Higher interest rates putting financial strain on Albertans: poll

A new study suggests Albertans are feeling financial pressure because of higher interest rates.

A poll by insolvency firm MNP suggests 40 per cent of Albertans are feeling the effects of increasing interest rates, which is a higher percentage of people than any other province.

The Bank of Canada raised its key interest rate to one per cent from 0.75 per cent in early September, which followed a hike in July from 0.5 per cent to 0.75 per cent.

The study also found 42 per cent of participants are concerned about the impact of rising interest rates, 46 per cent are afraid they’ll be in financial trouble and 55 per cent are concerned about their ability to repay their debts.

“It’s no surprise that Albertans are feeling anxiety about higher rates. Many took on more debt to make ends meet during the downturn,” MNP licensed insolvency trustee Zaki Alam said.

“The good news is that there seems to be at least the acknowledgement now that rates are going to climb, which might make people reassess their spending habits – especially using credit.”

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Albertans want to change their spending habits, according to the poll, with 77 per cent saying they’ll be more careful about how they spend their money with the rising interest rates.

Those who participated in the study said they have $262 less each month after paying bills and debt obligations, compared to an MNP study conducted in June. It was the largest decline out of any province during the time period.

“Albertans are less optimistic when we actually break down the potential dollar amount increase in debt servicing costs,” Alam said.

“This is likely because most people haven’t taken a close enough look at how their payments could be affected by rate increases or they don’t understand specifically how rate increases  will impact their payments.”

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The MNP survey also suggested 43 per cent of Albertans are $200 or less from not being able to pay their bills and debt payments each month, which is a five point increase from June, and 37 per cent are concerned rising interest rates are moving them towards bankruptcy.

The poll is part of the MNP Consumer Debt Index conducted by Ipsos. The data was collected between Sept. 18 and Sept. 21.

The results are accurate to withing +/- 2.5 percentage points, 19 times out of 20.