Consumers Turning to Credit Cards and Payday Loans to Cover Costs of Living, with Debt-Stress Impacting Mental Health, Self-Esteem & More – 10th Annual BC Consumer Debt Study

Credit card debt a problem for nearly 3 in 5 individuals polled in the 2022 BC Consumer Debt Study, and worrying high-cost payday loan use is on the rise. Most troubling - almost 4 in 5 people said their mental health suffered being in debt.

VANCOUVER, British Columbia, Jan. 16, 2023 (GLOBE NEWSWIRE) -- BC Licensed Insolvency Trustees Sands & Associates released complete findings from their 2022 BC Consumer Debt Study today, marking the 10th annual study in this unique series that aims to highlight consumer debt problems and the financial challenges British Columbians face.

As Sands & Associates President Blair Mantin explains, in polling over 1,400 consumers from around the province who recently used a legal debt relief process, “The BC Consumer Debt Study is an invitation to discuss money matters with honesty and openness, and better understand the challenges that thousands of people across our local communities face when dealing with debt.”

Click here to read the full 2022 BC Consumer Debt Study report in PDF format

Over the past decade the study series has identified notable trends in consumer debt habits, with 2022’s BC Consumer Debt Study finding that:

  • The largest proportion of participants (34%) said they had $25,000-$49,999 of debt (excluding vehicle loans/mortgages) at the time they started a formal debt relief process.
    • Close to 30% of individuals described their credit rating at this time in the range of ‘good’ to ‘excellent’.
  • Nearly 3 in 5 people (59%) said credit card debt was the main type of debt they had – almost 6 times higher than the next most-common type of debt.
  • Payday or instalment loans were cited as the main type of debt for 11% of respondents, having considerably increased since pre-pandemic surveys.

As high-cost credit dominated debt-loads, 2022 BC Consumer Debt Study also highlights troubling findings as to common causes of what ultimately became problem debt. It is also striking to consider that 4 of 5 most common reported main causes of debt relate to triggering events or circumstances generally outside an individual’s direct control:

  • 1 in 5 people (20%) surveyed said the direct main cause of their debt was using credit for essential costs of living income could not cover, while 1 in 4 (28%) said their debt was caused by overextended credit due to general financial mismanagement.
  • Following this were: Illness, injury or health-related problems (10%); Marital or relationship breakdown (8%); Job-related issues (6%).
    • Although the 2022 study marks the lowest proportion of survey respondents who, following pre-pandemic trends, trace the main cause of their debt to job issues alone, a total of 6% of respondents did identify job or business disruptions due to COVID-19 as the direct main cause of their debt.

An emotionally taxing response was the number one sign of a debt problem as reported by study participants, and, despite escalating conditions, only 5% of people said they sought help right away:

  • Nearly 7 in 10 people (69%) said overwhelming stress was how they knew their debts were becoming a problem.
  • This was followed by: only making minimum payments, reported by almost 6 in 10 people (58%); seeing debt balances remain almost the same every month, despite making payments (53%); and accumulating more debt on credit accounts (36%).

As illustrated through insights shared by study participants, debt came at a high cost, and far beyond financial. A range of debt-stress impacts were widely reported, including:

  • Almost 4 in 5 people (79%) said their mental health suffered being in debt, also 63% said their self-esteem suffered as a result, and 47% that debt affected their physical health.
  • More than 4 in 5 (82%) said they had constant worry about debt; 3 in 4 (76%) experienced anxiety from the stress of debt; 66% feelings of helplessness and/or hopelessness; 60% depression.
  • Roughly 1 in 7 people said debt-stress resulted in them experiencing thoughts or contemplation of suicide.

Participants of the 2022 BC Consumer Debt Study also shared insights into how they attempted to resolve their debt problems, retrospective personal advice in managing debt, and how their experience has impacted their financial attitudes and outlook.

Click here to read the full 2022 BC Consumer Debt Study report in PDF format

About Sands & Associates and the BC Consumer Debt Study Series

Since founding in 1990, Sands & Associates has grown to become an award-winning industry leader, now BC’s largest firm of Licensed Insolvency Trustees focused exclusively on debt help services for consumers and small businesses.

Sands & Associates is committed to delivering empowering and non-judgmental support to British Columbians and aims to encourage knowledge and understanding through the annual BC Consumer Debt Study series.

Blair Mantin, Licensed Insolvency Trustee