Nearly two-thirds of Canadians Say Household Income Negatively Impacted by COVID-19
TransUnion unveils research assessing pandemic’s effect on consumer finances
- Nearly two-thirds (64%) of Canadian household incomes surveyed negatively impacted by COVID 19, a 6% increase compared to the prior week
- Canadians financially affected indicate it was due to either a reduction in working hours (30%), losing their job (25%), or a partner losing his/her job or having reduced work hours (24%)
- Of those impacted, 67% continue to be concerned about their ability to pay bills and loans – down slightly from 70% the prior week
- Impacted Canadians said they will not be able to pay credit card debt (53%), followed by rent (42%), utilities (39%)
- 36% of surveyed Canadians are reaching out to lenders to discuss payment options
TransUnion’s second weekly study looking at the impact of COVID-19 on consumer finances in Canada, reveals consumers continue to feel financially strained as a result of this pandemic, more so than the previous week. The survey of 1,035 adults conducted on the week commencing April 6, 2020, also found that recent measures announced by the federal government including the Canada Emergency Wage Subsidy and Canada Emergency Response Benefit is already positively impacting consumers' concerns around paying their bills.
“Our latest research clearly indicates that the COVID-19 pandemic is negatively impacting consumer financial concerns,” said Roman Mykhaylyshyn, Managing Director, Consumer Solutions, TransUnion Canada. “But at the same time, the data infers that recent government measures to provide financial support are already positively impacting Canadians’ anxiety about being able to pay their bill from just one week ago.”
Canadians consumers continue to be impacted financially
The research revealed that 64% of surveyed Canadian household incomes are being negatively impacted by COVID 19 overall. This represents a 6% increase compared to last week. The impact decreased for Gen Z (down from 82% in Week #1 to 73% in Week #2). This is in contrast to increases across Millennials (up from 67% in Week #1 to 76% in Week #2), Gen X (up from 53% in Week #1 to 67% in Week #2) and Baby Boomers (up from 43% in Week #1 to 50% in Week #2). Overall, Canadians who indicated they are financially affected by COVID-19 said it was due to either a reduction in working hours (30%), losing their job (25%) or a partner losing his/her job or having reduced work hours (24%). This is relatively unchanged from the week prior.
Consumers turning to emergency resources for financial relief
Impacted Canadians continue to express concern about their ability to pay bills; however, recent announcements from the federal government including the Canada Emergency Wage Subsidy and Canada Emergency Response Benefit have eased concern (slightly down from 70% in Week #1 to 67% in Week #2). TransUnion also observed that of the percentage of Canadians that indicated they were impacted by this pandemic, an increased number are planning to turn to their savings and investment accounts – including their Tax-Free Savings Account (TFSA) or Registered Retirement Savings Plan (RRSP) – during this difficult time (up from 10% in Week #1 to 24% in Week #2). Consumers are also seen to be going to greater lengths to seek out help and advice, with nearly four in 10 (36%) surveyed Canadians reaching out to lenders to discuss payment options.
Ability to pay bills still challenging
Of those impacted, two-thirds of Canadians (67%) indicated that they continue to be concerned about their ability to pay bills and loans. Specifically, consumers are worried about not being able to pay their bills for longer periods of time, with the majority claiming concerns about not being able to pay for up to one month but less than three months (up from 34% in Week #1 to 40% in Week #2). Additionally, impacted Canadians said they will not be able to pay credit card debt (53%), followed by rent (42%), utilities (39%), and mobile/wireless charges (39%). Gen Z and Millennial consumers who are impacted report a higher level of concern around paying rent (63% of Gen Z and 49% of Millennials) and their credit card bill (46% of Gen Z and 56% of Millennials).
Keeping a close eye on credit scores
When it comes to monitoring their credit scores and activity, 65% of Canadian indicated that they monitor their score with almost a third of Canadians checking at least monthly. Many major banks and lenders provide free credit monitoring and access to credit information to their customers and almost one in three Canadians indicate they are using them, with others using popular credit monitoring sites and other services. The frequency of monitoring appears correlated to age, as Gen Z consumers are much more likely to monitor at least monthly (45%), while the percentage of Baby Boomers (24%) and Silent Generation (13%) consumers monitoring at least monthly is much smaller. When asked how important credit monitoring is during this crisis, almost three-quarters of Canadian felt it was important, with 20% indicating it was very important.
“Familiarizing yourself with your personal credit score and report is particularly important at the time of economic uncertainty, and our research confirms that most of Canadians feel the same way. As access to credit may become much more relevant at this time, knowing your credit score, seeing a complete picture of credit accounts, missed payments or delinquencies can empower consumers to take appropriate action. It is also great to see that Millennials are demonstrating prudent credit management habits by monitoring their information early on as they are more likely to require credit products including loans, mortgages and lines of credits in the future,” continues Mykhaylyshyn.
To help consumers maintain financial steadiness during the coronavirus pandemic, TransUnion is providing the following tips:
- Be aware: Stay informed about the latest coronavirus updates from your local, provincial and federal government bodies to learn more about what financial resources may be available to you. Many organizations, including financial institutions, are actively communicating with their customers during this difficult time, so be sure to regularly check an organization’s website, social media channels or sign up for email updates to receive the latest information.
- Be prudent: If you need additional credit, make sure to contact a lender, explain your circumstances and explore your options before making any decisions, while also ensuring you understand any potential long-term effects. If you have concerns about being able to pay your bills, contact your lenders to ask whether they might have a payment arrangement or hardship program.
- Be vigilant: As the situation in Canada and around the world continues to evolve, consumers should be checking their credit report regularly to make sure all their account information is correct and to maintain visibility into their financial standing during this pandemic. You can get your TransUnion free consumer disclosure by visiting ocs.transunion.ca. TransUnion has also partnered with a number of organizations (Royal Bank of Canada, Scotiabank, Desjardins, Bank of Montreal, Capital One) to provide credit information access to consumers – be sure to talk to your financial provider for details.
Details about the research and additional resources for consumers can be found on TransUnion’s COVID-19 website.
TransUnion is a global information and insights company that makes trust possible in the modern economy. We do this by providing a comprehensive picture of each person so they can be reliably and safely represented in the marketplace. As a result, businesses and consumers can transact with confidence and achieve great things. We call this Information for Good.® TransUnion provides solutions that help create economic opportunity, great experiences and personal empowerment for hundreds of millions of people in more than 30 countries. Our customers in Canada comprise some of the nation’s largest banks and card issuers, and TransUnion is a major credit reporting, fraud, and analytics solutions provider across the finance, retail, telecommunications, utilities, government and insurance sectors.
For more information visit: www.transunion.ca