MNP Consumer Debt Index: Low Interest Rates and Rising Costs Leading Many Canadians Down Ever-Riskier Path to Borrow More

Six in ten Canadians likely to pile on more consumer debt before the end of the year, including one in five who will use ‘buy now, pay later’ options

Calgary, Alberta, CANADA

CALGARY, Alberta, Oct. 04, 2021 (GLOBE NEWSWIRE) -- The latest MNP Consumer Debt Index raises red flags about Canadians’ plans to borrow more – and in potentially riskier ways – to make ends meet or finance their purchasing habits over the next few months.

Six in ten (58%) are at least somewhat likely to borrow more before the end of this year, including nearly four in ten (37%) who say they are inclined to spend using a credit card that already carries a balance. ‘Buy now, pay later’ (BNPL) options, which have boomed alongside the spike in online shopping and financial instability caused by the pandemic, will likely be the method of payment for one in five (22%) Canadians this fall. Around the same number (22%) are looking at purchase finance options, and fifteen per cent say they are likely to apply for a new credit card. Moreover, one in ten (9%) are considering a payday loan.

“’Buy now, pay later’ options, payday loans and credit cards are particularly attractive to those with tight finances, but the payment terms, fees and interest charges are largely underestimated or misunderstood,” says Grant Bazian, president of MNP LTD., the country’s largest personal insolvency firm. He is cautioning Canadians about the allure of borrowing more through quick credit options and BNPL offers increasingly touted by online retailers.

“Retail incentives that offer the instant gratification of buying goods now and paying later are not always good value for consumers,” he cautions. “What Canadians need to remember is that these credit options benefit the lenders the longer that people stay in debt because of the high interest costs and various fees for processing and/or late payments.”

Rock bottom interest rates have left Canadians feeling more comfortable increasing indebtedness. Notably, half (49%) say that with interest rates so low, they are more relaxed about carrying debt than they usually are, up four points since last quarter. Moreover, six in ten (58%) say that low interest rates provide them with a good opportunity to buy things they might not otherwise be able to afford.

Perhaps drawn to the ability to make purchases that may otherwise be outside their means, young people are more likely to use BNPL options, with four in ten (38%) Gen Z and three in ten (27%) Millennials considering doing so before the end of the year. Gen Z and Millennial Canadians are also much more inclined to say they are at least somewhat likely to use a payday loan service (24% and 13% respectively).

But Canadians also know that the low-interest gravy train must end at some point. With nearly half (46%,-2pts) reporting that they are $200 away or less from not being able to meet all of their financial obligations, including 27% (-3pts) who say they already don’t make enough to cover their bills and debt payments, it is no surprise that the majority (52%,+2pts) are concerned about the impact of rising interest rates on their financial situation. One in three (35%,+1pt) are concerned that rising interest rates could move them toward bankruptcy.

“Debt can be a useful tool, but every time you borrow, you are taking a financial risk. Interest rate increases, unexpected income loss, emergency expenses or life-changing events are all potential outcomes that can make debt repayment next to impossible,” says Bazian.

With the uncertainty that the fourth wave of COVID-19 brings, Canadians express some concern about their ability to cope with life changes without increasing their debt load. Many say that they could not financially cope with an unexpected auto repair (21%, unchanged) or having an illness and being unable to work (28%,+1pt). Three in ten (30%,+3pts) express a lack of confidence in their ability to cope financially with a loss of employment or a change in work without going into debt.

“In addition to the unexpected financial turmoil brought on by the pandemic, another issue we see playing out in our research is that households are struggling more and more with the rising cost of living. With the price of necessities increasing, some may take on more credit to make ends meet while others will have less room in the budget for debt repayment,” says Bazian.

Affordability concerns are widespread across the country, with a large proportion holding the opinion that life’s necessities have become less affordable over the past year. Forty-five percent say it is becoming less affordable to feed themselves and their family. One in three say housing costs are less affordable, and around the same number (36%) say clothing or household necessities and transportation (33%) are costing more. More Canadians also say that it is becoming less affordable for them to put money aside for savings (40%) or to put money towards their debt (29%).

“Unmanageable debt is stressful enough on its own, but when there is already virtually no wiggle room in the household budget and then the cost of living increases, people can start to feel hopeless. Anyone in this situation needs to know there is professional debt help available. Licensed Insolvency Trustees are qualified professionals specifically trained to get you out of debt. The sooner you reach out, the quicker you will find relief from financial stress and the sooner you can start working toward a financial fresh start for yourself and your family,” says Bazian.   

Every Canadian can obtain a free and confidential assessment of their financial situation with a Licensed Insolvency Trustee. As the only government-regulated debt professionals, they provide a full range of debt relief options, including consumer proposals, informal debt settlements and bankruptcies.

Now in its eighteenth wave and conducted quarterly by Ipsos, the MNP Consumer Debt Index currently stands at 95 points, down two points compared to the last wave conducted in June, 2021.


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 Canadian offices from coast-to-coast, MNP helps thousands of Canadians each year who are struggling with an overwhelming amount of debt. Visit 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.

Conducted quarterly by Ipsos, the Index has dipped by 2 points since last quarter to 95 points, having remained steadily below the established benchmark of 100 points for the last two years.

The latest data, representing the eighteenth wave of the MNP Consumer Debt Index, was compiled by Ipsos on behalf of MNP LTD between September 3-7, 2021. For this survey, a sample of 2,001 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.


Angela Joyce, Media Relations

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