Canada: Stable Card Trends Support Cautious Optimism, RBC Reports

Canada’s credit and debit card data is showing signs of stability in early 2025, according to a new report from RBC Economics. The trend is providing a cautious basis for optimism about consumer spending and the broader economy, even as households continue to manage elevated debt levels and higher living costs.

What the Data Shows

RBC’s analysis, based on aggregated and anonymized card transaction data, indicates that spending patterns have stabilized after a period of volatility in late 2024. The report highlights that growth in card spending has moderated to a more sustainable pace, aligning with pre-pandemic trends. This suggests that consumers are adjusting to higher interest rates and inflation without dramatically pulling back on essential purchases.

Implications for the Economy

The stability in card trends is a key indicator for economists monitoring the health of the Canadian consumer. RBC notes that while spending is not booming, the lack of a sharp decline is a positive sign. This data supports the view that the Bank of Canada may have room to hold interest rates steady or consider gradual easing later in the year, depending on inflation and employment data.

Consumer Behavior and Debt

Despite the stable spending, RBC’s report cautions that many households remain under financial pressure. Credit card balances are still elevated compared to pre-2020 levels, and the share of income going to debt service remains high. The stable card trends, therefore, reflect careful budgeting rather than renewed confidence, particularly among lower-income households.

Conclusion

RBC’s latest card data offers a cautiously optimistic view of the Canadian economy. While consumer spending is not surging, its stability provides a foundation for measured growth. The key risk remains the ability of households to sustain this balance if economic conditions worsen. For now, the data suggests a ‘steady as she goes’ outlook for the near term.

FAQs

Q1: What does ‘stable card trends’ mean for the average Canadian consumer?
It means that overall spending on credit and debit cards is neither sharply rising nor falling. This suggests that consumers are managing their finances carefully, avoiding both a spending spree and a sudden pullback, which is a neutral-to-positive signal for the economy.

Q2: How does RBC collect this data?
RBC uses aggregated and anonymized transaction data from its own card networks. This provides a real-time snapshot of consumer spending patterns, which is more current than traditional economic surveys.

Q3: Could stable card trends lead to interest rate cuts?
It is one factor among many. If stable spending continues alongside cooling inflation, the Bank of Canada may feel more confident in reducing rates. However, the central bank also watches employment, wage growth, and global economic conditions closely.