Stable Rates, Unstable Futures: The Growing Debt Crisis Facing Young Canadians

Credit Counselling Society data shows rising debt, high-cost of borrowing, and worsening stress among 18–34-year-olds

NEW WESTMINSTER, BC, July 30, 2025 /CNW/ - The Bank of Canada announced today it will hold its key policy rate steady. But for many young Canadians, the pressure hasn't eased. In fact, it's rising.

New data from the Credit Counselling Society (CCS) shows that Canadians aged 18 to 34 are trying to manage rising costs in a variety of ways—but for many, it's still not enough. They're not just borrowing; they are increasingly turning to high-cost lenders and short-term financing tools to make ends meet when cutting back, budgeting, and other solutions aren't enough. And while the central rate remains unchanged, wage instability, rising housing costs, and inflation continue to push many young adults deeper into debt—and into crisis.

"A steady interest rate doesn't undo years of financial strain," states Peta Wales, President & CEO of CCS. "Many young Canadians are already deep in debt. They're borrowing small amounts just to cover essentials, and over time, those borrowing decisions stack up."

More Young Canadians Are Asking for Help

The number of Canadians under 35 reaching out to CCS for help has grown by more than 7 per cent compared to 2023. They now account for over a quarter of all clients, a sign that financial pressure on this group is not only growing but accelerating.

The majority are renters (over 70 per cent), with most either working full-time or in precarious part-time, contract, or gig work . The highest concentrations of younger help-seekers are in Edmonton, Vancouver, and Calgary—all regions still experiencing steep housing costs.

"The sheer volume of people in their 20s and 30s we're hearing from speaks to how much financial pressure they are feeling from their mounting debt," says Isaiah Chan, Vice President of Programs & Services at CCS. "They're doing what they can—working, budgeting, cutting back—but it's not enough to offset today's cost of living."

Debt Loads Are Climbing, and So Is High-Cost Credit

The average unsecured (non-mortgage) debt load for 18 to 34-year-olds has grown by 9 per cent since 2023, rising to over $24,000 in 2025. But it's not just the total that's concerning; it's the nature of the debt. Over 40 per cent of younger clients now owe money to finance companies, known for offering high-interest loans, or buy-now-pay-later (BNPL) plans. More than 35 per cent owe money to payday lenders—a steady increase since 2023.

This kind of borrowing often fills urgent financial gaps, especially when budgets are stretched. But it can also come with high costs and complex repayment terms.

"We're seeing younger clients use credit for everything from groceries to textbooks to cosmetics," explains Mason Cox, Director of Counselling at CCS. "It's not just one big credit card bill anymore. It's a patchwork of smaller debts that add up and are hard to manage without guidance."

Debt Stress Is Becoming a Daily Reality

Convenient digital lending tools and in-app payment options are part of the story. Many young Canadians are relying on multiple forms of credit just to get through the month, including instant BNPL plans that don't feel like debt, online installment loans, and payday products that don't require a credit check. The ease and speed of these tools—often available with just a few clicks—make borrowing feel frictionless, even when the terms carry risk. More than 4 in 5 younger clients who reach out to CCS are already in a budget deficit—meaning their monthly expenses exceed their income.

"Using apps to split payments or relying on payday lenders has become so normal, it doesn't feel like risky debt," states Wales. "But these patterns are often unsustainable. Without a clear plan, it becomes harder to keep track of what's owed, and easier to fall behind."

A Call to Act Before the Breaking Point

By the time many young adults reach out, their lifestyle is already based on spending more than they earn each month. But avoiding debt isn't always the full solution. What's often missing is access to clear advice, practical tools, and early support. Many bank entirely online and never get a chance to talk to someone about budgeting, borrowing, or managing repayments.

"For many, quick credit feels like the easiest solution," explains Chan. "But every option comes with trade-offs, and without the right guidance, it's easy to get in over your head. That's why reaching out early can make all the difference."

The Credit Counselling Society urges anyone feeling overwhelmed by debt to reach out as soon as you feel like you might benefit from professional help. Speaking with an accredited credit counsellor is free, confidential, and available online or by phone.

"You don't need to hit rock bottom to get help," adds Chan. "If you're unsure what to prioritize, how to juggle payments, or even what solutions are available to you, that's exactly when to talk to someone. You don't have to figure it out alone.

To speak with a certified credit counsellor, visit nomoredebts.org or call 1-888-527-8999.

About the Credit Counselling Society
The Credit Counselling Society is a non-profit organization dedicated to helping consumers manage their money and debt better. CCS provides free and confidential credit counselling, objective debt repayment options, budgeting assistance, and financial education. Visit nomoredebts.org

Media Inquiries: 
The Credit Counselling Society has spokespeople from across Canada available for interviews to discuss this topic in more detail as well as any other relevant financial topics. Please feel free to reach out to the number below:

Garrett Johnson
Content & Communication Specialist
Direct: 604-636-0292
Email: [email protected]

SOURCE Credit Counselling Society of BC