Over half of Canadians are $200 or less away from being unable to pay bills
Over half (52%) of Canadians say they’re $200 or less away from being unable to pay their bills, according to the latest MNP Consumer Debt Index.
This is a 6% increase from the last index report released in April.
The report cites rising interest rates and the high cost of living as the primary reasons Canadians cannot meet their financial obligations.
“The escalating burden of household bills and food prices has intensified Canadians’ financial anxiety ā and is further compounded by increased debt-servicing costs, particularly for those who are deeply indebted,” stated MNP President Grant Bazian in a release.
Among respondents, 35% said they already don’t make enough to cover their bills and debt payments, making this the highest recorded proportion since the report began to be published five years ago.
The MNP Consumer Debt Index significantly declined from 89 points in April to 83 in July, as more Canadians expressed a negative view toward their finances this quarter.
The report says that 52% of respondents regret the amount of debt they’ve accumulated and 48% are worried about their current level of debt. These have both reached all-time highs this quarter, notes MNP.
Rising interest rates are a driving cause behind why Canadians are worried they cannot pay off their debt.
Last week, the Bank of Canada hiked its key interest rate from 4.75% to 5%, with the Bank Rate at 5.25% and the deposit rate at 5%.
According to the report, 66% of respondents are more concerned about their ability to pay off their debts as interest rates rise, and 63% say they’ll “be in financial trouble” if interest rates go up any further.
Even though many are trying to cut costs and spend carefully, the average Canadian says their weekly expenses have increased by $230.
Bazian says that “many households have reached a point where there is nothing left to cut back on.”
“This situation forces individuals to make difficult decisions regarding which bills they can prioritize and which they may have to postpone or forgo altogether,” he added.
Bazian recommends that Canadians who foresee missing payments contact their lender as soon as possible to see if a payment plan option is viable.
The data used in the report was compiled by Ipsos on behalf of MNP between June 1 to 6, 2023, and 2,000 Canadians 18 years and over were interviewed.
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