TORONTO, Jan. 23, 2020 /CNW/ - A recent study of 1665 credit-constrained Canadians, conducted by Loans Canada, the country's leading loan comparison website, found inconsistencies between respondents' perceived and actual financial literacy. CTO Cris Ravazzano explains, "The purpose of this survey was to learn more about credit-challenged Canadians and the role their financial literacy plays in the financial decisions they make."
The study found that 67% of respondents consider themselves financially knowledgeable and agreed that they make informed decisions about their finances.
However, when tested on their financial behaviour and decision making, their performance was not in line with their claims. These particular findings stood out.
43% of the 67% are not tracking their expenses or spending habits
Two thirds of the 67% are not paying their credit card bills in full every month
72% of the 67% are not saving on a regular basis
44% of the 67% believe that lenders are allowed to ask for upfront payments on personal loans
30% of the 67% believe that paying the minimum payments on a credit card prevents them from being charged interest
The study takes a deeper look at how credit-constrained Canadians are managing their finances and dealing with debt and credit issues.
46% of respondents are loan stacking for emergencies, unexpected costs or to make ends meet. Loan stacking refers to taking on multiple loans from multiple lenders, resulting in multiple monthly payments to different providers, multiple credit hits, higher risk of default, and often a violation of loan terms.
Almost half of the credit-constrained Canadians carry high-interest debt in the form of payday loans (45%) and credit cards (55%).
People who claim they are financially knowledgeable typically have higher debt levels than people who disagree with that notion.
Financial literacy and financial well-being are closely linked. Credit education is critical in improving financial health for credit-constrained Canadians. "Our findings show that many Canadian consumers still have a lot to learn when it comes to their financial health, and we feel that financial education plays a very important role in financial decision making. We will continue to make financial literacy a key component of our content strategy moving forward," said Caitlin Wood, Chief Editor at Loans Canada.
Launched in 2012, Loans Canada is the country's leading loan search and comparison platform. Millions of Canadians visit LoansCanada.ca each year to take advantage of their credit education resources or to search for credit products. Loans Canada's proprietary lender-matching technology instantly connects borrowers to lenders and other financial solution providers. For more information, please visit www.loanscanada.ca.
From January 7, 2020, to January 16, 2020, a survey was conducted by Loans Canada. A representative sample of 1665 users, from across Canada, were asked questions related to their financial health and literacy. Participants were asked 22 questions and data was collected using Google Forms.