Most Canadians think the level of debt they have is manageable, but may think differently with a change in rates or personal circumstances
TORONTO, Dec. 11, 2014 /CNW/ - Contrary to concerns about debt levels across the country, a new CIBC (TSX: CM) (NYSE: CM) poll finds that more than 8 in 10 Canadians are not worried about their level of personal debt with the vast majority (85 per cent) taking steps to reduce what levels they have.
"Annual research on financial priorities for Canadians shows that debt repayment has been their number one priority for four years running, and we are now seeing some results from those good intentions," says Christina Kramer, Executive Vice President, Retail and Business Banking, CIBC.
Key findings of the poll include:
- Only 16 per cent say they are concerned they have too much debt
- 24 per cent say they are comfortable with the amount of debt they have
- 33 per cent of Canadians say they would like to have less debt, but what they have is manageable
- 24 per cent are debt free
- Among Canadians with debt, 85 per cent are taking steps to reduce their debt level:
- 34 per cent say they are working hard to pay off their debt as quickly as possible
- 51 per cent say they are making a reasonable effort to pay off their debt
Canadians paying down debt
A recent CIBC economic report found that Canadians are taking advantage of current low interest rates to pay down $11 billion more a year in principal on their mortgages than previously thought. That progress is aligned to the high percentage of poll respondents who say they are taking action on paying down debt, with 34 per cent saying they are working hard to pay off their debt as quickly as possible and another 51 per cent saying they are making a reasonable effort to pay off their debt.
"As they work to keep their debt in check, it is important for Canadians to realize the importance of making extra payments when interest rates are low," adds Ms. Kramer. "By taking steps now, you can better manage a rate increase or changes in personal circumstances that may affect your finances in the future."
Among those with debt, 71 per cent think they will have their debt paid off in 5 years or less:
- 35 per cent plan to pay off their debt in the short term (less than 2 years)
- 36 per cent plan to pay off their debt in the medium term (2-5 years)
"It is important to be realistic in looking at your level of debt," suggests Ms. Kramer. "Create a practical financial plan that not only allows you to pay off existing debt when you want to, but also helps you to avoid taking on new debt. While it is important to make debt repayment a priority, it needs to be prioritized in the context of other financial goals, which is why having a conversation with an advisor can be helpful in setting priorities that make sense for you."
Advice for focusing on reducing debt
- Talk to an Advisor - Most Canadians don't think about making debt reduction the topic of a conversation with an advisor, but it can help you make progress on paying down debt by looking at your overall financial picture and putting realistic steps in place to reduce interest costs and accelerate debt repayment.
- Spending Alerts - Services such as CIBC CreditSmart can help you stick to your budget. Free to CIBC credit card holders, CIBC CreditSmart allows clients to set a budget limit on each spending category on their credit card, and be notified by phone, email or online message when they exceed their customized budget.
- Stick to your plan - Once you have a plan in place, stick to it. If you fall off track, get back to your plan as soon as possible and keep making progress towards your goal.
KEY POLL FINDINGS
What Canadians think about their current level of debt:
| Would like to have less debt, but what they have is manageable | 33% |
| Are comfortable with the amount of debt that they have | 24% |
| Don't have any debt | 24% |
| Are concerned they have too much debt | 16% |
Among Canadians with debt, the time in which they plan to pay off their debt:
| Plan to have it paid off in the short term (less than 2 years) | 35% |
| Plan to have it paid off in the medium term (2-5 years) | 36% |
| Will be a long time before debt is paid off (more than 5 years) | 24% |
| Don't ever plan to pay off their debt | 2% |
Among Canadians with debt, how they are planning to reduce it:
| Working hard to pay off my debt as quickly as possible | 34% |
| Making a reasonable effort to pay off my debt | 51% |
| Only making minimum payments | 8% |
| Not making payments/behind on payments | 3% |
From September 29th to 30th 2014, an online survey was conducted among 1,509 randomly selected Canadian adults who are Angus Reid Forum panelists. The margin of error—which measures sampling variability—is +/- 2.53%, 19 times out of 20. The results have been statistically weighted according to education, age, gender and region (and in Quebec language) Census data to ensure a sample representative of the entire adult population of Canada. Discrepancies in or between totals are due to rounding.
About CIBC
CIBC is a leading Canadian-based global financial institution with nearly 11 million personal banking and business clients. Through our three major business units - Retail and Business Banking, Wealth Management and Wholesale Banking - CIBC offers a full range of products and services through its comprehensive electronic banking network, branches and offices across Canada with offices in the United States and around the world. You can find other news releases and information about CIBC in our Media Centre on our corporate website at www.cibc.com.
SOURCE: CIBC
Caroline Van Hasselt, Director, External Communications, 416-784-6699 or [email protected]
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