Growing number of Canadians concerned about household finances

A significant share of consumers are pessimistic about their financial prospects over the next year, TransUnion says

Growing number of Canadians concerned about household finances

The latest edition of TransUnion’s Consumer Pulse showed that Canadians are becoming increasingly concerned about their household finances, with 43% saying that they believe that their financial situations are worse than anticipated.

A clear majority of Canadians (59%) also said that there was no change in their financial capabilities over the past three months, while 21% acknowledged an increase and 19% reported a decrease.

The study found that 48% of Canadians project household income to stay the same over the next 12 months, while 41% believe it will increase and 11% expect it will decrease.

“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.”

TransUnion also found that many Canadians are anticipating a potential recession, with 57% cutting back on their spending, 36% bolstering their savings, and 31% scrambling to pay down debt.

Taking on more credit is an attractive option for many Canadians

A sizeable share of respondents said that they will face difficulties in bill repayments, TransUnion found. Of these, 23% said that they will be using their credit card or opening a new credit card to help pay their bills and loans. Another 33% are expecting their bills and loan repayments to increase over the next three months.

Around 22% of Canadians said that they plan to apply for new or refinance existing credit within the next 12 months. Younger generations were found to be particularly willing to choose this avenue, with 39% of Gen Z-ers and 35% of millennials saying that they plan to apply for new credit or refinance existing credit.

“While Canadians remain resilient, many consumers report that bills and loans are more difficult to cover, which could lead to interest charges,” Fabian said. “Canadians are spending less, saving where they can, and turning to credit to help manage their household income cashflow.”