Low interest rates and rising costs leading many Quebecers down an ever-riskier path to borrow more

2021-10-04   minute read

Frederic Lachance

MNP Consumer Debt Index

Six in 10 Quebecers likely to pile on more consumer debt before the end of the year, including one in five who will use buy now, pay later options.

Montreal skyline during a fall sunset

MONTREAL, QC – October 4, 2021 –The latest MNP Consumer Debt Index raises red flags about Quebecers’ plans to borrow more — and in potentially riskier ways — to make ends meet or finance their purchasing habits heading into the holiday season.

Six in 10 (58%) are at least somewhat likely to borrow more before the end of this year, including nearly four in 10 (39%) who say they’re inclined to use a credit card that already carries a balance. Buy now, pay later (BNPL) options which have boomed alongside the pandemic-induced spike in online shopping and financial instability will likely be the method of payment for one in five (21%) Quebec residents this fall. Around the same number (25%) are looking at purchase finance options, and 16 percent say they are likely to apply for a new credit card. Moreover, one in 10 (14%) Quebecers are considering a payday loan — more than any other province.

“Buy now, pay later options, payday loans, and credit cards are enticing, but the risk is many do not understand the payment terms, fees, and interest charges,” says Frederic Lachance, a Licensed Insolvency Trustee with MNP LTD in Montreal. He cautions Quebecers about the allure of borrowing more through the quick credit options and BNPL offers increasingly touted by online retailers.

“Retail incentives that offer the instant gratification of buying goods now and paying later are not always good value for consumers,” he cautions. “Before taking out any type of credit — no matter how good the offer may seem — it’s critical to know the monthly obligation and how long it will take to pay the debt in full — and weigh the risks of unexpected events.”

Rock bottom interest rates have left Quebecers feeling more comfortable with increasing their debt. Notably, Quebec residents are the most likely (60%) among all provinces to say they’re more relaxed about carrying debt than usual in this low interest rate environment — up four points since last quarter. Moreover, six in 10 (59%) say low interest rates provide them with a good opportunity to buy things they otherwise couldn’t afford.

But Quebecers also know the low interest environment must end at some point. With four in 10 (43%, -1pt) reporting they are $200 away or less from financial insolvency — including a quarter (24%, +1pt) who say they already don’t make enough to cover their bills and debt payments — it’s unsurprising nearly half (47%, +2pts) are concerned about the impact of rising interest rates on their financial situation. One in three (34%, -1pt) are concerned rising interest rates could move them toward Bankruptcy.

“We need to think of borrowing — or using any form of credit — as taking a financial risk. Interest rate increases, unexpected income loss, emergency expenses, or life-changing events are all potential outcomes that can put us in a position where we can’t pay it back,” says Lachance.

With uncertainty around the fourth wave of COVID-19, Quebecers express some concern about their ability to cope with life changes without increasing their debt. Many say they could not financially cope with an unexpected auto repair (18%, +3pts) or having an illness and being unable to work (22%, -1pt). One in five (23%, unchanged) worry about their ability to cope financially with a loss of employment or a change in work without going into debt.

“In addition to being saddled with debt, households are struggling with the rising cost of living. With the price of necessities increasing, some may take on more credit to make ends meet while others will have less room in the budget for debt repayment,” says Lachance.

Affordability concerns are widespread across Quebec, with a large proportion saying life’s necessities have become less affordable over the past year. Nearly half (47%) say it is becoming less affordable to feed themselves and their family. Three in 10 (29%) say housing costs are less affordable, and around the same number say clothing or household necessities (32%) and transportation (29%) are costing more. More Quebecers also say it’s becoming less affordable to put money aside for savings (28%).

“Anyone struggling needs to know there is professional debt help available. Licensed Insolvency Trustees are qualified professionals specifically trained to get you out of debt. The sooner you seek help, the sooner you can start working toward a financial fresh start for yourself and your family,” says Lachance.

Every Quebec resident can obtain a free and confidential assessment of their financial situation with a Licensed Insolvency Trustee. As the only government-regulated debt professionals, they provide a full range of debt-relief options, including Consumer Proposals, informal debt settlements and Bankruptcies.


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.

The Index has dipped by two points since last quarter to 95 points, having remained steadily below the established benchmark of 100 points for the last two years.

The latest data, representing the eighteenth wave of the MNP Consumer Debt Index, was compiled by Ipsos on behalf of MNP LTD between September 3-7, 2021. For this survey, a sample of 2,001 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.

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