New report reveals a quarter of Canadians expect to miss a bill payment
A new report from TransUnion revealed that financial concerns are mounting for Canadians, with over a quarter (26%) expecting they won’t be able to pay at least one bill or loan in full. Despite recent interest rate cuts by the Bank of Canada, financial strain remains a significant challenge across generations, particularly for Millennials and Gen X.
Millennials, holding the largest share of Canadian debt at $911 billion, are the most concerned about meeting financial obligations. Over one-third (35%) of Millennials report they cannot pay at least one debt in full, outpacing other generations. Gen X, nearing retirement, also faces significant pressures, with 51% reporting financial strain.
Adding to these challenges, 63% of Canadians do not anticipate an increase in household income in the next six months.
Mixed reactions to debt and spending
Despite financial stress, more than one in five Canadians (22%) plan to take on additional credit or refinance existing loans within the next year. Among these, nearly half (43%) intend to apply for a new credit card. This trend highlights a reliance on credit to navigate cash flow shortages, even as 49% express concern about the impact of interest rates on their ability to repay debts.
Many Canadians are taking steps to reduce discretionary spending. Dining out, clothing, entertainment, and travel are among the areas where households have cut back, with 84% reporting reduced spending on eating out.
Housing market challenges
Housing affordability remains a significant concern, with 57% of respondents identifying rising home prices as a deterrent to purchasing property. Consequently, only 14% of Canadians plan to take out a new mortgage in the next 12 months.
Gen X respondents are the most affected by rising home prices, while Millennials cite high interest rates as a primary concern.
Matthew Fabian, director of financial services research and consulting at TransUnion Canada, noted that while interest rate reductions may provide some relief, persistent economic pressures have left many households in a precarious position.
“With more than half of households expecting their income to stay the same in the next 12 months, added liquidity created by anticipated further interest rate cuts should create some room to breathe, and fuel optimism for 2025,” Fabian said.
Preparing for uncertainty
As recession fears linger, 71% of Canadians report reducing spending to prepare for potential economic downturns. Building savings and paying down debt are also common strategies.
This economic caution coincides with record-high consumer credit debt, which reached $2.5 trillion in the third quarter of 2024.
While measures like interest rate reductions may offer temporary relief, many Canadians remain financially vulnerable.
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