Five year data flags debt blind spots and rising vulnerability to interest rate shocks
Five years of national data show financial resilience remains constrained amid ongoing economic pressures, with debt literacy challenges leaving many Canadians vulnerable to common financial shocks and the long-term impact of borrowing costs.
As financial pressures persist, five years of national tracking data compiled by Ipsos on behalf of MNP LTD show that debt concern remains elevated, financial preparedness has declined, and debt literacy lags.
More than two in five Canadians (44 percent) say they are concerned about their current level of debt, and nearly half (47 percent) regret the amount of debt they have taken on over their lifetime.
Only about half (51 percent) believe they will be debt-free in retirement.
Debt anxiety is especially pronounced among younger generations: concern about current debt is highest among Gen Z (55 percent) and Millennials (55 percent), while three in five Millennials (59 percent) say they regret the amount of debt they have taken on in life, the highest of any age group.
From 2022 onward, measures of debt concern, debt regret, and confidence in being debt-free in retirement show greater quarter-to-quarter variation, consistent with a period of economic adjustment.
In 2024–2025, the three measures move within a narrower range than in prior years, suggesting less separation between Canadians’ views of their past, present, and future debt.
At the same time, a debt literacy gap persists.
While borrowing has become more common amid cost-of-living pressures, many Canadians remain unclear on how interest works in practice and how rate changes affect their own financial position.
One in five Canadians (20 percent) say they do not have a solid understanding of how interest rate increases impact their financial situation, indicating that although there has been modest improvement over five years, significant knowledge gaps remain.
“The data underscores the need for stronger debt literacy across the country.
Awareness of balances owed is not enough.
A practical grasp of compounding interest, rate sensitivity and contingency planning is now critical, says Grant Bazian, president of MNP LTD, the country’s largest insolvency firm.
He says that over five years, debt can function like “financial quicksand,” as compounding interest and modest rate hikes quietly extend repayment timelines and increase total interest paid.
Compared with five years ago, Canadians report feeling less equipped to handle unexpected life events, as unresolved debt blind spots leave households more vulnerable when unexpected income loss or expenses arise.
The most recent data shows that Canadians recorded negative confidence scores for every unexpected life event tested — and those scores have all worsened since 2020.
In a side-by-side comparison of 2020 and 2025, Canadians’ net confidence in coping financially with unexpected life events is lower across all categories, and all measures now fall in negative territory.
Unexpected financial shocks such as education costs (-13 percent), job loss (-8 percent), death of an immediate family member (-8 percent), and an illness preventing work for at least three months (-7 percent) show the greatest vulnerability.
Relationship changes such as divorce or separation (-1 percent) and unexpected auto repairs or vehicle purchase (-2 percent) also remain in negative territory.
Starting in 2022, Canadians’ confidence in handling unexpected life events exhibits greater quarter-to-quarter fluctuation, reflecting a period of economic adjustment, and in 2024–2025, the measures remain firmly in negative territory, underscoring that many Canadians report low confidence in their ability to cope with major financial shocks.
Sudden changes can quickly strain household finances, especially for people who already depend on credit to cover daily costs, explains Bazian.
He says the most common triggers of unmanageable debt are relationship breakdowns and job loss or reduced income, and that “seeking qualified advice early can help individuals understand their options and make informed decisions before financial pressures escalate.”
Against this backdrop, MNP is marking Debt Literacy Month this March with a focus on “debt blind spots,” helping Canadians better understand where their financial vulnerabilities lie, how quickly circumstances can change, and why planning for life’s “what ifs” matters.
