Albertans feeling the effects of rising interest rates more than any other province, half say increases could drive them closer to Bankruptcy

• Six in 10 say they’re beginning to feel the effects of interest rate increases (58%, +6pts), more than any other province.
• Two thirds say they’re more concerned about their ability to pay their debts as interest rates rise, (66%, +6pts).
• One third say they’re not financially prepared to deal with rising interest rates (34%, +7pts), more than any other province.
• More than half are concerned they won’t be able to cover all living / family expenses in the coming year without going further into debt (52%, +9pts).
• Thirty-six percent say they already don’t make enough to cover their bills and debt payments (+8pts), more than any other province.

CALGARY, AB – April 18, 2022 – Albertans are feeling the enduring financial impacts of COVID-19 along with the pressures of increased interest rates and a rising cost of living more than any other province, according to the latest MNP Consumer Debt Index, which is conducted quarterly by Ipsos on behalf of MNP LTD.

Half of Albertans (50%) say rising interest rates could drive them closer to Bankruptcy, a significant 15 point increase since December and the largest increase compared to the other provinces. Six in 10 (58%, +6pts) say they’re already feeling the effects of interest rate increases, more than any other province. Two in three (66%, +6pts) say they’re more concerned about their ability to pay their debts.

“Albertans may be feeling the effects of rising interest rates more than the rest of Canada due to high consumer debt loads increasing the financial pressure for many households in the province,” says Donna Carson, a Licensed Insolvency Trustee with Alberta-based MNP LTD.

“Many are likely to pile on more debt in an attempt to keep up with rising costs. But as interest rates rise, so will the cost of servicing some of those debts, making it more challenging to pay them down. It’s extremely hard to break free from that cycle of debt once it’s begun.”

Looking ahead, six in 10 (61%, +1pt) say they’re concerned about the impact of rising interest rates on their financial situation. Compared to other provinces, Albertans are also the most likely (34%, +7pts) to say they’re not financially prepared to deal with a rate increase of one percentage point.

“Many people’s rainy-day savings were severely depleted over the course of the pandemic,” explains Carson. “Albertans’ household budgets are contracting and at some point it will become impossible for many people to cover monthly expenses and debt repayment obligations — particularly for those who are already in the red.” 

Many households could find themselves at that point within the next 12 months; half (52%) report they are $200 away or less from not being able to meet all of their financial obligations, a significant eight-point increase since December. This includes 36 percent (+8pts) who say they already don’t make enough to cover their bills and debt payments, more than any other province. In addition, the average amount Albertans have left over at the end of the month has decreased marginally to $711, down $15 from December.

More than half (52%, +9pts) are concerned they won’t be able to cover all living / family expenses in the coming year without going further into debt, the largest increase from last quarter among all provinces. Albertans are the most likely to say they’re concerned about their current level of debt (50%, unchanged) compared to the other provinces, and nearly the same proportion regret the amount of debt they’ve taken on in life (47%, -3pts).

“Those who are struggling financially often feel a lot of shame and regret about their debt situation. The stress and anxiety caused by a heavy debt burden can lead many to convince themselves of things that simply aren’t true: they’re alone, they’ve failed, they’re beyond help, or they’ll never be free of their debt,” explains Carson.

“We have all been through a great deal over the last two years, including a financially devastating pandemic and the associated job loss. My advice for anyone struggling is to go easy on yourself and seek out professional debt advice right away.” 

Licensed Insolvency Trustees are the only professionals that can offer deeply indebted individuals with debt-relief options, including Consumer Proposals and Bankruptcy.

Carson notes that while many people fear they will lose their house or car in a Bankruptcy, there are alternatives that can protect assets while still providing relief from unsecured debt. By filing a Consumer Proposal, for example, an individual can retain their assets and repay their unsecured debt through interest free monthly payments that fit their budget.

Both Bankruptcy and Consumer Proposals also offer legal protections which stop wage garnishments and end harassing phone calls from creditors.

“If you’re at or nearing the point where you are covering your bills with credit cards and other forms of debt, it’s time to reach out and speak with a government licensed professional who will take an unbiased approach and give you the debt-relief advice you need,” says Carson.

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 who are struggling with an overwhelming amount of debt each year. 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 twentieth wave, the Index has dropped one point since last quarter to 87 points, remaining at an all-time low since its inception in June 2017. Visit MNPdebt.ca/CDI to learn more.

The data was compiled by Ipsos on behalf of MNP LTD between March 9 and March 15, 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.

A summary of some of the national data is available by request.