Report: Seven in 10 Albertans are concerned about the impact of interest rates on their financial situation, up four points since last quarter

Nine in 10 say they will be more careful with how they spend their money with interest rates rising (+5pts)

CALGARY, AB – October 24, 2022 – As another Bank of Canada interest rate announcement looms, a recent poll conducted by Ipsos on behalf of MNP LTD finds that nearly seven in 10 Albertans (68%) say they’re concerned about the impact of rising interest rates on their financial situation, increasing four points since last quarter. Compared to the other provinces, Albertans are the most likely (67%, +1pt) to say they’re more concerned about their ability to pay their debts as interest rates rise.

“Albertans have endured repeated interest rate hikes this year, so it’s understandable that more are concerned about what the impact will be on their finances,” says Donna Carson, a Licensed Insolvency Trustee with Alberta-based MNP LTD.

Carson says those who are financially vulnerable and struggling to make ends meet may not be able to cut back their budgets any further if interest rates continue to rise and make their debts more unaffordable.

“Many households have already slashed their budgets and cut down on as many expenses as they can. Future interest rate hikes could put them in a tough financial position where they’re forced to rely on debt to make ends meet. But as rates rise, so too will the cost of servicing that debt — making it far more difficult to pay off,” explains Carson. “I advise those households to seek professional debt help from a Licensed Insolvency Trustee before their debt snowballs beyond control.”

While Licensed Insolvency Trustees can administer debt-relief options including Consumer Proposals and Bankruptcy, they’re also qualified to provide valuable personalized debt advice to individuals who are struggling to budget for their bills and debt repayment obligations. Additionally, Licensed Insolvency Trustees can help individuals reduce their debts through an informal debt settlement, a voluntary arrangement negotiated between an individual and their creditors, which will help put them in a better financial position as the cost of borrowing continues to rise.

Carson adds that many can think about making small budget changes to give themselves some breathing room.

“Minor credit card expenses often go unnoticed but they can really add up. In particular, monthly subscriptions such as TV streaming, apps, music, and cloud services can be quite sneaky,” says Carson. “You can start cutting back by cancelling subscriptions you rarely or no longer use and looking to see if you’re paying for any overlapping services. For trial offers, make sure to set reminders to cancel before you’re charged or the pricing increases. Always take a critical look at your bills each month and keep an eye on those recurring expenditures so they don’t get away from you.”

Most Albertans (92%, +5pts) agree they will be more careful with how they spend their money with interest rates rising. In fact, Albertans are more likely than any other province to say so. Yet while the majority of Albertans are more conscious of their spending, six in 10 (63%, -5pts) say they’re already beginning to feel the effects of interest rate increases.

Compared to the other provinces, Albertans are by far the least likely (16%, -1pt) to say they’re better equipped to absorb an interest rate increase of one percentage point than they used to be — and the most likely (25%, -6pts) to say their ability to deal with this increase has worsened. Only one in 10 (13%,+2pts) say their ability to absorb an interest rate increase of an extra $130 is much better, while a larger proportion (33%, -5pts) say it’s much worse.

“Albertans seem to be by far the least prepared to deal with a one-percentage-point interest rate increase,” says Carson. “Anyone who is already struggling to meet all of their debt repayment obligations should seek professional guidance to deal with their debt.”

Approximately one in five Albertans (22%) say they don’t have a solid understanding of how interest rate increases impact their financial situation. Rising three points since last quarter, six in 10 Albertans (61%) now say they will be in financial trouble if interest rates go up much more. Nearly four in 10 (38%, -7pts) say rising rates could drive them closer to Bankruptcy, showing improvement since last quarter.

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 Survey

The data was compiled by Ipsos on behalf of MNP LTD between September 6 and September 13, 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.