Risky Financial Behaviours Keeping Atlantic Canadians In Debt

A quarter of Atlantic Canadians say they will never be debt free.

Halifax, NS, March 2, 2020 — A survey conducted by Ipsos on behalf of MNP LTD helps identify some of Atlantic Canadians’ costly money mistakes which could be contributing to the mounting consumer debt challenges in their respective provinces. From making only minimum payments to borrowing money they can’t afford to repay, the survey found more than half of Atlantic Canadians (54%) admit to engaging in what debt experts consider risky financial behaviours over the past year.

“Things like paying only the minimum, making impulse purchases and borrowing more debt than you can afford to service are risky behaviours because they can trap people in an endless cycle of debt that can be nearly impossible to get out of,” says Joe Wilkie, a local debt expert with MNP LTD, the country’s largest insolvency firm.  

Making only the minimum payments on their credit card was the most common risky behaviour among Atlantic Canadians last year, with one quarter (24%) admitting to doing so.

“For some it might be out of recklessness or impulsivity, but for others it is simply out of necessity. They are having a tough time making ends meet and making questionable money choices in their attempt to stay afloat,” says Wilkie.

The second most common financial mistake among Atlantic Canadians was paying only the minimum on a line of credit last year (17%). About 1 in 10 said they had been lured in by deals and special offers (14%), 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 (10%) or bought something on credit that requires no payments for a while (10%).  

Cash-strapped, already saddled with debt and struggling to navigate, about 1 in 10 (9%) also admitted to borrowing money they know they can’t afford to pay back.

“A lack of financial literacy may explain why many are engaging in financially risky behaviours. Some are in denial about their finances and are living well beyond their means, while others are trying their best to get their debts under control but may not have the knowledge or support to do so,” says Wilkie. “Regardless of the reason behind the behaviours, many people are pursuing more credit without taking into consideration the longer-term consequences.”

Compared to other provinces, it seems Atlantic Canadians are the most likely to be suffering the consequences of their money mistakes and admit they have lost hope; one quarter (25%) say they will never be debt free.

“A lot of people experience hopelessness when it comes to their debt. They don’t want to ask for help, they are embarrassed and feel they are in it by themselves. This only makes the situation worse,” explains Wilkie.

About a quarter (26%) of Atlantic Canadians are fortunate enough to say they are currently living without debt obligations. Meanwhile, there are Atlantic Canadians who believe they can be debt free one day but admit they will still be struggling for years to come. Of the remaining 49 percent who aren’t debt free or haven’t lost hope of becoming debt free, they estimate it will take approximately 5 years and 10 months to pay off their debts.  

“While becoming debt free might seem impossible for some, with the right help it is a reasonable goal for anyone who is struggling with their finances — even those with a heavy debt burden. Licenced Insolvency Trustees can provide advice to help you make the most informed choices to break free of the debt cycle,” says Wilkie.   

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.