20% of Canadians regret how much they borrowed: Survey
It’s been roughly 20 months since borrowing costs were slashed drastically at the onset of the COVID-19 pandemic, but a newly released poll is providing fresh evidence that Canadians are still binging on cheap money.
According to the latest MNP Consumer Debt Index, 58 per cent of Canadians are likely to take on more consumer debt before the end of the year. And the insolvency firm is concerned about the “riskier ways” consumers may pile it on.
Among survey respondents who intend to increase their debt load, 37 per cent said their credit card is already carrying a balance. Twenty-two per cent are planning to use Buy Now Pay Later options, which, according to MNP, have increased in popularity during the pandemic. Another 22 per cent of respondents are looking at purchase finance options. Fifteen per cent said they are likely to apply for a new credit card, while nine per cent said they are considering a pay day loan.
“’Buy now, pay later’ options, payday loans and credit cards are particularly attractive to those with tight finances,” said Grant Bazian, president of MNP, in a release. “What Canadians need to remember is that these credit options benefit the lenders the longer that people stay in debt because of the high interest costs and various fees for processing and/or late payments.”
In the age of rock-bottom interest rates, Canadians are feeling confident increasing their indebtedness, with the majority of survey respondents indicating low rates are giving them an opportunity to buy things they couldn’t otherwise afford.
But consumers are aware the good times can’t last forever, with 35 per cent of respondents saying they’re worried that higher interest rates could push them into bankruptcy. Meanwhile, 46 per cent of those polled said they are within $200 or less away from not being able to meet their financial obligations.
“Debt can be a useful tool, but every time you borrow, you are taking a financial risk. Interest rate increases, unexpected income loss, emergency expenses or life-changing events are all potential outcomes that can make debt repayment next to impossible,” said Bazian.
To conduct this poll, MNP surveyed 2,001 Canadians over the age of 18 between Sept. 3 and Sept. 7. The poll has a margin of error of plus or mine 2.5 percentage points, 19 times out of 20.