Canadians are eager to be debt-free, but they’re missing many opportunities to pay down their debts faster, says Manulife Bank.
According to the bank’s recent consumer debt survey, 61% of Canadians have struggled to reduce their debt over the past year. In fact, 25% said they have increased their debt, 15% said they have seen no change in their debt and 21% said they’ve reduced their debt—but by less than they expected.
When asked what their primary obstacles are to becoming debt-free, the top three barriers identified were a lack of extra money to put towards debt repayment (54%), the overall amount of their debts (43%), the interest rates they pay on their debts (39%)—despite interest rates remaining at near historic low levels—and the number of different debts (27%) they have.
The survey also found that many Canadians are not taking advantage of strategies that can help them overcome these barriers and reduce their debt faster. For example:
- almost half (43%) said they do not plan to consolidate their debts at a single low interest rate;
- among respondents with a mortgage, 70% said they did not make any extra payments on their mortgage in the past year;
- two-thirds of homeowners (65%) said they did not compare mortgage products from more than one lender the last time their mortgage came due;
- more than half of respondents (55%) said they do not plan to work with a professional financial advisor to get advice on how they can manage their debt; and
- only 56% of respondents said they have, or intend to create, a debt repayment plan that includes a specific date for when they expect to be debt-free.
Full results of the survey are available at manulifebank.ca/debtresearch.