Risky Financial Behaviours Keeping Albertans In Debt

Two in 10 (19%) say they will never be debt free; require more than 7 years to be debt free on average — longer than any other province.

Calgary, AB, March 2, 2020 — A survey conducted by Ipsos on behalf of MNP LTD helps identify some of Albertans’ costly money mistakes which could be contributing to the mounting consumer debt challenges across the province. From making only minimum payments to borrowing money they can’t afford to repay, the survey found nearly half of Albertans (47%) admit to engaging in what debt experts consider risky financial behaviours over the past year.

“Risky behaviours like making only the minimum payments, impulse purchases and taking on more debt in order to make ends meet can put people in an endless cycle of debt that can be nearly impossible to break free of,” says Donna Carson, a Calgary-based debt expert with MNP LTD, the country’s largest insolvency firm.

Paying only the minimum on their credit card was the most common risky behaviour among Albertans last year. While those across the country were guilty of this to some degree, residents of Alberta (26%) and Saskatchewan and Manitoba (28%) and were the most likely to admit to it.

“While some might be engaging in these behaviours out of recklessness, for others it is out of necessity,” says Carson.

The second most common financial mistake among Albertans was being lured in by deals and special offers (12%). Cash-strapped, already saddled with debt and struggling to navigate, one in ten (10%) also admitted to borrowing money that they know they can’t afford to pay back quickly.

“A lack of financial literacy may be to blame for why many are engaging in behaviours that are considered financially risky. Some want to dig themselves out of debt but just don’t have the know-how to do so, while others are digging themselves further into debt because they are in denial about the state of their finances,” says Carson. “Either way, there’s an appetite for fast money and it’s important for people to understand the longer-term consequences of using it as a crutch.”

While about 3 in 10 (29%) Albertans are fortunate to say that they are currently living without debt obligations, it seems 2 in 10 (19%) are suffering the consequences of their money mistakes and have lost hope; they say they will never be debt-free.

“Being in debt causes feelings of hopelessness and embarrassment. People are hesitant to ask for help. That only exacerbates the problem, because then they are dealing with it alone,” explains Carson.

Many Albertans believe they can be debt free one day but will still be struggling for years to come. Of the remaining 52 percent who aren’t debt free or haven’t lost hope of becoming debt free, they estimate it will take approximately seven years and eight months to pay off their debts — longer than any other province.

“Becoming debt free is possible, even for those who are severely indebted. Licenced Insolvency Trustees can provide valuable advice to anyone struggling financially and can help them make educated decisions to manage their debt,” says Carson.  

MNP LTD has an experienced team of Licensed Insolvency Trustees who provide federally regulated debt-relief options, such as Consumer Proposals and Bankruptcies. They offer free consultations in more than 230 offices across the county.  

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 230 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.

About the Survey

This survey was conducted by Ipsos on behalf of MNP LTD between December 4 and December 9, 2019. A sample of 2,000 Canadians aged 18 years and over was interviewed. The precision of online polls is measured using a credibility interval. In this case, the results are accurate to within +2.5 percentage points, 19 times out of 20, of what the results would have been 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 the national data is available by request.