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Canada's household debt problem is not quite as bad as we think it is.

By some measures, growth in debt has stalled or slowed this year. Take credit cards – outstanding balances are flat on a year-over-year basis. And where borrowing is rising the most – car loans – you can argue that people are making rational economic decisions to replace aging vehicles.

To be sure, people are way too comfortable owing money these days. But the level of angst about debt is overly dramatic. It's even a little hypocritical in terms of what people are saying about debt and what they're actually doing.

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A story about rising debt levels was one of the most read on the Globe website last week, and the comments from readers treated indebtedness as the worst sort of personal failing. And then there are the polls the big banks keep doing in which people are asked about their attitudes toward debt. Debt is bad, most of the poll participants keep saying in their answers.

The Bank of Canada has warned about debt, the federal Finance Minister has spoken up and the media has covered the issue closely – yet people keep on borrowing. We now have a public consensus that debt is a social evil of smoking-like proportions and a private one that it's completely acceptable.

Today's borrowing reality is somewhere between these two extremes, not that you'd know it from the alarm bells that went off as the latest debt numbers were issued last week.

TransUnion, a keeper of the nation's personal credit files, issued a report showing a year-over-year rise in non-mortgage debt of 2.4 per cent in the second quarter of the year. This was seen as a major setback for the cause of reducing personal debt levels that aren't too far off those seen in the United States before the last recession hit.

But the latest rise in borrowing momentum wasn't a story of mindless acquisition. Pretty much the whole increase came from loans taken out by people buying something useful, even essential, in many families. That would be cars. In a rare example of group-think frugality, Canadians have been hanging onto their cars to the point where the average vehicle was 8.6 years old as of 2011. There's pent-up demand for replacement vehicles, and now people are acting on it.

It's a great time to buy a car. A recent edition of our Globe Drive newspaper section included ads for vehicles being sold with zero or 1.9-per-cent financing for terms of 48 to 72 months. A new car would probably use less gas than one built eight or nine years ago, and it would likely be safer.

Even the head of a non-profit credit counselling agency admits that – at least for some consumers – it's a good time to replace the car. "It makes a lot of sense [for people in good financial shape]," said Laurie Campbell, CEO of Credit Canada Debt Solutions. "But I'm jaded. I see people coming in here and half their income is going to car payments, gas, insurance, parking, repairs – it's insane."

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Cases like these highlight the fact that high debt levels are dangerous to both personal finance and the country's health. Families in deep debt can't take care of themselves properly, and they can't do their part to sustain the consumer spending on which our economy depends.

Fortunately, trends in borrowing are starting to look more favourable. You can see this in the fact that the total amount of unpaid credit card balances has stopped growing. Line of credit balances were up 6 per cent by the latest tally, but Benjamin Tal of CIBC Economics said a lot of this growth comes from people moving over their double-digit credit card balances to a borrowing vehicle with single-digit rates.

"People are getting smarter – they're moving from high interest rates to low interest," Mr. Tal said. "They're optimizing their debt."

Mortgage borrowing grew 7 per cent in Mr. Tal's latest numbers, but that's the lowest rate since mid-2009. Even slower growth in mortgage debt is expected as a result of new rules that make it more expensive for many first-time buyers to get into the market. The rules require borrowers to take a 25-year amortization if they have a down payment of less than 20 per cent, down from 30 years. The shorter the amortization period, the higher your regular payments.

It's beyond dispute that Canadians owe too much, but there are nuances to this story that are being missed. Our debt problem isn't quite as bad as we think.

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