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Almost half (46%) of Canadians say that their household finances are worse than planned at this point in 2024, up four percentage points from a year ago. This is despite 79% of Canadians who reported that their income either stayed the same or increased in the last three months. In comparison, 21% reported that their household income decreased in the last three months and 40% expect their household income to increase in the next year. While the study finds that the majority of Canadians say their income has either stayed the same of increased, 57% feel their income is not keeping up with the rate of inflation.
“While income levels are holding steady overall, our data indicates that cost of living increases continue to put pressure on household finances and are fueling a decline in financial optimism among Canadians. Many Canadians are tightening spending and looking to take on more credit to help with cash flow. With the Bank of Canada recently lowering the prime interest rate for the first time in four years we may see some of these trends around taking on new credit or refinancing existing loans accelerate,” said Matthew Fabian, director of financial services research and consulting. “This is especially likely for younger Canadians, who indicated that interest rates play a larger factor in their decision to take on new credit.”
Other key findings of the study include:
Canadians feeling the strain of increased cost of living
Low (61%) and medium household incomes (57%) and older Canadians say their household incomes aren’t keeping up with inflation the most, with 66% of Gen X and 60% of Baby Boomers indicating this. Many Baby Boomers and some Gen Xers are at or near retirement, meaning they may have fixed retirement incomes which increases the pressure of inflation.
As this pressure rises, consumers must make trade-off choices as to where money is directed. Essential goods such as groceries and gas tend to be considered as spending priorities, potentially leaving less disposable income available to cover credit debt. As seen in the most recent TransUnion Consumer Industry Insights report, 1.3% of Canadians are only paying the minimum balance in their credit card.
Shifts in saving patterns and taking on more debt
Despite some Canadians only making minimum payments on their credit cards, there was a four-percentage-point increase in the number of Canadians who say they paid down debt faster in the last three months, when compared to Q1 2024.
Other ways Canadians reported they adjusted their saving patterns in the last three months include:
Canadians anticipate shifts in household spending
Canadians are showing concern about the increased cost of goods for non-discretionary items saying they were most concerned with the increased cost of:
In the next three months, Canadians are anticipating their spending habits to accommodate the rising cost of living. While over a third (38%) expect to increase the amount they pay for bills and loans, over half (52%) said they’ll cut back on discretionary spending (dining out, travel and entertainment). In fact, 57% say they already cut back on discretionary spending in the last three months, and a significant percentage say they canceled subscriptions or memberships (29%) and canceled or reduced digital services (24%) in that timeframe.
Interest rate levels impact appetite to take on more debt Nearly two-thirds (62%) of Canadians indicate that rising interest rates have a high or moderate impact on whether they’ll apply for new credit in the next 12 months. This percentage increases among Gen Z at 77% and Millennials at 74%, compared to 59% of Gen X and 47% of Baby Boomers.
Nearly one in three Canadians struggling to pay their bills and loans in fullThirty percent of Canadians report that they expect to be unable to pay at least one of their current bills and loans in full meaning some may need to tap into savings or take on additional credit to pay these balances. Among those who said they couldn’t pay at least one current bill and loans in full, 35% intend to pay a partial amount they can afford.
Other ways Canadians said they plan to help pay their currents bills and loans among those who said they couldn’t pay at least one:
Of those planning to take on more debt, 69% say they’ll either apply for a new credit card or increase available credit on their existing card Of those who plan to take on new or refinance existing credit in the next 12 months, nearly half (47%) expect to apply for a new credit card and 22% say they’ll increase available credit on their existing credit card. This is despite a historic record of 31.5 million Canadians holding at least one credit product (an increase of 3.75% YoY).
Other forms of additional credit that Canadians plan to apply for in the next year include:
Gen X is feeling the most financial strain Gen X appears to be the most stressed about their financial situation, with 53% reporting their household finances are worse than expected – the highest among generations surveyed. This can potentially be attributed to them carrying a large amount of debt like mortgages, and some nearing retirement. As noted earlier in this press release, this age group had the highest percentage (66%) of Canadians who said their incomes are not keeping with the current inflation rate.
Over a third (35%) of Gen X surveyed don’t expect to be able to pay at least one of their current bills and loans in full, higher than the 30% overall. This could again be attributed to the large amount of debt this generation is carrying.
Despite concern around interest rates and rising cost of living, Canadians still believe in the importance of credit
Canadians overwhelmingly see the value of credit, with 87% saying that access to credit and lending products is important to achieve their financial goals. However, over half (52%) believe they don’t have sufficient access to these products.
Of all age demographics, only Baby Boomers (71%) report a majority of respondents believe they have sufficient access to credit and lending products.
The complete Consumer Pulse study can be viewed here.
*The most recent Consumer Pulse study includes a survey of 1,000 Canadian adult consumers conducted May 1-10, 2024.
About TransUnion® (NYSE: TRU)TransUnion is a global information and insights company with over 13,000 associates operating in more than 30 countries, including Canada, where we’re the credit bureau of choice for the financial services ecosystem and most of Canada’s largest banks. We make trust possible by ensuring each person is reliably represented in the marketplace. We do this by providing an actionable view of consumers, stewarded with care.
Through our acquisitions and technology investments we have developed innovative solutions that extend beyond our strong foundation in core credit into areas such as marketing, fraud, risk and advanced analytics. As a result, consumers and businesses can transact with confidence and achieve great things. We call this Information for Good® — and it leads to economic opportunity, great experiences and personal empowerment for millions of people around the world.
For more information visit: transunion.ca
For more information or to request an interview, please contact:
Katie DuffyEmail: katie.duffy@ketchum.com Telephone: +1 647-772-0969
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