Albertans’ debt concerns spike, amid persistently high interest rates, inflation and affordability struggles, MNP Consumer Debt Index finds

• Half say they’re concerned about their current level of debt (52% +12 pts), more than any other province.
• More than half say they regret the amount of debt they’ve taken on in life (58%, +8 pts), more than any other province.
• Two in three say they’re already feeling the effects of interest rate increases (67%, +4 pts).
• Two in three say they will be in financial trouble if interest rates go up much more, (66%, +5 pts), more than any other province.

CALGARY, AB, January 16, 2023 – Albertans’ anxiety about their debt situation is building amid rising interest rates, persistent inflation, and heightened affordability concerns. The latest MNP Consumer Debt Index finds half of Albertans are concerned about their current level of debt (52%), more than any other province — increasing a record 12 points from the previous quarter. Additionally, Albertans are the most likely to say they regret the amount of debt they’ve taken on in life compared to the other provinces (58%, +8 pts).

The MNP Consumer Debt Index is conducted quarterly by Ipsos to track Canadians’ attitudes about their debt situation and their ability to meet their monthly payment obligations. It has taken a drastic plunge to 77 points, down a record 15 points from last quarter, marking an all-time low since the Index was created more than five years ago.

“The significant change we are seeing in Albertans’ attitudes towards their debt situation mirrors the rapidly rising interest rates and stubborn inflation throughout the past year. In many ways, they are feeling the squeeze more than the other provinces,” says Donna Carson, a Licensed Insolvency Trustee with Alberta-based MNP LTD. “Many overleveraged Albertans are being hit by a double whammy as borrowing costs rise sharply and inflation erodes household budgets.”

After last year’s seven interest rate increases, Albertans are feeling worse about their ability to absorb any more. Two in three Albertans (67%) say they’re already feeling the effects of interest rate increases, making a four-point jump since last quarter. Spiking eight points from last quarter, Albertans are more likely than any other province to say their ability to absorb an interest rate increase of one percentage point has worsened (33%). Two in three say they’re more concerned about their ability to pay their debts as interest rates rise (65%, -2 pts), and that they will be in financial trouble if interest rates go up much more (66%, +5 pts). Albertans are more likely than any other province to say they will be in financial trouble if rates continue to go up.

Rising costs are being felt by a growing proportion of Albertans. Compared to the other provinces, Albertans are the most likely to say that clothing or other household necessities (61%, +5 pts) and housing (49%, +3 pts) are becoming less affordable, increasing by five and three points respectively. Three in five say putting money aside for savings (63%, +3 pts) is less affordable. Dropping slightly from last quarter, more than half still say that transportation (53%, -3 pts) and feeding themselves and their family (55%, -3 pts) are less affordable.

“Many households are already spending nearly all their income each month and have very little wiggle room to accommodate an increase in expenses and debt-carrying costs. Albertans who are in this position are struggling to maintain their standard of living and may resort to taking on more debt to get by,” explains Carson.

Many Albertans are already resorting to taking on more debt or reducing their payments on existing debts to make ends meet. Compared to December 2021, Albertans are more likely than any other province to say they have paid only the minimum balance on their credit card (35%, +8 pts), borrowed money they can’t afford to pay back quickly (25%, +9 pts), or that they will borrow from friends or family (19%, +9 pts). One in four say they will use their savings to pay their bills (24%, +4 pts); about one in 10 say they will use their credit card to pay their bills (14%, +2 pts) or have paid the minimum balance on their line of credit (15%, +1 point). Albertans are also the most likely to say they plan to reduce their discretionary spending to make ends meet (40%, -2 pts).

“More individuals are being forced to make difficult financial decisions and potentially take on more debt in an attempt to stay afloat. Those decisions can unfortunately have lasting financial impacts and may push some into a debt spiral. These types of financial challenges often trigger stress and anxiety which can have a significant impact on the individual’s mental health,” says Carson.

Two in five (42%, -5 pts) Albertans report they are $200 away or less from not being able to meet all of their financial obligations at month’s end. That includes three in 10 (29%, -1 point) who say they already don’t make enough to cover their bills and debt obligations. Only half are confident in their ability to cover all of their living/family expenses in the next year without going further into debt (49%, +3 pts).

“With the holiday bills arriving this month, I encourage Albertans to be aware of the financial red flags that may point to the need for guidance from a debt professional,” says Carson. “Anyone who is unable to pay their bills and debt obligations or anticipate they will miss payments, or who plans to use other forms of credit to cover bills, should seek help from a debt professional like a Licensed Insolvency Trustee right away before the problem gets worse.”

Debt-relief options can include striking a deal with creditors through an informal debt settlement, consolidating all debts into one monthly payment, making a debt repayment plan through a Consumer Proposal, or declaring Bankruptcy.

Carson explains that individuals often miss the initial warning signs or feel shameful about seeking help, causing the debt to snowball, and in some cases leaving the individual with fewer options.

“Every person’s debt situation is unique, which is why meeting with a Licensed Insolvency Trustee for a free, confidential financial review is often the best place to start. The Licensed Insolvency Trustee will walk through all of the debt relief options available and offer an expert opinion on which would provide the most permanent and cost-effective solution,” advises Carson.

Licensed Insolvency Trustees are federal-regulated and are the only debt professionals in Canada who are qualified to advise on all the debt relief options available. MNP offers free consultations across Canada.

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 has 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 twenty-third wave, the Index has plunged 15 points since last quarter to 77 points, an all-time low since the MNP Consumer Debt Index’s inception over five years ago. Visit MNPdebt.ca/CDI to learn more.

The data was compiled by Ipsos on behalf of MNP LTD between December 1 and December 6, 2022. 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.