Many young adults are turning to high-cost credit just to survive
The Bank of Canada’s decision to hold interest rates steady at 2.75% is not the news young Canadians needed, as debts strain their finances, increasingly to breaking point.
Growing reliance on high-cost credit and an increasing sense of financial instability among those aged 18 to 34, is highlighted in new data from the Credit Counselling Society (CCS) revealing that young adults are doing everything they can to stay afloat—cutting back, budgeting, picking up extra work—but it's still not enough.
When coping strategies fall short, many young Canadians are turning to short-term lenders, buy-now-pay-later plans, and payday loans just to cover basics like groceries and transportation.
"A steady interest rate doesn't undo years of financial strain," states Peta Wales, President & 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."
The report shows that unsecured debt among Canadians under 35 has jumped 9% since last year, now sitting at over $24,000 on average, with more than 40% owing money to finance companies or through BNPL plans, and over a third relying on payday loans. These numbers have steadily increased over the past year.
“We’re seeing people use credit for everything from textbooks to toiletries,” says Mason Cox, Director of Counselling at CCS. “The problem is, this kind of borrowing feels normal - until it isn’t.”
On a positive note, young Canadians are asking for help. CCS reports a 7% increase in under-35 clients since 2023. Most are renters, often in unstable employment, and the highest demand is coming from cities like Edmonton, Vancouver, and Calgary—regions with persistently high housing costs.
"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," says Isaiah Chan, Vice President of Programs & 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."
In today’s credit landscape, where borrowing is just a few clicks away, the ease of access is both a tool and a trap. Many don’t realize they’re in over their heads until they’re juggling five or six different repayment schedules.
"For many, quick credit feels like the easiest solution," explains Chan. "But every option comes with trade-offs, and without the right guidance, it's easy to get in over your head. That's why reaching out early can make all the difference."
