Canadians can’t cover living expenses without more debt amid higher interest rates

The Bank of Canada (BOC) raised interest rates once again on Monday, causing some indebted consumers to lose another hour of sleep.

According to a new MNP survey, one-third of Canadians say they can no longer cover their monthly bills and debt payments. The poll found that 33 percent of respondents admitted to having a difficult time covering their monthly bills, while nearly half (48 percent) said they only have a buffer worth about $200 to cover their obligations.

Indeed, Canadians suffer from a lot of regret: 40 percent concede they regret the amount of debt they have taken on in their lifetime. And about half don’t believe they can cover all of their living expenses over the next 12 months without going into debt.

But here is the kicker: close to half (42 percent) say they are in trouble if the BOC pulls the trigger on more rate hikes in the future.

“The results highlight just how financially vulnerable Canadians are. Even small interest rate increases result in escalating financial strain and anxiety,” said Grant Bazian, MNP’s president, in a statement. “While Canadians say they are heeding rate increase warnings, they are still reliant on credit to make their household budgets work. The result may be a dangerous debt trap that will be impossible for some to ever get out of.”

Consumers are tapped out, and an economy cannot survive and thrive if people are stuck in a debt trap.

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