Canadians Can't Pay Their Bills And Are In More Debt Than Ever Before
And it will probably only get worse.
The Bank of Canada is expected to announce an interest rate hike on Wednesday, not that many Canadians will be able to handle the financial squeeze.
A staggering one-third of Canadians can’t cover their monthly expenses and payments, according to a survey conducted by Ipsos for business advisory firm MNP. Only three months ago, only one-quarter of Canadians were in the same financial situation.
Not that it’s looking financially pretty for a lot of other Canadians.
Almost a half of Canadians (48%) are only $200 shy of not being able to pay their monthly bills and debt obligations.
Even the Canadians who were doing “well” are facing more financial burdens. After all monthly expenses are paid the average Canadian still has $631 left in the bank, a drop of $112 since September.
"With interest rates on the rise, Canadians are more stretched financially than they have ever been before," said Grant Bazian, MNP President. "I wouldn't say we're at a major tipping point yet, but likely not far off."
Unfortunately, if interest rates increase, the situation won’t get any better. That’s at least what many Canadians believe.
In order to cover the costs of an interest rate hike, 48% of Canadians predict they will need to accrue even more debt to make payments. One-in-three Canadians fear they’ll actually go bankrupt as a result of increased interest rates.
If you’re a Millennial reading this and actually have no idea how interest rates impact your financial situation, you’re not alone. 37% of Millennial respondents said they don’t really understand how increased internet rates will change things.
2000 Canadians were interviewed from Dec 8th to Dec. 13th, 2017 for the Ipsos-MNP survey.