Survey Shows 46 Percent of Canadians Are Only $200 Away from Financial Insolvency

July 23, 2024 TruthUSA

Nearly half of Canadians are teetering on the brink of insolvency, a new survey suggests.

Forty-six percent of Canadians say they are $200 or less away from failing to meet all their financial obligations, according to the MNP Consumer Debt Index survey conducted by Ipsos and released July 22.

While that figure is consistent with the previous quarter, there is an increase among those who were close to insolvency and already not making enough to cover their bills, Ipsos said. Nearly one in three Canadians—29 percent—say they already can’t cover their bills and debt payments, and those who say they are $1 to $200 away from insolvency increased by 3 points.

“Some individuals are living paycheque to paycheque, struggling to make ends meet and cover day-to-day necessities,” MNP president Grant Bazian said in a press release, adding that with the prices of many daily necessities still high, “many have not seen the meaningful reduction in their monthly expenses needed to ease their financial burdens.”

Nationally, the MNP Consumer Debt Index fell six points, a decline signalling “increasingly negative” views on participants’ debt load, the survey found.

Alberta saw the sharpest rise in financial stress among provinces, with 47 percent of Albertans saying they are within $200 from failing to meet all their financial obligations—an increase of 13 percentage points from the previous quarter.

An additional 32 percent of Albertans surveyed say they already can’t cover their expenses and debt payments, up 10 points from the last quarter, the report from the Calgary-based accounting firm found.

“We are seeing a significant shift in the number of Albertans who say they are close to insolvency or already not making enough to cover their bills,” MNP licensed insolvency trustee Lindsay Burchill said in a press release.

The recent interest rate cut by the Bank of Canada has done little to shift Canadians’ pessimistic perceptions of their personal finances, the survey suggests. The central bank cut its benchmark interest rate by a quarter of a percentage point to 4.75 per cent in June.

Despite that cut, 66 percent of those surveyed said they “desperately need interest rates to go down,” while 56 percent said rates may not decline quickly enough to provide the financial relief they need. Fifty-seven percent said interest rates will need to drop considerably for their financial situation to improve significantly.

Those with an income of $40,000 or less were much more likely to say they had accumulated so much debt that lower interest rates won’t provide much relief.

“The data tells us that many Canadian households will need support to help manage their debt payments over the coming months, regardless of interest rates,” Mr. Bazian said.

Ipsos senior vice-president of public affairs Sean Simpson said the Bank of Canada’s recent announcement about lowering key interest rates might have prompted some Canadians to expect a more substantial or immediate effect on their finances.

“As a result, they’re now more disheartened, eagerly looking forward to the next announcement in the hope of a steady decline that will significantly influence their financial situation,” he said in a July 22 blog post.

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