Risky Financial Behaviours Keeping British Columbians In Debt

One in 10 (13%) say they will never be debt free; require more than 6 years to be debt free on average.

Vancouver, BC, March 2, 2020 — A survey conducted by Ipsos on behalf of MNP LTD helps identify some of British Columbians’ 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 half of British Columbians (51%) admit to engaging in what debt experts consider risky financial behaviours over the past year.

“When people in engage in risky behaviours like making only the minimum payment and borrowing more than they can afford to pay back, they can end up trapping themselves in an endless cycle of debt that can be nearly impossible to free themselves from,” says Lana Gilbertson, a Vancouver-based debt expert with MNP LTD, the country’s largest insolvency firm.

Making only the minimum payment on debts was the most common risky behaviour among British Columbians last year. One in five (20%) said they paid only the minimum on their credit card. Twelve percent said they paid only the minimum on a line of credit.

“This kind of behaviour might appear reckless and impulsive, but the reality is some believe it is necessary. They are just trying to get their debts under control, but are having a hard time keeping up,” says Gilbertson.

Cash-strapped, already saddled with debt and struggling to navigate, the second most common financial mistake among British Columbians was borrowing money they can’t afford to pay back quickly (18%). About 1 in 10 said they spent money they shouldn’t have in order to 'keep up with the Joneses' (12%), made a major purchase on credit without paying it off right away (15%) or bought something on credit that requires no payments for a while (8%).

“Some of these financially risky behaviours can be explained by a lack of financial literacy. Some are in denial about their financial situation and spending beyond their means. Meanwhile, others are trying their best to stay afloat but may not possess the knowledge required to meaningfully reduce their debt,” says Gilbertson. “Whatever the reason, many are unaware of the lasting consequences of taking on debt.”

While about one in three (32%) British Columbians are fortunate enough to say that they are currently living without debt obligations, it seems 1 in 10 (13%) are suffering the consequences of their money mistakes and have lost hope; they say they will never be debt-free. Although, compared to other provinces, British Columbians are the least likely to think this.

“Feelings of hopelessness are often associated with being in debt. People may feel too embarrassed to ask for help, which leaves them to try to deal with their debt alone. This can make the problem even worse,” explains Gilbertson.

Many British Columbians do believe they can be debt free one day but will still be struggling for years to come. Of the remaining 55 percent who aren’t debt free or haven’t lost hope of becoming debt free, they estimate it will take approximately six years and eight months to pay off their debts.

 “Living debt free isn’t out of reach — even for those who are heavily indebted. Licenced Insolvency Trustees offer professional advice to help individuals make informed choices to deal with their debt,” says Gilbertson.  

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.