How much are you spending on debt repayment?
A recent report from Prosper Canada found 62 per cent of moderate-income households have debt, and low-income households spend approximately 31 per cent of their income on debt repayments.
Based on the findings, the most common forms of debt for low- and moderate-income households are credit card and installment loans.
Additionally, most indebted households hold consumer debt, such as: credit card and installment debt, auto loans and student loans.
Further, the pandemic has highlighted how tenuous many Canadian households’ financial situations were—large amounts of debt and not much in savings have caused significant financial distress for many.
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Moreover, the Bank of Canada has identified high household debt levels as a potential risk to Canadas’ economic recovery—rising insolvency levels are expected as emergency debt deferral measures wind down and households whose incomes have still not recovered are confronted with higher debt payments.
“Canada lags peer nations like Australia, New Zealand and the United Kingdom in ensuring vulnerable households have access to free, quality, financial help to deal with money and debt problems,” Elizabeth Mulholland, CEO of Prosper Canada, said in a news release.
“Canada has the necessary organizations, expertise and suitable programs we can quickly scale up to help those who are struggling – but only if our governments make the necessary public investments,” she continued.