CIBC Debt Poll: 75 per cent of Albertans are in debt, but many are making extra payments to bring down balances
Lump sum payments primarily directed to credit cards and lines of credit; having a plan is key to successful debt reduction
CALGARY, May 28, 2012 /CNW/ - More than half of all Albertans holding debt made at least one extra payment to bring down their balances in the last 12 months, finds a new CIBC (TSX: CM) (NYSE: CM) Poll conducted by Harris/Decima. Amidst warnings on rising household debt levels and the prospect of higher interest rates, Albertans primarily focused these extra payments on reducing credit card and line of credit balances.
Key Poll Findings:
- 75 per cent of Alberta residents hold some form of debt, while the national average is 72 per cent
- Among Albertans with debt, 52 per cent have made at least one lump sum payment to their debt sometime in the last year, while the national average is 49 per cent
- Albertans making extra payments are directing these payments to reducing credit card balances (64 per cent), followed by line of credit balances (42 per cent), and mortgages (22 per cent)
- Nationally, Canadians more heavily indebted are also the most likely to have made an extra lump sum payment toward their debt in the past 12 months
- The age groups most likely to hold debt were 25-34 year olds (84 per cent) and 35-44 year olds (83 per cent)
- After age 45, the likelihood of holding debt begins to decline
"Debt management is top of mind for Albertans, and these poll results show that many Albertans are taking steps towards reducing their debt," said Mike Stevenson, Senior Vice President, Western Canada, CIBC.
Mr. Stevenson also noted that despite the increased awareness Albertans have about the importance of managing debt, it's a topic they are less likely to get advice about - a gap that suggests more Albertans would benefit from a strategy to tackle debt reduction.
"We know from past research that Alberta residents are more likely to seek financial advice about saving for retirement than they are about managing their debt," added Mr. Stevenson. "Debt reduction takes effort and discipline about how your money is spent, but it also requires a thoughtful approach as to how to direct extra payments and reduce interest costs, which is where a conversation with an Advisor can be very helpful as part of an overall financial plan."
Some Albertans Making up to Five Debt Payments a Month
Among the 75 per cent of Albertans holding some form of debt, some are managing only one debt product, while others are making up to 5 monthly payments to various debt products which could impact their ability to manage their overall finances.
- 19 per cent of Alberta residents polled reported being debt free, with no balances on any debt products
- 13 per cent held just one debt product with a balance
- 19 per cent have two debt products with a balance
- 31 per cent have either 3 or 4 debt products with a balance
- And, 12 per cent of Alberta residents have 5 or more debt products with a balance
Interestingly, when looking at the data nationally, clients with 5 or more debt products were more likely to have made a lump sum debt payment in the last 12 months (62 per cent) versus the national average (49 per cent). This trend could be a result of a realization among more heavily indebted Canadians of the need to take action to reduce their debt levels more urgently than those Canadians managing just one monthly payment.
Advice on Managing Debt:
For Albertans focused on paying down debt, Mr. Stevenson offered debt management tips to take charge of their finances and reduce debt as part of their long term financial plan.
- Make lump sum payments to higher interest debt first to reduce interest costs
- If you have debt, work with an advisor to structure it to minimize your overall interest costs by utilizing debt products that offer a lower interest rate and having a strategy to pay these balances down in a specific time frame
- While interest rates remain near historic lows, don't ignore the long term benefits of making small adjustments to your payment today. Setting your debt payment even slightly higher than your required payment can reduce your overall interest costs and help you become debt free faster
- Use free budgeting tools to help you stay on budget - CIBC CreditSmart available to CIBC credit card holders allows you to set customized budgets and receive spend alerts if you exceed your planned budget for the month, helping you stay on top of your everyday budgeting and saving
"For Albertans holding debt but working to pay it down, there is a clear benefit to sitting down with an advisor and working through the steps you can take today that can have a significant benefit in the future to reducing your debt and building your savings," added Mr. Stevenson.
To learn more tips and try various debt repayment tools and calculators, visit the CIBC Advice Centre.
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For Reference - Summary of Key Data Points:
Percentage of Canadians holding some form of debt, by region:
| National Average | 72% |
| BC - | 71% |
| Alberta - | 75% |
| Man/Sask - | 77% |
| Ontario - | 69% |
| Quebec - | 72% |
| Atlantic Canada - | 78% |
Percentage of Canadians holding some form of debt, by age:
| National Average | 72% |
| 18-24 | 51% |
| 25-34 | 84% |
| 35-44 | 83% |
| 45-54 | 78% |
| 55-64 | 67% |
| 65 and over | 56% |
Percentage of Canadians holding debt who made one or more lump sum payments towards any of their debt in the past 12 months, by region:
| National Average | 49% |
| BC - | 55% |
| Alberta - | 52% |
| Man/Sask - | 56% |
| Ontario - | 53% |
| Quebec - | 37% |
| Atlantic Canada - | 46% |
Percentage of Canadians holding debt who made one or more lump sum payments towards any of their debt in the past 12 months, by age:
| National Average | 49% |
| 18-24 | 44% |
| 25-34 | 50% |
| 35-44 | 53% |
| 45-54 | 54% |
| 55-64 | 47% |
| 65 and over | 35% |
Percentage of Canadians who directed their lump sum payments to the following debt facilities, by popularity (numbers add to more than 100% as respondents could identify more than one product they have made an extra payment to):
| Credit Card | 62% |
| Line of Credit | 46% |
| Mortgage | 22% |
| Loan | 15% |
| Student Loan | 6% |
Among Canadians with debt, average number of debt products with a balance held by age group:
| National Average | 2.98 |
| 18-24 | 2.44 |
| 25-34 | 3.25 |
| 35-44 | 3.29 |
| 45-54 | 3.10 |
| 55-64 | 2.65 |
| 65 and over | 2.42 |
Results are based on a CIBC poll conducted by Harris/Decima, via teleVox, their telephone omnibus solution. These data were gathered in a sample of 2,003 Canadians between March 22nd and April 2nd, 2012. A sample of this size has a National margin of error of +/-2.2%, 19 times out of 20. The margin of error for the 200 Albertans interviewed is +/-6.9%, 19 times out of 20.
CIBC is a leading North American financial institution with nearly 11 million personal banking and business clients. CIBC offers a full range of products and services through its comprehensive electronic banking network, branches and offices across Canada, and has offices in the United States and around the world. You can find other news releases and information about CIBC in our Press Centre on our corporate website at www.cibc.com.
Kevin Dove, Head of External Communications, CIBC, 416-980-8835 or [email protected]
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