Nearly half of Albertans are $200 or less away from failing to meet all their financial obligations, a significant 13-point increase since last quarter

• A third say they already can’t cover their bills and debt payments, increasing a significant 10 points from the previous quarter (32%).
• Two-thirds say they desperately need interest rates to go down (67%).
• Nearly three in five express concern that interest rates may not decline quickly enough to provide the financial relief they need (58%).
• Nearly three in five say interest rates will need to drop much further before their financial situation significantly improves (57%).
• More than two in five agree they are still concerned with their ability to repay their debts, even if interest rates decline (45%).

CALGARY, AB – July 22, 2024 – Significantly more Albertans are close to insolvency this quarter — and many are feeling pessimistic about their personal finances, despite the recent interest rate cut by the Bank of Canada. The MNP Consumer Debt Index finds nearly half (47%) of Albertans are $200 or less away from failing to meet all their financial obligations, increasing a substantial 13 points since last quarter. A third (32%) say they already can’t cover their bills and debt payments, a considerable 10-point increase from the previous quarter.

“We are seeing a significant shift in the number of Albertans who say they are close to insolvency or already not making enough to cover their bills. Alberta is the only province to see such substantial increases this quarter,” says Lindsay Burchill, a Licensed Insolvency Trustee with Alberta-based MNP LTD.

Nearly three in five Albertans express concern that interest rates may not decline quickly enough to provide the financial relief they need (58%) and say interest rates will need to drop much further before their financial situation significantly improves (57%). Two-thirds (67%) say they desperately need interest rates to go down.

“Albertans may have been hoping for a more pronounced interest rate cut or to experience a quicker impact from the reduction, resulting in some feeling disheartened,” says Burchill. “The prices of many daily necessities are still high, and individuals may not have seen the meaningful decrease in their monthly expenses necessary to relieve their financial burdens.”

After two years of aggressive interest rate hikes, seven in 10 (69%) Albertans say high interest rates have had a negative impact on their household finances. More than two in five (45%) agree they are still concerned with their ability to repay their debts, even if interest rates decline. Notably, a quarter (26%) feel they are so heavily in debt that even lower interest rates would offer little relief.

“Some individuals are living paycheque to paycheque, finding it challenging to make ends meet and cover their basic needs. Others are simply so deep in debt that they won’t be able to manage their financial obligations, regardless of interest rates,” says Burchill. “Those experiencing these difficulties should consider reaching out to a Licensed Insolvency Trustee for assistance. They can offer a personalized assessment of the individual’s financial situation and provide advice on debt relief options.”

Debt perceptions have declined this quarter, following improvements in March. When asked to reflect on their current debt situation compared to one year ago, far fewer perceive their current debt situation to be better (20%, -7 pts). One in 10 (14%, -3 pts) rated their current debt situation as much worse compared to a year ago.

“Those struggling with debt often feel overwhelmed by guilt and embarrassment due to the stigma surrounding this subject. People must recognize that debt is not solely due to personal choices and many external factors can result in unmanageable debt, including job loss and the high costs of servicing debts such as credit cards. Increasing prices of essential expenses, rising mortgage payments and rental costs, emergency expenses such as car or home repairs, and unexpected changes in income all contribute to rising debt,” explains Burchill.

More than half (54%, unchanged) of Albertans say they will be in financial trouble if interest rates rise. Potentially counting on interest rate cuts to improve their financial situation, nearly half intend to save more (48%), and two in five plan to accelerate their debt repayment (41%) if interest rates drop in the next three months. However, about a quarter (27%) believe that declining interest rates won’t affect them in any way.

“The data shows that many Albertans will need help to manage their debt payments in the months ahead,” says Burchill. “Licensed Insolvency Trustees are an accessible resource for Albertans, offering tailored guidance to help individuals navigate financial uncertainties with informed strategies.”

MNP’s national team of Licensed Insolvency Trustees offers free consultations to help severely indebted Albertans get unbiased debt advice, understand their rights, and determine the best path forward. Licensed Insolvency Trustees are the only federally regulated debt professionals who can assist with all the debt relief options, including Consumer Proposals and Bankruptcy, stop harassment from debt collectors, and discharge people from debt.

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 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 MNP Consumer Debt Index

The MNP Consumer Debt Index measures Canadians’ attitudes toward their consumer debt and gauges their ability to pay their bills, endure unexpected expenses, and absorb interest-rate fluctuations without approaching insolvency. Conducted by Ipsos and updated quarterly, the Index is an industry-leading barometer of financial pressure or relief among Canadians.

Now in its twenty-ninth wave, the Index decreased to 85 points, down six points since last quarter. Visit MNPdebt.ca/CDI to learn more.

The data was compiled by Ipsos on behalf of MNP LTD between June 6 and June 11, 2024. 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.