A new research study by a financial institution found that 72 percent of Canadians maintain some form of debt, while 49 percent have made at least one lump sum payment in the last year. Is the debt crisis worsening in the country?
Although Bank of Canada governor Mark Carney has maintained record low interest rates for quite some time now, the Organisation for Economic Co-Operation and Development (OECD) has urged the central bank head to start raising interest rates. He has declined to make such a move.
Amidst talks of rising interest rates, Canadians are starting to tackle their debt, whether it is a credit card, mortgage or loan.
According to a study by Harris-Decima and commissioned by the Canadian Imperial Bank of Commerce (CIBC), nearly three-quarters (72 percent) hold some form of debt. The poll found, however, that 49 percent have made an extra lump sum payment in the last year to attempt to lower their debt – 62 percent are making these payments to less credit card debt.
One key finding in the poll was that those with the most indebtedness were more likely to make a lump sum payment. A quarter of Canadian respondents said they are free of debt, 18 percent noted they have just one product with debt, 25 percent have three or four debt products and 12 percent have five or more.
The two age groups more likely to have debt are those between 25 and 34 (84 percent) and 35 to 44 years old (83 percent). One someone reaches the age of 45, the debt holdings begin to decrease.
“Debt management is top of mind for Canadians, and these poll results show that many Canadians are taking steps towards reducing their debt,” said Christina Kramer, CIBC Executive Vice President of Retail Distribution and Channel Strategy, in a news release. “We know from past research that Canadians are more likely to seek financial advice about saving for retirement than they are about managing their debt.”
Upon analysis of the different regions of Canada, it was found that 78 percent of residents in Atlantic Canada, 77 percent in Manitoba and Saskatchewan and 75 percent in Alberta were more likely to be in debt. The province of Ontario had the lowest number with 69 percent.