Canadians 65 and over more likely to feel their debt could be with them for life; Some Canadians comfortable with current debt level and don't plan to pay it off
TORONTO, July 31, 2013 /CNW/ - A new CIBC (TSX: CM) (NYSE: CM) poll conducted by Harris/Decima shows 14 per cent of Canadians carrying debt believe they will never be debt free - a number that jumps to 21 per cent for Canadians 65 years of age and up.
Key poll findings include:
- 14 per cent of Canadians holding debt today believe they will never be completely debt free.
- Another 10 per cent said they don't know when they'll be able to completely pay off their debt.
- Collectively, that means 24 per cent of Canadians holding debt today have no defined timeline to pay it off.
- Age plays a role within the 14 per cent who say they will never be debt free - among Canadians 65 and over who carry debt today, 21 per cent said they would never be debt free, while only 7 per cent of Canadians between ages 18-34 said the same.
"While past research has shown many Canadians are making progress on reducing debt, there is a smaller group that feels they won't be able to achieve debt freedom in the long run," said Christina Kramer, Executive Vice President, Retail Distribution and Channel Strategy, CIBC. "Carrying debt over the long term without a plan to pay it off means you are taking a risk with your long term financial goals, including retirement."
Too Far in Debt, or Too Comfortable?
Interestingly, the reasons Canadians feel they may carry debt over the long term range from financial circumstances, to a smaller group who are actually comfortable with the idea of carrying debt for life.
Within the 14 per cent of Canadians who said they would never be debt free:
- 25 per cent of this group said they are already too far in debt to pay it off based on their current circumstances
- 16 per cent said they can't pay it off because the cost of living is too high
- 12 per cent said they have a comfortable level of debt and don't intend to pay it off
"An advisor can help you look at your overall financial picture and develop short term targets for debt repayment that will start improving your cash flow and reducing your interest costs," noted Ms. Kramer. "Choosing to carry debt over the long term may carry risks because your financial circumstances tomorrow might make it harder to manage the debt level you have today. That's why it makes sense to make progress on debt repayment, even if you are comfortable with the debt you hold today."
Canadians 65 and over Holding Debt More Likely to Feel They're Stuck with it
While Canadians 65 and over were among the most likely to say they were debt free (42 per cent) in prior CIBC polls, those with debt in this age group were among the most likely to feel they would never pay it off completely. In contrast, younger Canadians were more optimistic they would get a handle on debt over time, with only 7 per cent (aged 18-34) saying they would hold debt for life.
"Canadians 65 and over are more likely to be working with a fixed income, which can make debt repayment more challenging,' added Ms. Kramer. "The key is setting smaller goals and then working towards them, since every dollar you reduce in debt also reduces interest costs, and helps your cash flow."
Advice for Canadians Looking to Get a Handle on their Debt
CIBC offers these tips to help Canadians take charge of their finances and reduce debt as part of their long term financial plan.
- Get Started - even small steps to reduce debt can deliver benefits by reducing the interest you pay each month. For those Canadians who can't determine when they'll be debt free, it's important to get started and then refine your goals as you go.
- Pay off higher interest debt first - Make lump sum payments to higher interest debt first to reduce interest costs.
- Talk to an Advisor - If you have debt, work with an advisor to structure it to minimize your overall interest costs by utilizing debt products that offer a lower interest rate and having a strategy to pay these balances down in a specific time frame.
- Increase your Payments - While interest rates remain near historic lows, don't ignore the long term benefits of making small adjustments to your payment today. Setting your debt payment even slightly higher than your required payment can reduce your overall interest costs and help you become debt free faster.
- Use free budgeting tools to help you stay on budget - CIBC CreditSmart, available to CIBC credit card holders, allows you to set customized budgets and receive spend alerts if you exceed your planned budget for the month, helping you stay on top of your everyday budgeting and saving.
Among Canadians with debt, percentage that say they will never be completely debt free when looking ahead, by region:
Among Canadians with debt, percentage that say they are not sure when they will be completely debt free when looking ahead, by region:
Among Canadians with debt, percentage that say they will never be completely debt free when looking ahead, by demographic:
|18-24 years of age||3%|
|25-34 years of age||9%|
|35-44 years of age||15%|
|45-54 years of age||15%|
|55-64 years of age||13%|
|65 years of age and over||21%|
Among Canadians with debt, percentage that say they are not sure when they will be completely debt free when looking ahead, by demographic:
|18-24 years of age||11%|
|25-34 years of age||4%|
|35-44 years of age||8%|
|45-54 years of age||7%|
|55-64 years of age||13%|
|65 years of age and over||20%|
Results are based on a CIBC poll conducted by Harris/Decima, via teleVox, which surveyed 2,002 Canadians. The associated margin of error is +/-2.2%, 19 times out of 20. Polling was conducted between March 28th to April 7th, 2013.
CIBC is a leading North American financial institution with nearly 11 million personal banking and business clients. CIBC offers a full range of products and services through its comprehensive electronic banking network, branches and offices across Canada, and has offices in the United States and around the world. You can find other news releases and information about CIBC in our Press Centre on our corporate website at www.cibc.com.
For further information:
Kevin Dove, Head of External Communications, CIBC, 416-980-8835, [email protected]