Credit Card Debt in Canada Hits New Highs in 2025: What It Means for You

As of early 2025, Canadian households are grappling with unprecedented levels of credit card debt, reflecting broader economic pressures such as rising interest rates and the increasing cost of living. According to Equifax Canada, total consumer debt has surged to a historic high of $2.5 trillion, with credit card balances alone reaching $124 billion—a 9.2% year-over-year increase.

This financial burden is being felt across all age groups and income levels, with younger Canadians especially vulnerable. As more individuals rely on credit cards for everyday essentials, understanding the data behind this trend is crucial for managing your personal finances and long-term stability.

Key Takeaways

Credit card debt in Canada reached record highs in 2025, impacting millions of consumers nationwide.
Average credit card debt per person climbed to $4,562, representing a 6.97% increase from 2024.
22% of Canadians plan to take on more debt this year, largely to manage basic living expenses.
Millennials saw the steepest increase in debt among insolvent Canadians, with an average 35% spike in their credit card balances.
Effective debt management strategies—such as budgeting, consolidation, and professional guidance—are essential for regaining financial control.

The Current State of Credit Card Debt in Canada

As we move through 2025, the credit card debt landscape in Canada has never looked more concerning. With inflation still lingering and interest rates remaining elevated, more Canadians are turning to credit cards to fill gaps in their monthly budgets.

According to TransUnion Canada, credit card balances increased by 9.2% year-over-year, reaching $124 billion, the highest on record. This is part of a broader trend where total household debt has ballooned to $2.5 trillion, exacerbated by rising mortgage and auto loan balances.

Younger demographics are especially hard-hit:

Gen Z credit participation rose by 29%, and their total outstanding balances increased by over 25%.
Millennials and Gen Z combined now hold $1.1 trillion in consumer credit, up 10% from the previous year.

Even more troubling, data shows that the average credit card debt among insolvent Canadians grew by 25.9% in 2024, to $20,398, with millennials leading the way in debt accumulation.

The Human Cost: Financial Stress and Lifestyle Changes

The surge in debt is more than just numbers—it’s affecting the mental and financial well-being of Canadian households. A 2025 survey by FP Canada found that 48% of Canadians cite money as their biggest source of stress, and a significant portion of this is linked to managing credit card debt.

In practical terms:

Nearly 1 in 2 credit card holders carry a balance month-to-month.
22% of Canadians reported plans to take on even more debt this year, mostly through credit cards, just to “stay afloat.”

This ongoing reliance on revolving credit reduces consumers’ ability to save, invest, or qualify for future loans and mortgages—ultimately impacting retirement readiness and overall financial independence.

‘Beware of little expenses; a small leak will sink a great ship.’ – Benjamin Franklin

Strategies for Managing and Reducing Credit Card Debt

Given the pressures facing Canadian households, it’s more important than ever to adopt proactive strategies for managing debt:

1. Create a Detailed Budget

List all income and expenses to identify areas where you can cut back. Prioritize high-interest debt in your spending plan.

2. Consolidate Your Debt

Consider a low-interest personal loan or a credit card balance transfer to reduce your interest charges and streamline payments.

3. Use Debt Repayment Methods

Apply either the debt avalanche method (paying off highest-interest debt first) or the snowball method (paying off smallest balances first) to stay motivated and efficient.

4. Seek Professional Guidance

Licensed insolvency trustees, credit counselors, and debt relief agencies can help you explore structured debt solutions like consumer proposals or consolidation programs.