Canadians' credit debt levels 'merit close watching'

A recent study from the C.D. Howe Institute points out that Canadian households' credit card debt has surpassed that of their American counterparts. The Rise in Consumer Credit and Bankruptcy: Cause for Concern? report addresses the fact that debt levels associated with consumer credit in Canada are higher than at any point in history. Study author James MacGee fears issues like the expansion of new consumer credit products - such as home equity lines of credit - have led Canadian borrowers to be "overly optimistic." However, he adds that Canada's financial institutions have more "prudent" lending standards than American ones, making consumer debt levels more "manageable." Yet residents may still be vulnerable to rises in interest rates or economic declines. "At present, there is no cause for panic," said MacGee, "but there are warning signs in the numbers that are reason for concern, and merit close watching." Reuters reports that American household debt rose for the first time in more than three years during the fourth quarter of 2011, according to Federal Reserve data. Household wealth also grew by $1.2 trillion during that period, supporting increased spending.