Consumers are Using More Credit but Carrying Fewer Cards


Here is a fact about credit that may seem fairly odd: Canadians are using fewer credit cards but charging more purchases. According to the most recent quarterly report from Industry Insights, there were approximately 800,000 fewer credit cards in use in 2016. However, the total credit-related debt balance for the country rose by 3.3 per cent.

It appears that consumers are putting more purchases on existing cards instead of opening new ones. Also, Millennials may have something to do with this trend, as they are notoriously credit-shy.

Possible Changes Due to More Credit Usage and Fewer Cards

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Right now, instead of stuffing their wallets with plastic, more consumers are just sticking to their favourite cards. This could mean that you'll soon seen changes coming from the credit card companies such as:

  • Limit boosts for those who qualify
  • Better, more enticing reward programs
  • After all, if credit card users are getting pickier about the cards they carry, competition will stiffen between providers. This could be good news for consumers who are currently shopping for a credit card. Or, existing credit card holders may find that they suddenly have more spending power and the potential to earn more points and/or air miles.

    Why it's Important to Still Use Credit Cards Cautiously

    If you do get a bump in your credit limit, this absolutely does not mean you should start spending more. In fact, unless you've also received a sizeable income boost, your credit card use should remain the same. A spending limit increase can add a few points to your credit score by lowering your utilization ratio. But your credit won't improve if you immediately take advantage of the additional credit.

    Your utilization ratio, or the percentage of your available credit that you're actually using, is considered when your credit score is calculated. Ideally, you should be using no more than 30 per cent of any credit line at a given time. If you are using most of a card's spending limit or have a card that is maxed out, it can easily seem like you're relying too much on credit. And if your utilization ratio is too high, your credit score can drop.

    In addition to paying attention to your credit utilization, you should always make responsible payments. Making payments on time every month is crucial, but it's also important to pay more than the minimum amount due. Carrying a big balance over from month to month can cause interest charges to add up. So, after a while, even an account in good standing can get out of hand.

    Rebuilding Credit after Making Credit Card Mistakes

    If your credit has been damaged because of past credit card mistakes, financing your next vehicle purchase can help. In fact, you can give your credit score a major boost just by making all of your auto loan payments on time.

    So, if you need a car and a chance to rebuild poor credit, let Canada Auto Loan assist in making the process faster and easier. We can match you with a local dealer that can work with unique credit situations.

    Our service is free and contacting us places you under no obligation to buy anything. Go ahead and fill out our simple and secure auto loan request to get started today.