British Columbians are more anxious about their debt situations while an increasing number are slipping deeper into debt by paying only the minimum balance on their credit cards, according to a new MNP Consumer Debt Index report released this morning.
The news follows recent data from Canada's Office of the Superintendent of Bankruptcy that the number of insolvencies in B.C. was at a more-than-three-year high in November: 974.
Only 52 per cent of British Columbians are confident that they will be able to cover their expenses in the next year without going further into debt, according to polling done by Ipsos. That is down from 59 per cent in September.
Inflation hit a 39-year peak of 8.1 per cent in June, and has since cooled to a still-high 6.8 per cent in November. Bank of Canada's policy interest rate has increased to 4.25 per cent, from 0.25 per cent in early 2022. COVID-19-related financial support, which was badly needed relief for some, is long gone.
These factors combined to make 44 per cent of British Columbians say that they were within $200 of not being able to pay their debts, which would put them into insolvency.
That is up from 42 per cent of British Columbians who felt that way in September 2022.
The survey found 46 per cent of British Columbians said that they regret the amount of debt that they've taken on in life, up from 41 per cent in September.
A similar finding was in the proportion of British Columbians who said in December that they were concerned about their level of debt. That metric rose by three percentage points, to 43 per cent, compared with September.
“The shift we are seeing in British Columbians’ attitudes towards their personal debt is a reflection of the successive interest rate hikes and persistent inflation we saw in 2022,” said Linda Paul, a MNP Ltd. licensed insolvency trustee.
She said that the "double whammy" is that many of those who are financially vulnerable are seeing borrowing costs rise as inflation eats away at their purchasing power.
One in five told Ipsos in December that they plan to use savings to pay bills, up slightly from three months earlier. Another 14 per cent said that they would borrow from friends or family – up from seven per cent in November.
These trends also have the effect of potentially hurting the economy because 36 per cent of those surveyed said that they planned to reduce their consumer spending to make ends meet. That is up from 32 per cent of people who said the same thing in November.
The survey was conducted Dec. 1 through Dec. 6, and involved 2,000 Canadians aged 18 years and older. The poll is thought to be accurate within 2.5 percentage points 19 times out of 20.