Albertans Hardest Hit by Rising Interest Rates and Inflation – Red Deer Advocate
Half of Albertans say rising interest rates could bring them closer to bankruptcy — a 15% jump since December — according to new poll results.
This increase is the largest among the provinces, as shown by the latest MNP Consumer Debt Index conducted by Ipsos on behalf of MNP LTD, Canada’s largest insolvency firm.
“These are frightening numbers given that there is nothing to show inflation and high interest rates are going to change any time soon,” said Kevin Lacey, Alberta director at the Canadian Federation of taxpayers.
He said Alberta’s economy was just starting to improve after a few tough years, which is why Albertans are worse off than others.
The poll, compiled between March 9 and March 15, shows that two in three Albertans say they are most concerned about their ability to pay their debts.
Six in ten say they are already feeling the effects of the rise in interest rates, also the highest among the provinces.
Donna Carson, licensed insolvency trustee at Alberta-based MNP LTD, said high consumer debt could intensify the impact for Albertans.
“Many have accumulated more debt in an attempt to meet the rising cost of their living expenses, but as interest rates rise the cost of servicing some of these debts will also rise, making more difficult to repay them. Once this cycle of indebtedness has started, it is extremely difficult to break free from it,” Carson said in a statement.
Lacy said that if average Red Deer residents don’t have money to spend and high-income earners are also cautious, local store owners won’t be able to contribute to economic drivers such as the growth of the job.
He said a poll like this should be a signal to politicians. The federal government must reverse the carbon tax increase that took effect on April 1. The provincial government got off to a good start with its 13-cent gas tax relief and electricity rebate, but could go further by ending income tax hook creep.
“It’s a call to action.”
Compared to other provinces, Albertans were also the most likely to say they were not financially prepared for a one percentage point rate increase.
“During the pandemic, many people’s savings funds have been severely depleted. Household budgets for Albertans are shrinking, but especially for those already living in the red,” Carson said.
Half of those surveyed say they were $200 or less away from not being able to meet all of their financial obligations, which is an eight-point increase since December. This includes 36 per cent who say they were already not earning enough to cover their bills and debts, which was more than in any other province.
More than half feared they would not be able to cover all living/family expenses in the coming year without taking on more debt, the biggest increase from last quarter among any province.
Albertans were also the most likely to be concerned about their current level of debt.
Ron Rose, president of the Alberta Council on Aging, said rising costs make it especially difficult for people living on fixed incomes, such as seniors.
He said they aren’t able to make more money by getting a job, and he suspects going to a food bank can be a bit of a barrier for older people, but that day might come. .
“A lot of seniors will get by with tea and toast when they probably shouldn’t be,” said Rose, of Red Deer, who doesn’t see the end to the skyrocketing costs.
“Everyone wants to get back to normal. I don’t want to go back to normal. That’s what got us into this mess. We need a new normal, and I guess I’m waiting to see who finds out what it is.