New Report from TransUnion Reveals Rising Prices Stifle Canadians’ Personal Finance Optimism

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More than half of Canadians (56%) surveyed report that inflation and interest rate concerns impact purchasing behavior despite current positivity

Q1 2022 TransUnion’s Consumer Pulse study key findings:

  • 56% of Canadians reported being ‘very concerned’ about the inflation rate and associated impacts

  • 60% indicated their current household finances are as planned or better in Q1 2022

  • 54% reported not feeling confident about household finance outlook over the next 12 months

  • 46% indicated they are cutting back on discretionary spending

  • One in four (25%) reported that they do not expect to be able to pay at least one of their current bills and/or loans in full

  • 53% indicated that rising interest rates impact their approach to applying for credit

TORONTO, April 19, 2022 (GLOBE NEWSWIRE) — TransUnion’s most recent Consumer Pulse study* shows that while the majority of Canadians feel positive about their current personal finances as the economy continues to reopen, concerns about longer-term macro-economic pressures are casting a shadow over their optimism.

“Canadian households have been building up their savings throughout the pandemic,” said Matt Fabian, director of financial services research and consulting at TransUnion. “As the impact of the pandemic continues to subside, we expect that consumers will distribute these savings toward deleveraging credit, wealth management and increased household spending. But for now, concern over inflation and interest rates is fueling a sense of concern and hesitation.”

Canadians feel positive about their current financial situation – but are concerned about the future: The latest Consumer Pulse Survey showed that 60% of Canadians felt like their finances were the same or better than planned in Q1 2022. This may be partially due to the government subsidies supporting households throughout the pandemic, as well as lender debt relief. Overall, 19% reported that their household income increased since the last quarter, versus 54% who said it stayed the same, and 28% who said it decreased. However, looking ahead more than half (54%) indicated they do not feel as optimistic about their household finances over the next 12 months.

Future outlook tainted by inflation and cost increase pressures: When it comes to the longer-term perspective over the next 12 months, the majority of Canadians’ outlook is tainted as concerns about inflation and affordability grow. This is despite the fact that 52% of Canadians expected their household income to stay the same, and 35% expected it to increase over the next year. More than half (56%) of Canadians said they are ‘very concerned’ about the inflation rate and the associated impact when it comes to their financial outlook. These concerns impacted purchasing behaviors for 56% of Canadians.

Canadians in ‘wait and see’ mode in accessing or refinancing new credit: Many Canadians appear to be in ‘wait and see’ mode when it comes to accessing credit, with 78% who said they have no current plans to apply for new credit or refinance existing credit. More than half (53%) of Canadians said that rising interest rates impacted whether they are applying for credit or waiting. For some, concern about getting approved for credit due to their income or employment status made them more reluctant to apply. Despite the lower demand for credit, 81% of Canadians agree that access to credit is important. Among Canadians that planned to either apply for new or refinance existing credit:

  • 45% planned to apply for a new credit card

  • 28% planned to apply for a new personal loan

  • 21% planned to apply for a new mortgage, home loan or bond payment

Canadians embrace a cautious outlook on spending: Consumers are willing to spend slightly more on discretionary items; however, many Canadians are holding back on spending and are taking a more conservative approach overall.

  • 46% of Canadians reported cutting back on discretionary spending (such as dining out, travel, entertainment), versus 9% who increased discretionary spending

  • 20% canceled subscriptions/memberships, versus 7% who added subscription or memberships

  • 15% canceled or reduced digital services, versus 8% of 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 down debt, while, conversely, a smaller percentage reported increasing available credit and/or using their retirement savings to help manage cashflow.

  • 19% of Canadians reported they saved more in emergency funds

  • 18% said they paid down debt faster

  • 13% increased usage of available credit

  • 10% saved more for retirement

  • 9% used retirement savings

Majority of Canadians feel confident they can pay their bills – but one in four report they are struggling: When it comes to being able to pay the bills, 75% of Canadians reported that they expect to be able to pay their current bills. However, one in four Canadians (25%) said that they expect not to be able to pay at least one of their current bills or loans in full.
Of these Canadians:

  • 20% said they will borrow money from friends or family to pay their bills or loans

  • 12% said they will use money from savings

  • 7% said they will use unemployment benefits

“Although the pandemic restrictions have been easing across the country supporting Canada’s economic recovery, Canadians are feeling the shock waves of supply chain disruptions and inflation driven price hikes,” said Fabian. “Not least – the increase in food costs and the sky-high prices at the pumps. There’s no doubt that these macro-economic concerns are fueling a conservative ‘wait and see’ approach when it comes to spending and credit behavior among many consumers.”

TransUnion’s COVID-19 support center provides helpful information for consumers who are concerned about their ability to pay bills and loans. The complete Consumer Pulse study can be viewed here.

*The most recent Consumer Pulse study includes a survey of 1,069 Canadian consumers conducted between Feb. 14 and 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 providing a comprehensive picture of each person so they can be reliably and safely represented 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 customers in Canada comprise some of the nation’s largest banks and card issuers, and TransUnion is a major credit reporting, fraud, and analytics solutions provider across the finance, retail, telecommunications, utilities, government and insurance sectors.

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