Canadian companies are taking extra precautions to protect themselves, dropping credit limits and increasing interest rates for late payments in response to the growing credit crunch.

Art Thornton, an Ottawa-based bankruptcy trustee, said credit changes — such as TD's decision to raise interest rates on late payments by five percentage points — will put pressure on consumers.

"The banks have shoveled out credit religiously to lower- and middle-income people — and they're the ones who are going to bear the brunt of the change in credit policy," he said.

"It's going to increase the interest rates noticeably to people who can ill-afford to pay, and it's going to render them in many cases insolvent."

Lisa Gibson, a spokeswoman for Canadian Tire, said the retailer has begun lowering credit limits on cards that are rarely used.

"Certainly if someone is in trouble financially, there's a tendency to pick up an unused credit card, so we're just trying to manage that risk," she said.

Laurie Campbell, executive director of the debt counseling agency Credit Canada, said consumers must use their credit cards prudently to avoid financial fallout.

"When people start using their credit cards for everyday purchases you know that it's a huge red flag — and that's what's happening down south," she said.

"They just don't have the cash available to make everyday purchases, and they're using the credit card to bridge that gap."

Consumer Rollie Larche, however, says she's had to put some expenses on her credit card when her retirement income doesn't meet her needs.

"Medical expenses, prescriptions, if they're too high I can either eat or I can pay for my medications," she said. "And I choose to eat, so what I can't afford to pay cash, I have to put on the credit card."