Man cutting his credit card with scissors.

The Manulife survey highlights a growing concern over personal debt, with Canadians now holding the uncomfortable honour of having amongst the highest personal debt levels in the world. (Photo by Le Club Symphonie/Getty Images)

Canada | Trends

Rising interest rates causing many Canadians to cut back on personal spending, survey says

Multiple sources say personal debt levels are at a dangerous level

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A recent survey from Manulife Bank says many Canadians are cutting back on their spending habits over concerns about rising interest rates.

The online survey polled more than 2,000 Canadians between May 11 and 14, ahead of the Bank of Canada’s latest interest rate hike to 1.5 per cent. Almost 60 per cent of respondents said they’ve changed their spending habits when it comes to both essentials and extras, with 23 per cent saying they’re spending more on interest payments this year than last.

Infographic image showing survey results

Interest rates were steady at 0.5 per cent throughout 2016 and into 2017 but have been inching up since then. This is the fourth time the Bank of Canada has risen rates since last summer.

Personal debt troubles

The Manulife survey highlights a growing concern over personal debt, with Canadians now holding the uncomfortable honour of having amongst the highest personal debt levels in the world.

Infographic image showing survey results

The fear of debt and rising interest rates caused 27 per cent of respondents to cut back on entertainment spending, such as going out to bars or the movies, while 10 per cent even had to cut back on groceries. Another 17 per cent said they’ve deposited more into their savings to account for rising rates.

Infographic image showing survey results

The state of many Canadians’ financial affairs is also causing deeper ripple effects, with 40 per cent of respondents saying debt is negatively impacting their mental health and 30 per cent saying debt is causing them relationship issues.

Quarterly concerns

CPA Canada’s Q2 2018 Business Monitor echoes these concerns. Of the 466 survey respondents, 83 per cent agreed the government needs to continue warning Canadians to reduce their level of personal debt, while 41 per cent said personal debt levels threaten future demand for their company’s products and services.

Infographic image showing survey results

The Business Monitor is a quarterly report, commissioned by CPA Canada and conducted by Nielsen, offering insights from CPAs across the country holding senior-level business positions at public and private companies. 

Clearly, both the Manulife report and the Business Monitor results highlight concerns about the financial well-being of Canadians – whether it comes from individuals or business leaders.   

FOR MORE

Concerned about your finances? CPA Canada offers a wide variety of financial literacy programs to help individuals better manage their money and plan for the future.