New TransUnion report finds price hikes stifle Canadians’ optimism about personal finance
More than half (56%) of Canadians surveyed reported that inflation and interest rate concerns influence purchasing behavior despite the current positivity
TransUnion’s Consumer Pulse results in the first quarter of 2022:
- 56% of Canadians reported being ‘extremely concerned’ about the rate of inflation and its associated effects
- 60% indicated that their family’s current financial position is as planned or better in the first quarter of 2022
- 54% reported not feeling confident about their family finance outlook over the next 12 months
- 46% indicated that they reduce discretionary spending
- One in four (25%) said they did not expect to be able to pay at least one of their current bills and/or loans in full.
- 53% indicated that higher interest rates affect their approach to applying for credit
TORONTO, April 19, 2022 (GLOBE NEWSWIRE) — A recent TransUnion study of Consumer Pulse* shows that while a majority of Canadians feel positive about their current personal finances as the economy continues to open, concerns about looming long-term macroeconomic stresses have remained over their optimism.
“Canadian families have been building their savings throughout the pandemic,” said Matt Fabian, director of financial services research and advisory at TransUnion. As the impact of the pandemic continues to recede, we expect consumers to channel these savings toward reducing credit, managing wealth and increasing household spending. But right now, concern about inflation and interest rates is fueling a sense of anxiety and hesitation.”
Canadians feel positive about their current financial situation – but worry about the future: The recent Consumer Pulse survey showed that 60% of Canadians felt their finances were similar or better than planned in the first quarter of 2022. This may be due in part to government support for families throughout the pandemic, as well as debt relief for lenders. Overall, 19% reported that their household income had increased since the last quarter, compared to 54% who said it had remained the same, and 28% who said it had decreased. However, more than half (54%) indicated that they are not optimistic about the financial situation of their family over the next 12 months.
The outlook is polluted by inflation and cost pressures: When it comes to the long-term perspective over the next 12 months, the majority of Canadians are tainted with growing concerns about inflation and affordability. This is despite the fact that 52% of Canadians expect their household income to remain the same, and 35% expect it to rise over the next year. More than half (56%) of Canadians said they are “extremely concerned” about the rate of inflation and the associated impact when it comes to their financial outlook. These concerns affected the buying behaviors of 56% of Canadians.
Canadians are in a “wait and see” mode of accessing or refinancing new credit: Many Canadians seem to be in a “wait and see” situation when it comes to getting credit, with 78% saying they have no current plans to apply for new credit or refinance existing credit. More than half (53%) of Canadians said increased interest rates have affected whether they apply for credit or wait. For some, worrying about getting approved for credit because of their income or job status has made them more reluctant to apply. Despite the low demand for credit, 81% of Canadians agreed on the importance of getting credit. Among Canadians who have planned to either apply for new credit or to refinance existing credit:
- 45% intend to apply for a new credit card
- 28% intend to apply for a new personal loan
- 21% plan to apply for a new mortgage, home loan or bond payment
Canadians are taking a cautious view on spending: Consumers are willing to spend a little more on discretionary items; However, many Canadians are reluctant to spend and generally take a more conservative approach.
- 46% of Canadians reported reducing discretionary spending (such as dining out, travel and entertainment), versus 9% who increased discretionary spending
- 20% canceled subscriptions/memberships, 7% added subscription or memberships
- 15% canceled or reduced digital services, versus 8% added or expanded digital services
Canadians take a conservative approach to managing their debt and savings: Many Canadians reported increasing their savings and focusing on paying off debt, while, conversely, fewer reported increasing available credit and/or using retirement savings to help manage cash flow.
- 19% of Canadians reported saving more in emergency funds
- 18% said they paid off debt faster
- 13% increase in available credit usage
- 10% save more for retirement
- 9% used retirement savings
The majority of Canadians feel confident in their ability to pay their bills – but one in four reported experiencing: When it comes to being able to pay bills, 75% of Canadians say they expect to be able to pay their current bills. However, one in four Canadians (25%) said they expect to be unable to pay at least one of their current bills or loans in full.
Among these Canadians:
- 20% said they would borrow money from friends or family to pay their bills or loans
- 12% said they would use the money from savings
- 7% said they would use unemployment benefits
“Although pandemic restrictions have been eased across the country to support Canada’s economic recovery, Canadians are feeling shock waves from supply chain disruptions and price hikes caused by inflation,” Fabian said. Not the least of which is the rise in food prices and the massive rise in pump prices. There is no doubt that these macroeconomic concerns fuel a conservative “wait and see” approach when it comes to spending and credit behavior among many consumers.”
The TransUnion COVID-19 Support Center provides useful information to consumers who are concerned about their ability to pay bills and loans. The full Consumer Pulse study can be found here.
*The most recent Consumer Pulse Study includes a survey of 1,069 Canadian consumers conducted between February 14-17, 2022.
About TransUnion (NYSE: TRU)
TransUnion is a global information and insights company that makes trust possible in the modern economy. We do this by presenting a comprehensive picture of each person so that they can be represented reliably and securely in the marketplace. As a result, businesses and consumers can transact with confidence and achieve great things. We call this Information for Good.® TransUnion provides solutions that help create economic opportunity, great experiences, and personal empowerment for hundreds of millions of people in more than 30 countries. Our clients in Canada include some of the largest banks and card issuers in the country, and TransUnion is a leading provider of credit reporting, fraud, and analytics across the finance, retail, telecom, utilities, government and insurance sectors.