Nearly 40 percent of Canadians are taking out loans to cover the increasing costs of everyday expenses such as groceries and rent, according to new federal research.
The Financial Consumer Agency of Canada reported in a November 2022 report that the percentage of Canadians who borrow money for daily expenses had increased from 26 percent in 2020 to 38 percent in September 2022, as first reported by Blacklock’s Reporter.
The agency, which enforces consumer protection legislation, also stated that the proportion of Canadians who used online lenders or payday loans had more than tripled from August 2020 to September 2022, rising from less than 1.5 percent to over 4.5 percent.
The report, titled “Consumer Vulnerability: Evidence from the Monthly COVID-19 Financial Well-being Survey,” revealed that the percentage of Canadians who are dipping into their savings to keep up with rising costs had increased from 33 percent in 2020 to 48 percent in June 2022.
“As of September 2022, the survey results show that over the past several months, financial hardships have become more severe for many Canadians due to the rapidly evolving economic environment,” wrote the researchers. “In the current economic context, many Canadians are facing the greatest financial challenges of their lives. More are taking out loans to cover their day-to-day expenses, including high-cost loans,” the report said.
The agency’s findings were based on monthly questionnaires answered by 1,000 Canadians nationwide between August 2020 and September 2022.
The research showed that around 41 percent of Canadians reported they did not have enough emergency funds to cover unexpected expenses, while 25 percent said they regularly spent more than their monthly income. Forty-two percent of Canadians surveyed said they felt that finances “control their life,” while 41 percent said they were worried that “their money would not last.”
A Statistics Canada report published on Feb. 13 stated that about one in every four Canadians is currently unable to cover an unexpected cost of $500.
“In fall 2022, over one-third (35%) of Canadians reported that it was difficult for their household to meet its financial needs in the previous 12 months,” said the report. “When asked whether their household had the resources to cover an unexpected expense of $500, 26% said that they would be unable to do so.”
StatCan also found that the “vast majority” of Canadians were concerned with rising food and gasoline prices, while 44 percent were worried about their ability to afford housing or rent. The federal agency also discovered that nearly half of Canadians aged 35 to 44 years “found it difficult to meet their financial needs in the previous 12 months.”