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A consumer pays with a credit card at a store July 6, 2010 in Montreal.Ryan Remiorz/The Canadian Press

Personal debt levels in Canada continued to rise in the third quarter but two major cities bucked the trend: Toronto and Vancouver.

The average Canadian consumer's total debt in the third quarter rose $225 to $27,355, or 0.83 per cent, from the previous quarter, according to the latest analysis of credit trends by TransUnion, released Wednesday.

The figures, which excludes mortgage debt, consists of how much people owe on their credit cards, car loans, instalment loans and lines of credit.

On a year-over-year basis, total third-quarter debt increased 2.19 per cent, less than the 3.47 per cent year-over-year rise in the second quarter.

However, Toronto posted a 0.25 per cent drop in debt in the third quarter from the previous quarter and a 0.05 per cent fall compared with the year-earlier period.

Vancouver experienced a 0.59 per cent decline from the previous quarter and a 1.57 per cent drop on a year-over-year basis.

Thomas Higgins, the vice-president of of analytics and decision services at TransUnion, anticipates a "significant increase" in average consumer debt through the end of the year as holiday shopping ratchets up.

And some credit consultants are increasingly worried over the seeming reluctance of Canadians to lighten dangerously high debt loads.

"It's time for a real wake-up call for Canadians," said Vancouver-based Scott Hannah, president and chief executive officer of the non-profit Credit Counselling Society. "Canadian debt levels are high, savings are low, retirement savings are woefully low and consumers just haven't improved."

On top of that, we still have a fragile economy, he added.

"It's a bit disappointing to see debt continuing to increase," said Jeffrey Schwartz, executive director of Consolidated Credit Counselling Services.

"Savings rates are not where they should be," he said.

Referring to the hot housing markets in Toronto and Vancouver, he said "it's a challenge to understand how people are making this work [financially], with this record high level of debt over the last number of years."

Toronto-Dominion Bank economist Diana Petramala is not as gloomy.

"Incomes are growing faster than debt, helping stabilize the debt-to-income ratio," she said. Meanwhile personal debt growth is rising at its slowest pace in the past 30 years, she added.

The TransUnion report indicates that two provinces – Alberta and Saskatchewan – stand out for debt growth in the third quarter.

Saskatchewan consumers' personal debt increased 15.49 per cent in the third quarter compared with the year-earlier period, while in Alberta the figure was 7.46 per cent.

In Ontario, there was a slight decrease of 0.03 per cent, while British Columbia saw year-over-year debt fall 0.40 per cent.

Quebec was up 2.72 per cent, year-over-year.

"Confidence [in oil-boom rich Alberta and Saskatchewan] is high so people are borrowing, and borrowing a lot," said Mr. Hannah. People in those provinces are buying lots of new vehicles, he added.

As for Toronto and Vancouver, "they are two of the hottest housing markets in Canada, which puts a lot of pressure on other areas; disposable income after housing costs is lower," he said.

TransUnion also reports that delinquency levels for all credit products remained low in the third quarter.

Credit card delinquencies were stable at 0.24 per cent, lines-of-credit delinquencies were at 0.18 per cent, installment-loan delinquencies at 1.26 per cent and auto-loan delinquencies at 0.11 per cent.

"The relatively low delinquency levels observed in the third quarter are a positive sign that Canadian consumers are managing their greater debt loads," said Mr. Higgins.

"Credit card delinquencies saw the biggest decline on a percentage basis in the last year, which is a positive as we embark on the final three months of the year when credit card usage tends to pick up."

More details from the analysis:

· Credit card borrower debt posted a year-over-increase of 2.13 per cent.

· Lines of credit debt was up only 0.30 per cent compared with the year-earlier period.

· Installment-loan debt rose 5.51 per cent year-over-year.

· Auto debt increased 3.17 per cent compared with the third quarter of 2012, continuing a decelerating growth path.

· Lines of credit borrowers continue to counter the trend, with balances dropping for three consecutive quarters. "This is important because lines of credit make up about 40 per cent of all consumer debt, when excluding mortgages," said Mr. Higgins.

Burlington, Ont.-based TransUnion's market trends analysis is based on a sampling of anonymous credit files.

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