Vancouver – MNP LTD, one of Canada’s largest personal insolvency practices, released the results of a new survey showing that forty-five per cent of Canadians are concerned about the impact of rising interest rates on their financial situation.
Thinking about their current ability to cope with interest fluctuations, seven in ten (72%) rate their ability to cope with a 1% interest rate increase as less than optimal. Just one in four Canadians (23%) say they could absorb an additional $130 per month in interest payments on debt.
“We’ve been living with this ‘minimum payment mentality’ for so long because of low interest rates. Many have taken on debt without considering the affordability if and when interest rates rise,” says Grant Bazian, President at MNP LDT.
Beyond interest rates, other financial concerns are also prevalent, with three in ten (30%) agreeing they’re worried that they or someone in their household could lose their job. Millennials (39%) and Gen X Canadians (38%) are significantly more worried than Boomers (18%) about a potential job loss.
Though a majority of Canadians (56%) say they won’t be going on vacation this summer, the time off won’t come cheap for the 44% who will. Canadians who plan to spend money on a summer vacation this year will, on average, spend $2,149.20, when all expenses such as travel, accommodation, meals and entertainment are factored in. Just 8% say they’ll spend less than $500 on their summer vacation (including 2% who claim they won’t spend a dime), while one in ten (10%) will fork out $3,000 or more.
Summer holidaymakers will primarily finance their vacation with cash and savings (84%). Less (16%) will be financed through various forms of debt, such as borrowing, a line of credit, or a credit card – about $344 of the average planned expenditure.
“Summer is a lot like a holiday season; there is more spending and most people haven’t saved for it,” saysBazian. “My advice is simple: do not go into debt to pay for a vacation.”