Albertans’ concern about ability to pay debt reaches all-time high amidst rising rates and affordability struggles

• Albertans are more likely than any other province to say they’re more concerned about their ability to pay their debts as interest rates rise (72%, +21pts), a massive 21-point increase since last quarter and an all-time high.
• More than half regret the amount of debt they’ve taken on in life (56%, +16pts), a staggering 16-point increase since last quarter, the largest increase amongst the provinces.
• Three in four are feeling the effects of interest rate increases (74%, +5pts), more than any other province.
• Nearly half are concerned about their current level of debt (46%, +5pts).
• Half report that they are $200 away or less from not being able to meet all their financial obligations (51%, +4pts).

CALGARY, AB – July 10, 2023 – Amid rising interest rates moving upwards and a challenging cost of living for households, the proportion of Albertans who are concerned about their ability to pay their debts has reached an all-time high, according to the latest MNP Consumer Debt Index conducted quarterly by Ipsos. Albertans are the most likely (72%) among all provinces to be more concerned about their ability to pay their debts as interest rates rise, increasing 21 points since the last and setting a record high since the Index began five years ago.

Albertans are also the most likely (74%, +5pts) to say they’re feeling the effects of interest rate increases. Three in five (60%, +7pts) say they will be in financial trouble if interest rates go up much further. As a result, Albertans are the most likely (91%, +7pts) to say they will be careful with how they spend their money.

“Already weighed down by inflation and high borrowing costs, a record number of Albertans are concerned about being able to manage their debt as interest rates rise,” says Donna Carson, a Licensed Insolvency Trustee with Alberta-based MNP LTD. “The increased strain of household bills and food prices has heightened their financial anxiety, further compounding the escalating interest costs — especially for those who are already saddled with mounting consumer debt.”

As high borrowing costs persist, significantly more Albertans are pessimistic about their debt. More than half (56%) regret the amount of debt they’ve taken on in life, increasing a staggering 16 points since last quarter, the largest increase amongst the provinces. Nearly half (46%, +5pts) are concerned about their current level of debt.

More than half (51%) of Albertans report that they are $200 away or less from not being able to meet all their financial obligations, increasing four points since last quarter. This includes a third (32%, -1pt) who already don’t make enough to cover their bills and debt payments, making them insolvent.

“The dramatic increase in the cost of living is ramping up the financial pressures on households. Without much wiggle room in their budgets, there is a looming risk of falling into arrears on payments. Credit cards or other bills may go past due, at which point the late fees and interest accrue quickly. That’s when many households start to play a difficult game of catch-up,” says Carson.

Despite the efforts of some to spend more cautiously, the average Albertan reports spending an additional $274 in their weekly expenditure on essential items compared to a year ago — the most of any province. Likely the result of inflation, the vast majority of Albertans (73%) feel their weekly spending on essentials has increased by at least $100. A fifth (21%) feel it has increased by between $100 and $200.

“While some households have been diligently curbing their discretionary spending, others have reached a point where they simply can’t cut back on anything else. Despite switching to the cheapest options at the grocery store, reducing their entertainment costs, and being more cautious with their spending, they’re still struggling to pay for essential expenses like their mortgage or rent and putting food on the table,” explains Carson. “As a result, many are facing difficult choices about which bills to pay and which to postpone or forgo entirely.”

Carson recommends that anyone who anticipates missing payments first contact their lender to see if they can set up a payment plan that fits within their means.

“Missing payments without making prior arrangements with their lenders is a warning sign that borrowers need help with their debt,” says Carson. “Along with reaching out to the lenders directly, these individuals should also seek support from a Licensed Insolvency Trustee. They will conduct a confidential financial assessment and offer impartial guidance on the various debt relief options available. Depending on the individual's financial situation, this may include budgeting, debt consolidation, and more.”

Licensed Insolvency Trustees are the only federally regulated debt professionals who can assist with all the debt relief options, including Consumer Proposals and Bankruptcy, which can discharge people from debt. To support those in need of financial assistance, MNP provides free consultations across the country.

About MNP LTD

MNP LTD, a division of the national accounting firm MNP LLP, is the largest insolvency practice in Canada. For more than 50 years, our experienced team of Licensed Insolvency Trustees and advisors have been working with individuals to help them recover from times of financial distress and regain control of their finances. With more than 240 offices from coast to coast, MNP helps thousands of Canadians each year who are struggling with an overwhelming amount of debt. Visit MNPdebt.ca to contact a Licensed Insolvency Trustee or use our free Do it Yourself (DIY) debt assessment tools. For regular, bite-sized insights about debt and personal finances, subscribe to the MNP 3-Minute Debt Break Podcast.

About the MNP Consumer Debt Index

The MNP Consumer Debt Index measures Canadians’ attitudes toward their consumer debt and gauges their ability to pay their bills, endure unexpected expenses, and absorb interest-rate fluctuations without approaching insolvency. Conducted by Ipsos and updated quarterly, the Index is an industry-leading barometer of financial pressure or relief among Canadians.

Now in its 25^th wave, the Index has declined significantly to 83 points, down six points since last quarter. Visit MNPdebt.ca/CDI to learn more.

The data was compiled by Ipsos on behalf of MNP LTD between June 1 and June 6, 2023. For this survey, a sample of 2,000 Canadians aged 18 years and over was interviewed. Weighting was then employed to balance demographics to ensure that the sample's composition reflects that of the adult population according to Census data and to provide results intended to approximate the sample universe. The precision of Ipsos online polls is measured using a credibility interval. In this case, the poll is accurate to within ±2.5 percentage points, 19 times out of 20, had all Canadian adults been polled. The credibility interval will be wider among subsets of the population. All sample surveys and polls may be subject to other sources of error, including, but not limited to, coverage error and measurement error.

National data is available upon request.