Financial stress is rising among younger Canadians even despite rate relief

The Bank of Canada’s benchmark interest rate sits lower today than it did a year ago – but a growing number of young Canadians say the relief isn’t reaching them.

According to new data from the Credit Counselling Society (CCS), individuals aged 18 to 34 are experiencing increased financial stress, marked by rising debt levels and a reliance on high-cost borrowing to manage essential expenses.

“A steady interest rate doesn’t undo years of financial strain,” said Peta Wales, president and 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.”

CCS reports a more than 7% year-over-year increase in Canadians under 35 seeking debt help. This age group now makes up over 25% of all clients. Most are renters, and many are employed either full-time or in precarious work, including part-time, contract, or gig-based roles. Edmonton, Vancouver, and Calgary, where housing costs remain high, are seeing the largest concentrations of younger help-seekers.

“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,” said Isaiah Chan, vice president of programs and 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.”

Unsecured debt for Canadians aged 18 to 34 has risen by 9% since 2023, now averaging over $24,000. Notably, over 40% of younger clients owe money to high-interest finance companies or through buy-now-pay-later (BNPL) schemes. More than 35% have payday loan debt—a figure that continues to rise.

“We’re seeing younger clients use credit for everything from groceries to textbooks to cosmetics,” said 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.”

Digital tools have made borrowing easier but also more hazardous. Over 80% of younger clients contacting CCS are already spending more than they earn each month.

“Using apps to split payments or relying on payday lenders has become so normal, it doesn’t feel like risky debt,” added Wales. “But these patterns are often unsustainable.”

CMP

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