Prince Edward Islanders have the most debt regret amid high interest rates and inflation, revealing financial strain and mental health impact

• Atlantic Canadians are the most likely to regret the amount of debt they’ve taken on (52%, +2 pts) compared to those in the other provinces.
• Atlantic Canadians are the most likely than those in any other province to be making minimum payments on their line of credit (26%) compared to 2021.
• Atlantic Canadians are the most likely to say they took from savings, home equity, RSP, or alternative methods to pay debt or day-to-day expenses in the last year (25%).
• Atlantic Canadians are the most likely to say their financial situation causes them anxiety (66%) compared to those in the other provinces. They also say their financial situation is causing them stress (61%), isolation (54%), or embarrassment (43%).

CHARLOTTETOWN, PEI – January 8, 2024 – The impact of inflation and higher interest rates is leaving Atlantic Canadians feeling pessimistic about their debt, according to the latest MNP Consumer Debt Index. More Atlantic Canadians say they regret the amount of debt they’ve taken on in life (52%, +2 pts) compared to last quarter, and they are most likely than those in any other province to agree they have debt regrets. Nearly half are concerned about their level of debt (47%, -3 pts). Seven in 10 agree they are concerned about their ability to repay their debts (70%, -7 pts), well above the national average of 63 percent.

“Many Atlantic Canadians are relying on credit as they try to keep up with rising costs. However, the burden of repaying that debt is compounding the financial strain on many households, particularly amid higher interest rates,” says Walter MacKinnon, a local Licensed Insolvency Trustee with MNP LTD. “Most daily necessities cost more, and the cost of debt repayment has increased. As a result, people are feeling concerned about debt management and making ends meet.”

Interest rates likely contribute to Atlantic Canadians’ concerns, as many are pessimistic about their ability to absorb further interest rate hikes. Atlantic Canadians are the most likely compared to those in the other provinces (33%, -2 pts) to say their ability to deal with an interest rate increase of one percentage point has worsened. One in five (21%, +2 pts) say they are better equipped to absorb this increase. When this question was rephrased to ask their ability to absorb an interest rate increase of an extra $130, Atlantic Canadians are also the most likely (44%, -2 pts) to say their ability to absorb this increase is much worse. Atlantic Canadians are the least likely (15%, +2 pts) to say their ability to absorb this increase has improved compared to those in any other province. 

However, Atlantic Canadians’ debt perception has improved since last quarter — likely a result of the financial management strategies some have implemented over the past year. More Atlantic Canadians this quarter perceive their current debt situation as better (20%, +7 pts) compared to a year ago, while nearly a quarter rated it as much worse (23%, unchanged).

“Last year, many households took steps to tighten their budgets and adjust to higher interest rates. This may be providing a better sense of readiness for some, but not everyone has made the same strides,” says MacKinnon. “Atlantic Canadians who were already overextended by the high cost of living may feel they need to accumulate more debt just to meet their basic needs. This only fills one hole by digging another, which can start a cycle of debt.”

A quarter of Atlantic Canadians (25%) say they needed to take money from savings, home equity, RSP, or alternative methods to pay debt or day-to-day expenses in the past year — more than those in any other province. Additionally, the number of Atlantic Canadians opting to make only the minimum payments on their debts has jumped over the past two years. Atlantic Canadians are more likely than those in any other province to say they have made only the minimum payment on their line of credit (26%), a staggering 12-point increase compared to 2021. Three in 10 (31%) say they have made only the minimum payments towards the balance on their credit card, up five points since 2021. One in five (20%) indicate they borrowed money they can’t afford to pay back quickly, an increase of five points compared to 2021.

“Atlantic Canadians are facing upcoming mortgage renewals, rising costs, and the additional pressure of holiday bills coming due. Many might be edging closer to a crisis point both financially and mentally,” says MacKinnon.

The survey also underscores the impact of finances on Atlantic Canadians’ mental health, with Atlantic Canadians being more likely than those in other provinces to indicate their financial situation causes them anxiety (66%). Three in five say their financial situation causes them stress (61%) and more than half say it causes them to feel a greater sense of isolation (54%). More than two in five state they are embarrassed by the amount of debt they owe (43%). Two in five (40%) admit to hiding their credit card debt from friends and family, more than those in any other province.

“At a certain point, some people realize that there’s no straightforward way to settle their debts, regardless of the interest rates or timeline. This realization can be an incredibly isolating, stressful, and sometimes embarrassing experience,” explains MacKinnon.

He says that the shame and guilt associated with unmanageable debt often cause people to delay getting help, and many draw out the situation using credit to stay afloat. Some may face aggressive collections activity or debt relief scams — resulting in more stress and sleepless nights.

“Financial stability and preparedness contribute to a person’s overall well-being. Those facing financial distress should seek assistance, the same way someone facing a health crisis would seek assistance,” explains MacKinnon.

MNP’s national team of Licensed Insolvency Trustees offers free consultations to help severely indebted Atlantic Canadians get unbiased debt advice, understand their rights, and determine the best path forward. Licensed Insolvency Trustees are the only federally regulated debt professionals who can assist with all the debt relief options, including Consumer Proposals and Bankruptcy, stop harassment from debt collectors, and discharge people from debt.

“Our clients have often needlessly grappled with debt for long periods of time, sometimes spanning years or even decades, before they seek our assistance,” MacKinnon explains. “A Consumer Proposal or Bankruptcy may be the right step in some cases, but others may simply need guidance to create a budget and a plan to manage their debts. No situation is alike, which is why it is critical to get tailored, impartial advice from a licensed professional.”

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 twenty-seventh wave, the Index decreased to 83 points, down three points since last quarter. Visit MNPdebt.ca/CDI to learn more.

The data was compiled by Ipsos on behalf of MNP LTD between November 28 and December 4, 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.