowing, or credit, for sectors of the Canadian economy. The Statistics Canada measures are part of the National Balance Sheet Accounts (NBSA), which cover the entire economy and directly align with the internationally recognized national accounting principles detailed in the United Nations System of National Accounts. They are available by sector as currently defined in the Canadian System of Macroeconomic Accounts. The NBSA are created using a balance sheet approach, which involves presenting the assets and liabilities for all instruments and sectors of the economy. In other words, for each instrument all holders of financial assets must have corresponding counterparties who hold the financial liabilities, and as such, the sum of these are equal in the aggregate. The Bank of Canada’s data are presented based on the issuer of credit, i.e., the holder of the financial assets, and do not display liabilities.

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Summary:

This CBC article highlights the financial struggles of Canadian post-secondary students and reliance on student loans. It discusses how increasing reliance on credit affects long term financial stability with many students facing debt upon graduation. The article also examine how affordability impact access to education and the broader economy.

Why I chose this:

For its real world relevance, it demonstrate how borrowing affects individuals and contributes to the broader economic landscape.

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Everything seems to be getting more expensive. Food, gas and housing prices are on the rise while paycheques are slow to keep pace. The CBC News series Priced Out explains why you're paying more at the register and how Canadians are coping with the high cost of everything.
Facing ever-rising tuition as well as higher prices for food, housing, and other necessities, post-secondary students in Canada are concerned about the debts that loom after graduation.

Five students told CBC News about their costs of living and the financial pressures worrying them.

Nicolas Avendano, Toronto

Program: Architectural technology, Centennial College Tuition: $8,000-9,300/term | Housing: $1000/month | Food: $300-350/month | Transportation: $100-150/month | Books: $250/year | Internet $40/month | Phone: $66/month
Nicolas Avendano tries to live as frugally as possible.

The 28-year-old shares a downtown Toronto basement apartment with a roommate, favours free activities when meeting friends and cooks meals at home after shopping for sales at the supermarket. His parents, living in the U.S., help him with tuition and housing, but he also works a fast-food job to help cover the bills.

Yet the Colombian-born international student faces tougher decisions these days. Pay for public transit or walk? Start eating smaller breakfasts or perhaps smaller meals altogether?

"There are times when I just say, 'Maybe I won't go out, because I don't have money for that,'" noted the college student.

Avendano believes post-secondary tuition should be more affordable - especially in face of other costs rising so substantially - in order to be accessible to more students.

Education "shouldn't just be a thing that you can access because you have the money or the economic standing in order to achieve," he said. "I think that's definitely one of the reasons why society is becoming so stratified between the rich and the poor."

Nor should students be forced to live in total deprivation, he added.

"There's a lot of criticism against young people for wanting to lead full, meaningful lives instead of just working and studying every single day, non-stop."

Dane Monkman, Winnipeg
Tuition, books & transportation: $4,000-8,000/year (3 terms) | Housing: $600/month | Food: $300/month | Internet: $50/month | Phone: $120/month
In Winnipeg, 26-year-old Dane Monkman is a graduate student advocating for lower tuition rates. In the 2018-2019 school year, University of Manitoba students saw a tuition hike of 6.6 per cent. For three consecutive years afterward, students saw annual increases of 3.75 per cent.

"During the pandemic we're seeing an increase in tuition every year," Monkman said. "That's obviously coming at a time where things are getting worse - and a lot of the time that causes a barrier for students to access post-secondary education."

Monkman, who is a member of Peguis First Nation, knows he is lucky to have his tuition and textbooks funded by his band. He also shares his off-campus living costs with his partner, but he recognizes other students may not have those kind of financial supports.

Monkman maintains that those in positions of power are making decisions regarding tuition that minimize the chances of lower-income students ever reaching those positions themselves.

"They essentially are kicking away a ladder that will prevent further students from getting into these sort of same jobs or these same positions of power to make decisions."

Monkman has family members who have chosen not to pursue a higher education due to the financial strain it would place on themselves and their families. Some are just out of high school and unable to fathom attending university due to the cost, he said.

"That's really unfortunate because it should be a right for everyone."

Yasmin Gardy, Burnaby, B.C.
Tuition & transportation: $7,500/year | Housing: $1700/month | Utilities: $35/month | Food: $400-600/month | Books: $240/year | Internet: $70/month | Phone: $60/month
For students who live in B.C., pressures like rent and food are huge financial concerns.

Yasmin Gardy, 33, chose to live in the Edmonds neighbourhood in the city of Burnaby due to its proximity to campus. With rent as high as $1,700 per month for housing, she took out loans to pay for both her tuition and living expenses.

"I reached out to receive some financial support from the Jewish community here in Vancouver," said Gardy.

Gardy, who emigrated to Canada alone 10 years ago from Israel, turned to the Hebrew Free Loan Association of Vancouver. It's helping her stay afloat in her last term before graduation.

As for food, another major financial constraint, Gardy again turned to her community for support. This past January, she registered for the food bank for the first time after things became difficult. She now regularly makes an appointment to pick up the basics such as bread, eggs, cheese and vegetables.

"I [had] an opportunity to go to their location and pick up a basket that helps me, as well to reduce the expenses of food for a month," Gardy said.

It's her hope that the government expands the range of financial supports and resources available to students.

"The biggest one is if it's possible to plan toward having higher education be something that is available for free for citizens and permanent residents."

Gaayathri Murugan, Corner Brook, N.L.
Tuition: $5,000-$6,000/term | Housing and internet: $1,700-2,100/term | Food: $1,000 per term for meal plan, $150-300/month groceries | Transportation: $200-300/month | Books: $100-200/term | Phone: $40/month
The number of international students studying in Canada has risen for years, representing nearly one-fifth of university enrolments until just before the pandemic, according to Statistics Canada.

Yet most don't truly understand just how expensive school is for international students, says visual arts student Gaayathri Murugan - including those domestic classmates sitting next to her at Memorial University.

That the 22-year-old pays so much more to sit in the same classes came as a surprise to them, said the fourth-year student, who took out a loan in India to pay for her studies in Canada and works several part-time jobs and volunteers on campus.

Many don't know international students can only work a maximum of 20 hours per week during school, she pointed out, or that they're explicitly excluded from opportunities such as Canada Summer Jobs, a federal program matching students with summer work experiences.

"I really feel like international students are treated like cash cows and it's just not very fair to us because we are also just trying to get an education," said Murugan, who's hoping to find work in Newfoundland's arts sector upon graduation.

"It's so hard to get out of university and just start your life with so much debt already."

Colin Crawford, Montreal
Tuition: $4,760/year (3 terms) | Housing: $500/month | Food: $400-450/month | Transportation: $50/month | Books: $200/year | Utilities: $500/year | Internet: $60/month | Phone: $50/month
"It's just more and more expensive to be a young person in the world," says Colin Crawford, a Concordia University PhD student who shares an off-campus apartment in Montreal.

After working a few years to pay off the student loans for his undergrad, the 28-year-old has been able to secure scholarships to pay tuition for his graduate and doctoral studies. He's held multiple jobs to cover everything else, juggling being a teaching and research assistant with part-time gigs at local cafes, for instance.

With another two years to go in his program, he worries about further tuition increases along with a precarious job market post-graduation.

Young people are pushing the traditional markers of "becoming an adult" to their 30s and even 40s, said Crawford, who is working to start a Canadian branch of The Debt Collective to lobby for free post-secondary education and the cancelling of student debt.

Younger generations are taking longer to even think about starting a family or owning a home, he said, because "so many people are driven into debt or just kind of getting by, paycheque to paycheque."

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Rising tuition, student debt weigh heavily on post-secondary students | CBC News

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Facing ever-rising tuition as well as higher prices for food, housing and other necessities, Canadian students shared their costs of living and the financial pressures worrying them.

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Summary:

This video explains the difference between national debt and deficit focusing on U.S. borrowing practices and how most debt is domestically owned. It highlights the benefits of borrowing during recessions to stabilize the economy and warns of risks from rising interest rates. Solutions like tax adjustments and spending cuts are discussed.

Why I chose this:

This video clear, engaging explanation of debt's economic impact aligns with understanding consumer credit role in economic stability.

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Understanding the National Debt and Budget Deficit

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Summary:

Moody's reaffirmed Canada's AAA credit rating with a stable outlook, highlighting strong economic resilience and growth potential. This supports investments in initiative like early learning, childcare and affordable housing. The federal government emphasizes fiscally responsible growth enabling low cost borrowing for business and governments.

Why I chose this:

This topic showcases Canada's balanced approach to economic growth and fiscal responsible, which is vital for ensuring long-term prosperity and addressing immediate needs like affordability and job creation for younger Canadians.

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Canada’s economy is “strong, resilient” according to credit rating agency: Freeland

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Summary:

Consumer credit in Canada allows individuals to borrow money for goods and services, driving economic activity. It includes credit cards, loans and lines of credit. While it supports consumer spending, overuse can lead to financial strain. Regulated by federal and provincial laws consumer credit play a vital role in the economy.

Why I chose this:

This topic highlights the balance between credit accessibility and responsible usage, emphasizing its critical impact on economic stability and individual financial health.

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Consumer Credit

Canadian consumers obtain consumer credit whenever they purchase goods or services on account, or whenever they borrow funds to finance purchases already made. The most common type of consumer credit arrangements involve cash loans, usually to finance retail purchases on instalments. In addition, cash loans to consolidate existing debts and unpaid balances on CREDIT CARDS constitute important proportions of the total amount of consumer credit - with the latter representing about 20% of the total. While the goods purchased on credit are usually large items such as household furnishings and cars, increasingly consumers are using credit cards to purchase gasoline and other non-durable goods. By the mid-1990s, consumer credit arrangements of all types accounted for about 26-27% of all the personal indebtedness in Canada. Over 90% of these credit balances were owed to financial institutions, while the remainder were owed to retail vendors.

Today, with over two-thirds of the market, the predominant suppliers of consumer credit in Canada are the banks, either through instalment loans carried directly on their own books or through the credit-card plans they operate. Mortgage and TRUST COMPANIES also provide consumer credit, although they are a much smaller proportion of the total consumer credit market. CREDIT UNIONS and CAISSES POPULAIRES are also important suppliers of consumer credit, but these institutions deal exclusively with their members and have traditionally offered loans at lower rates than those charged by other financial institutions. Consumer loan and finance companies are financial intermediaries specializing in the provision of both consumer credit and the wholesale financing of consumer durable goods. Some firms of this type, known as acceptance companies, are owned by automobile or other manufacturers. Many large retailers also own and manage finance companies to serve the credit needs of their customers.

Finance companies have declined in importance since 1955. At that time, they accounted for over 30% of the consumer credit market; now their share is approximately 7%. Life-insurance companies also provide consumer credit by means of policy loans - loans to policyholders secured by the cash value of their life-insurance policies.

Apart from credit unions and caisses populaires and some mutually owned life insurance companies, the suppliers of consumer credit are profit-oriented firms. These lenders will extend credit, if it is profitable, to any class of client, but are reluctant to extend credit to clients whom they regard as presenting either a low potential for profit or a higher than normal risk. Consequently, disadvantaged minorities sometimes find it difficult to obtain consumer credit because lenders regard these borrowers either as less profitable or more risky. Because credit unions and caisses populaires are co-operative organizations founded on a self-help principle, they will sometimes extend consumer credit in situations where the other lenders are unwilling. Also, within limits defined in their policies, life-insurance policy loans are made at the sole discretion of policyholders.

The principal advantage of credit is that it allows consumers to purchase and use an item before they have the funds to pay for it completely. Through consumer credit, goods or services can be obtained with someone else's money for a price, ie, INTEREST. Borrowers determine the size of monthly payments by choosing the terms of the loan. From time to time, concern has been expressed by consumer groups and politicians about the level of credit card interest rates and their apparent insensitivity to changes in other interest rates. Calls to regulate card rates have, however, not been acted upon.

A second advantage of using consumer credit is that responsible borrowers have the opportunity to establish a good credit rating, making it easier for them to obtain credit for future dealings. The principal disadvantage of consumer credit is that some persons are tempted to borrow more than their earning power allows them to repay readily, with the result that they can become so heavily indebted that they have difficulty in meeting the instalment payments on their loans.

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Canadian consumers obtain consumer credit whenever they purchase goods or services on account, or whenever they borrow funds to finance purchases already made. ...

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Summary:

Canada's economy is shaped by natural resources, strong financial services, and proximity to the U.S. Despite stable governance and low inequality, challenges include declining exports, low business investment and brain drain. To remain competitive, Canada must innovate and diversify beyond resource reliance.

Why I chose this:

This highlights Canada's economic strengths and areas for improvement, emphasizing the need for innovation and growth.

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The Problem with Canada’s Economy | Canadian Economy

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Summary:

A survey by NerdWallet (April 2023) reveals that 36% of Canadians with credit card debt expect to pay it off within 1-3 months, while 17% foresee taking over two years. Others estimate varying timelines, with 11% unsure of their repayment duration.

Why I chose this:

This highlights key statistics from the chart, providing insights into Canadians' perceptions of their financial recovery timelines. It emphasizes the variation in confidence and challenges around debt repayment.

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Summary:

The chart shows a decline in 90+ days credit card delinquency rates from 13.12% in 2011 to 8.24% in 2023. Rates were lowest in 2016-2017 but increased slightly during the pandemic (2020-2021), highlighting economic disruptions.

Why I chose this:

This summary captures the trend of credit card delinquency over time, reflecting economic recovery and resilience while acknowledging challenges during the pandemic. It's concise yet informative for understanding financial behavior

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#1

I was surprised by how credit card delinquency rates peaked during the pandemic but have since decreased, indicating recovery, but still remain higher than pre-2019 levels.

#2

The rising credit card debt and delinquency rates are relevant to me as I manage my own finances and avoid credit card debt to maintain a good credit score.

#3

The most important thing to pass on is the significance of timely debt repayment and maintaining a healthy balance between spending and saving to avoid falling into debt.