‘Debt just keeps snowballing’: More Canadians are relying on credit cards for essentials

More Canadians are relying on credit cards to pay for everyday essentials, and one expert warns that what starts as a temporary solution can quickly turn into long-term debt.

An Equifax Canada survey of more than 1,500 adults found nearly one in four expect to make only the minimum payment on their credit cards, while seven per cent believe they’ll fall behind altogether. In contrast, 56 per cent say they expect to pay their full balances. 

Meanwhile, 29 per cent of respondents said they are using their credit cards more than a year ago to pay for essential living expenses, such as groceries, and 20 per cent say they are relying more on credit cards. 

Equifax Canada’s Head of Consumer Advocacy and Compliance, Julie Kuzmic, tells Now Toronto that the stats are concerning, as putting daily expenses on credit cards can add up over time and lead to future issues. 

“That can really compound over time, especially when there isn’t a likelihood of being able to repay. So that amount of debt just keeps snowballing,” she said. 

“As the amount of debt that somebody owes [increases], their options can be decreasing at the same time.” 

Study could reflect rising cost-of-living, financial stress

According to Kuzmic, the increase in credit card reliance might be driven by financial stress, reflected by economic uncertainty, increasing cost of living, and unemployment levels. 

Forty per cent of the study respondents reported spending more now than a year ago, while only 18 per cent said they are spending less. 

The findings come as residents continue to report stress over growing costs, despite inflation dropping by 3.2 per cent in June compared to May.

“It’s just another repercussion of the difficult financial circumstances that most of us in Canada find ourselves in, with the increasing cost of living and the uncertainty around tariffs and manufacturing, and unfortunately, that also introduces uncertainty around employment,” Kuzmic said. 

As everyday costs continue to rise, more Canadians are also having to choose to invest less in their future, with 23 per cent of respondents saying they are drawing on savings to cover essential expenses and 35 per cent saying they are contributing less to savings and investments. 

At this rate, 44 per cent said they worry about not saving enough for retirement and 41 per cent said they are concerned about emergency expenses. 

“One of the really important aspects of a healthy overall financial situation is to have a bit of a in the form of let’s say emergency savings, and that can really help with some unplanned, unexpected expenses like a car repair that is needed,” Kuzmic said. 

“That makes them even more likely to have to rely on credit should an extra unexpected event occur, which unfortunately then can grow their debt even further.”

‘It’s never too early to ask for help’

For those that are currently dealing with financial stress or reliance on credit, Kuzmic recommended seeking help, including talking to a trusted family member, financial advisor, or lenders. 

“They want you to be able to make payments, and so in a lot of cases, they’re willing to work with you on helping you overcome debt that is perhaps starting to feel unmanageable,” she added. 

Another option suggested by Kuzmic is speaking to a credit counselor who can advise them on how to overcome debt and navigate difficult situations.