A Crisis is a Terrible Thing to Waste

There is an old saying about an ill wind bringing no good. Even the ill-wind of the COVID crisis brought some good, based on a new study from StatsCanada on how Canadians managed their personal finances through the lockdown.

It turns out we were quite prudent. And it was the most vulnerable who showed the greatest improvement.

When the lockdown hit, the number of places we could spend money was also reduced. Restaurants closed, entertainment venues were dark and so on. That meant each of us probably had more disposable cash sitting around but the big question was….what would we do with it?

To put it simply, we paid off debt. Credit card balances fell by a record amount through the lockdown – falling 20-percent compared to normal 20-percent increase we had been posting in the years running up to COVID. And it was those with the poorest credit ratings who made the most gains suggesting, as StatsCan put it, they used their savings prudently, joining the other households who will exit the pandemic with lower debt levels than when they went in.