More than half of Canadians say they planned to reduce debt, but only 23% have been successful, finds PwC. And another 26% were outright unsuccessful.
Worse still is that Canadians are also taking on extra loans.
Read: Majority to use tax refunds to invest, pay debt
“With the average Canadian debt sitting at more than 160% of disposable income, the current trend is unsustainable — both for consumers and the banks who lend to them,” says John MacKinlay, national financial services consulting leader at PwC.
He adds, “Similar with any diet, saying you’ll cut back and make better choices is one thing, while actually doing it is quite another. We advise Canadians to take a hard look at their discretionary spending and prepare to make some tough choices on where to trim the fat.”
Read: Consumer debt up, defaults down
And while debt levels are high, so is consumer confidence.
More than half of Canadians feel the economy will remain steady or grow, and 46% feel their incomes will increase over the next five years. This suggests consumers will feel more comfortable carrying a heavier debt load than they would in tougher times.
Read: Q1 consumer spending up 3.31%
“The bullish attitude about prospects and earning power demonstrates a sense of optimism,” says Andrew Smee, director in consumer lending practice at PwC. “Still, we’re not completely on solid ground yet and it’s important for both consumers and banks alike to remain cautious about lending and borrowing.”
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