By rdnewsNOW staff

anxious times

Report shows Albertans most concerned about debt, interest rates

Apr 23, 2019 | 10:12 AM

April 22, 2019 – Albertans are feeling worse about their consumer debt and personal finances than other provinces, according to the latest MNP Consumer Debt Index, Albertans’ perception of their debt situation has been on a gradual decline since interest rates first began to increase in September.

When compared to other provinces, MNP says Albertans are the most likely to be worried about their ability to repay debts (64%; +1pt), the most concerned (48%; +5pts) about their current level of debt, and the most likely to regret the amount of debt they have taken on in their life (51%; +1pt). They are also most likely to say an interest rate increase could move them towards bankruptcy (45%; -3pts).

“Albertans are maxed out right now and what makes the situation more alarming is that there is no real plan for paying back what they have borrowed. If the economy deteriorates further or interest rates rise, there’s going to be a significant number who will be forced into bankruptcy or insolvency,” says Donna Carson, a Licensed Insolvency Trustee with MNP LTD, the country’s largest insolvency firm.

Consumer insolvencies are up 25.3 per cent in Alberta compared to the same time last year, according to the latest data from the Office of the Superintendent of Bankruptcy.

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According to MNP, nearly half (48%) of Albertans say they are already hovering close to financial insolvency at the end of the month, just $200 or less away from not being able to pay their bills. This includes one in four (27%) who say they have no wiggle room at month-end, as they already don’t make enough to cover their bills and debt payments.

“With such little breathing room in the household budget, it becomes very easy to slip into an endless cycle of debt that is impossible to get out of,” says Carson. “This isn’t simply a matter of people living beyond their means. Many households are already at the point where they are borrowing to make ends meet.”

While there may be red flags about where the economy and interest rates are heading, that has not stopped Albertans from continuing to borrow. Significantly more Albertans report taking on consumer debt compared to this time last year; over nearly six in ten (66%) say they have, up ten points. What’s more, it seems many may continue to borrow with half (51%; -4pts) indicating they won’t be able to cover all living and family expenses in the next 12 months without taking on more debt.

Nearly six in ten (57%; +2pts) Albertans say they are concerned about the impact of rising interest rates on their financial situation, a higher proportion than any other province.

Despite the debt anxiety that many are feeling, Albertans are somewhat optimistic about their financial future, as a year from now, a quarter (25%; +0pts) expect their debt situation to improve, and five years from now, more than one-third (36%) believe their situation will improve.

(With file from MNP media release)