British Columbians are being careful with money ahead of interest hike

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British Columbians are being more cautious about their financial situation lately, according to a new poll. With the Bank of Canada expected to announce an interest rate hike on Wednesday, a poll conducted by Ipsos on behalf of MNP LTD, the largest insolvency practice in Canada, found that more than half of the 2,000 folks surveyed in BC are concerned about the impact that rising interest rates will have on their financial situation, with 84% saying they’re going to be careful with how they spend their money moving forward.

Licensed Insolvency Trustee with MNP LTD in the Lower Mainland Linda Paul said in a release that after the “repeated interest rate hikes this year, and the potential of more to come, it is understandable that more than half of British Columbians remain concerned about what the impact will be on their finances.”

“Any future interest rate hikes could push households in BC that have already slashed their expenses and shaved off as much as they can from their budgets to take on additional debt to keep up with their bills,” she said.

“The cost of servicing that debt will also become more expensive as rates rise, making it even tougher to pay back those debts,” said Paul. “Those who are using debt to pay off their other debts should seek professional help from a Licensed Insolvency Trustee before their finances spiral beyond their control.”

Making budget changes

Paul has some tips to help people make small budget changes to give themselves breathing room.

“Sometimes, those smaller expenses on your credit card can go unnoticed, but be aware that they can really add up,” she said.

“Your monthly subscriptions, such as TV streaming subscriptions, app subscriptions, music subscriptions and cloud services, for example, can be sneaky,” said Paul.

“Always look over your bills at the end of each month with a critical eye to keep those recurring monthly expenditures in check and cut down on costs where you can. Cut back by cancelling subscriptions you no longer use or use rarely, and checking to see if you have any overlapping services you can remove. Keep a close eye on any trial offers, and set reminders to cancel before you’re charged or the pricing goes up.”

Effects of rising interest rates

Most British Columbians are becoming more spend-conscious, but 60% are saying they already are feeling the effects of interest rate increases.

Meanwhile, about one in five say they don’t have a solid understanding of how interest rate increases affect their financial situation.

“There are many who may not fully understand how a rate increase can impact their finances,” said Paul. “Anyone who is already having difficulty meeting all of their debt repayment obligations should seek professional guidance to deal with their debt load.”

Interest rate increases

Back in September, the central bank announced that it would increase the rate to curb inflation. Now, the next announcement about the interest rate will come on Wednesday.

Canada could be on the brink of a recession, as late last week, Bank of Canada’s former governor, Mark Carney, told a Senate committee that Canada is likely headed for a recession, citing “difficult economic times.”

A recent report by the Organization for Economic Co-operation and Development (OECD) expects the Bank of Canada will increase its rate to 4.5% by 2023.

OECD warned that such a steep hike would be necessary to further bring rampant inflation under control, including reducing economic demand to put a real damper on rising labour costs due to the immense labour shortage.

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With files from Daily Hive Staff