Two-in-five Canadians have no plan for when financial supports run out
The Canadian COVID Wake-up Call survey found that many Canadians are taking a wait-and-see approach to their finances as a second wave looms in the coming weeks.
TORONTO, Oct. 28, 2020 -- A new national survey by Credit Canada reveals that the COVID-19 pandemic has left many Canadians with their head in the sand when it comes to their future financial prospects – especially when government support and payment deferrals fully come to an end.
TheCanadian COVID Wake-up Call, an Angus Reid study of 1,500 Canadians, sponsored by the non-profit credit counselling agency Credit Canada, found that of those Canadians receiving assistance, two-in-five (39%) have no idea what they’ll do when the support runs out. This number balloons to 49 per cent in the Atlantic and drops to 36 per cent in Quebec. Additionally, this uncertainty is most prevalent among those aged 35-54 (44%) and levels out to 36 per cent with both the 18-34 and the 55+ age cohorts.
Overall, one-in-four Canadians (24%) have used income supports (government assistance, CERB, EI, etc.) and one-in-10 (9%) have used payment deferrals (car, mortgage, rent, lines of credit, credit cards etc.) due to the COVID-19 pandemic.
When asked how they plan to address their personal finances once income supports and payment deferrals have ended, one-in-10 will turn to traditional borrowing, such as family loans, bank loans, and credit cards. On the positive side of the ledger, only two per cent will resort to payday loans or short-term lenders, which generally charge the highest interest rates and excessive fees. Also encouraging is that half (49%) of those receiving income supports or using payment deferrals are confident they’ll no longer need financial assistance at all once these supports have ended.
Strikingly, only two per cent of those receiving financial supports will seek professional help (bankruptcy/insolvency, credit counselling, etc.) once the relief packages have ended. Although consumer insolvencies have seen a downward trend in recent months and the household debt-to-income ratio plummeted in the second quarter, these figures are artificially inflated by income supports. Canadians have had a false sense of security and a wave of insolvencies could come later this year.
“For those without a debt management plan, now is the time to put one in place,” said Keith Emery, Co-CEO of Credit Canada. “When government supports and payment deferrals come to a complete halt, the financial counselling network will reach beyond its critical mass if everyone waits until the last minute to get help.”
Crediteducation evolves into a year-round effort Beginning November, Financial Literacy Month, Credit Canada is dedicating itself to a 365-day effort to elevate credit education while ensuring Canadians have access to free resources all year round.
“As the country continues to deal with the aftermath of the pandemic, people are facing extraordinary financial challenges,” said Emery. “During this time of universal uncertainty, Credit Canada has intensified its efforts to help equip Canadians with the knowledge and tools they need to manage their finances and mitigate mental stress.”
There are steps Canadians can take now to offset these difficult financial times. Credit Canada has pulled together trusted financial information as a safeguard against the noise and misinformation. See theCOVID-19 Financial Resource Centrefor more information.
The full results of the Canadian COVID Wake-up Callare available through the contacts below.
About theCanadian COVID Wake-up Call From October 21 to October 23, 2020 an online survey was conducted among a representative sample of 1,500 Canadians who are members of the Angus Reid Forum. For comparison purposes only, the sample plan would carry a margin of error of +/- 2.5 percentage points, 19 times out of 20. Discrepancies in or between totals are due to rounding.
About Credit Canada Credit Canada is a not-for-profit credit counselling agency providing free and confidential debt and credit counselling, personal debt management, debt consolidation and resolutions, as well as preventative counselling, educational seminars, and free tips and tools in the areas of budgeting, money management, and financial goal-setting. Credit Canada is Canada’s first and longest-standing credit counselling agency and a leader in financial wellness, helping Canadians successfully manage their debt since 1966. Please visit www.creditcanada.com for more information and follow us on Facebook and Twitter.
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