In Alberta, high levels of non-mortgage debt stand as a testament to the economic impacts of the oil industry’s volatility. A consumer trends report compiled by Equifax indicates that in the second quarter of 2023, the average non-mortgage debt of the province’s residents rose to $24,439, exceeding the Canadian average by over ten per cent. Contrasting this with other large Canadian cities such as Toronto, Vancouver, Montreal, and Ottawa – their average non-mortgage debts linger around $20,067, $22,282, $16,442, and $19,142 respectively. Notably, the residents of Fort McMurray displayed a staggering amount of $37,549 in average non-mortgage debt.
Rebecca Oakes, Vice President of Analytics for Equifax Canada, reveals that Alberta’s escalated debt levels stem mainly from consumers’ increased utilization of credit for installment loans and maintaining higher credit card balances. She questions the sustainability of growing average minimum monthly payments given the current interest rates – a troubling scenario that could potentially result in increased debt and delinquency rates.
The Post-COVID climate, characterized by escalating interest rates and inflation, appears to have caught people off guard. Michelle Liang, Money Mentors’ Marketing and Communications Manager, remarks on the increasing demands on their services. Many Albertans, prior to this crisis, lived on limited incomes barely covering living expenses, often devoid of retirement savings. These individuals found themselves equipped with large debts they formerly could manage due to lower living costs and a mindset rooted in corporate account living, leasing, and borrowing.
Liang continues to elaborate that job losses, reduced income levels, a familiar debt load, and rising interest rates significantly factor into the financial struggles many of their clients face, affecting affordability on several living aspects. Her advice for anyone worried about their debts piling up is to make a budget and seek assistance from a credit counsellor.
Developing a budget may not come naturally to everyone, Liang admits. She encourages clients to start with their financial statements, aiming to identify their spending patterns. During these economically challenging times, having a counsellor to guide individuals through this process can prove enormously beneficial, paving a path amid the crisis.