Nearly One Third of Canadians Expect to Be Unable to Pay their Bills in Full, 33% of Whom Plan to Increase Reliance on Credit to Stay on Top of Bills or Loans – TransUnion Study
09 Janvier 2024 - 12:00PM
TransUnion’s most recent Consumer Pulse study* shows that almost
half (43%) of Canadians surveyed felt their household finances are
worse than planned, up two percentage points from Q3 2023. This
compares to 57% who felt their household finances are as planned or
better (Gen Z was the highest among generations at 70%). While more
than half (59%) overall said their household income stayed the same
in the last three months, 21% reported it increased and 19% said it
decreased in that time period. Despite the steady pace or increase
in household income for the majority of Canadians, TransUnion data
shows a continued shift in spending and saving behaviours which
appear to be fueled by the impact of the prevailing cost of living
pressures on disposable income and buying power.
The study also indicates that Canadians are preparing for a
possible recession by reducing spending (57%), building up savings
(36%), paying down debt (31%). At the same time, Canadians’ report
that access to credit and lending products is important to achieve
their financial goals (86%).
“The impact of higher interest rates and cost of living created
increased vulnerability among Canadians,” said Matt Fabian,
director of financial services research and consulting at
TransUnion Canada. “Consumers are forced to make trade-off
decisions on how to allocate their disposable income in a more
expensive environment. While Canadians remain resilient, many
consumers report that bills and loans are more difficult to cover,
which could lead to interest charges. Overall, Canadians are
spending less, saving where they can, and turning to credit to help
manage their household income cashflow.”
While Canadians remain resilient in the face of the prevailing
economic headwinds, financial pressures are impacting Canadians use
of credit, spending and saving behaviours. TransUnion’s Q4 Consumer
Pulse study shows:
Shifts in Canadian household spending.
- Reduced discretionary spending (e.g., dining out, travel,
entertainment) in the past three months (57%) versus 9% who
increased discretionary spending.
- Cancelled subscriptions or memberships (25%) versus 7% who
increased subscriptions or memberships.
- Cancelled or reduced digital services (19%) versus 6% who added
digital services.
Changes in managing debt or credit.
- Paid down debt faster (19%).
- Increased usage of available credit (14%).
Changes in saving.
- Saved more money in an emergency fund (21%).
- Cut back on retirement savings (16%).
- Saved more for retirement (10%).
- Used retirement savings (8%).
Canadians have polarizing view on financial
outlook. When it comes to the level of optimism Canadians
feel around their financial outlook, the study revealed there are
contrasting views. Despite the prevailing financial pressures, 43%
of Canadians feel optimistic about their household finances over
the next 12 months. Conversely, 57% of Canadians are not feeling
optimistic about their financial outlook. Gen Z feels the most
optimistic among generations at 61%, followed by Millennials (47%).
Gen X and Baby Boomers were significantly less optimistic at 36%
and 37% respectively. Overall, the study indicates that 48% of
Canadians expect household income to stay the same over the next 12
months, with 41% who believe it will increase and 11% who believe
it will decrease.
Canadians anticipate household spending pressures will
continue. Looking to the next three months, the study
shows that many Canadians anticipate a continued shift in household
spending likely influenced by continued financial pressures and
cost of living pressures, including:
- Bills and loans: Increase (33%), same (49%), decrease
(13%).
- Digital services (e.g., wireless, cable TV, internet): Increase
(17%); same (58%); decrease (20%).
- Discretionary spending (e.g., dining out, travel,
entertainment): Increase (13%); same (32%); decrease (50%).
- Large purchases (e.g., appliances, cars): Increase (12%); same
(34%); decrease (34%).
- Medical services: Increase (16%); same (55%); decrease
(12%).
- Retail shopping (e.g., clothing, electronics, durable goods):
Increase (17%); same (40%); decrease (39%).
- Retirement funds and investing: Increase (13%); same (42%);
decrease (23%).
Access to credit considered key for vast majority of
Canadians. The study further indicates that financial
pressures could be driving the importance of access to credit among
Canadians. Overall, 86% of Canadians report that access to credit
and lending products is important (an increase of 7 percentage
points year-over-year), with 40% who said it was extremely or very
important. Around one in five (19%) of Canadians report that they
don’t feel like they have sufficient access to credit and lending
products, compared to 55% who believe they do.
More than one in five Canadians plan to apply for new or
refinance existing credit – with higher rates among younger
cohorts.Overall, around one in five Canadians (22%) report
that they plan to apply for new or refinance existing credit within
the next year. Demand for new credit is significantly higher among
younger cohorts, at 39% for Gen Z and 35% for Millennials.
Canadians plan to take on diverse mix of
credit. Of those who intend to apply for new or refinance
existing credit, nearly half (45%) plan to apply for a new credit
card in the next year. Among those respondents, other planned
credit and loan activity in the next 12 months included:
- New personal loan (24%).
- Refinance mortgage, home loan or bond payment (17%).
- New mortgage, home loan or bond payment (16%).
- New car loan or lease (14%).
- Refinance personal loan (14%).
- New buy now, pay later services (13%).
- New home equity line of credit (9%).
- Refinance car loan (9%).
- New student loan (9%).
- Refinance student loan (6%).
- Refinance home equity line of credit (6%).
Paying the bills is a concern among many
Canadians.While the majority felt confident they could pay
their bills, 33% of surveyed Canadians anticipate their household
spending on bills and loans will increase over the next three
months. Nearly one third (28%) reported they will be unable to pay
at least one of their current bills and loans in full (up five
percentage points year-over-year). Of this participating group,
this is how they said they’d pay their current bills or loans:
- 35% pay a partial amount based on what they can
afford.
- 23% use their credit card or open a new one.
- 22% borrow money from friends or family.
- 15% use money from savings.
- 10% take out a personal loan.
Canadians’ focus on monitoring their credit
scores. The TransUnion study further reveals that
Canadians have increased their focus on monitoring their credit
scores, with 88% believing it is important (an increase of five
percentage points year-over-year). This is possibly due to economic
volatility driving consumers to be more conscientious of their
credit health. Younger Canadians (Gen Z at 91% and Millennials at
94%) had a higher rate, potentially trying to build their credit
scores. Around four in ten (41%) of Canadians check their credit
scores at least monthly (Gen Z at 65). Among all age groups who
said they monitor their credit report, the top reasons cited were:
it’s free (46%), to check accuracy (39%), and to protect against
fraud (36%).
The complete Consumer Pulse study can be viewed here.
*The most recent Consumer Pulse study includes a survey of 974
Canadian consumers conducted Oct. 3-13, 2023.
About TransUnion (NYSE: TRU)TransUnion is a
global information and insights company with over 13,000 associates
operating in more than 30 countries, including Canada, where we’re
the credit bureau of choice for most of Canada’s largest banks. We
make trust possible by ensuring each person is reliably represented
in the marketplace. We do this by providing an actionable view of
consumers, stewarded with care.
Through our acquisitions and technology investments we have
developed innovative solutions that extend beyond our strong
foundation in core credit into areas such as marketing, fraud, risk
and advanced analytics. As a result, consumers and businesses can
transact with confidence and achieve great things. We call this
Information for Good® — and it leads to economic opportunity, great
experiences and personal empowerment for millions of people around
the world.
For more information visit: www.transunion.ca
For more information or to request an interview, please
contact:
Alex WilcoxEmail: Alex.Wilcox@ketchum.comTelephone: +1
705-878-6815
TransUnion (NYSE:TRU)
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