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CIBC Poll on Consumer Debt: Canadians making progress on debt reduction, but many see their debt as an obstacle to achieving future financial goals

TORONTO, Ontario, August 08, 2011 — A new poll from CIBC conducted by Harris-Decima shows that while Canadians are taking steps towards reducing their debt in 2011, many still see their debt as an obstacle to achieving their financial goals, and may not be using all available options to help them become debt-free sooner.

Nationally, 72 per cent of Canadians report holding some form of debt, while 28 per cent say they are debt-free.

  • The 35-44 age group is the most likely to hold various forms of debt, with 89 per cent of this age group reporting that they hold at least some debt.
  • Canadians aged 18-24 (49 per cent) and those 65 and up (44 per cent) were least likely to hold debt according to the poll.

Among Canadians who reported holding some debt as part of the poll, 61 per cent say they are making good progress towards paying down their debt so far in 2011. The steps these Canadians have taken this year include:

  • 46 per cent have made at least one lump sum payment towards their debt
  • 44 per cent have instituted a household budget
  • 46 per cent see themselves as making sacrifices in order to better manage their debt

According to past CIBC research released in January 2011, paying down debt was named the top financial priority for Canadians this year.

"Managing debt as part of their overall financial plan is top of mind for Canadians in 2011, and these latest poll results show that some progress is being made," commented Christina Kramer, Executive Vice President, Retail Distribution and Channel Strategy, CIBC. "Taking simple steps such as making an extra payment or implementing a budget for your family can make a positive difference in your long term plans for debt reduction."

Despite signs of progress, the poll also revealed that most Canadians are taking a 'do-it-yourself' approach to debt management, and may be missing opportunities to accelerate their debt repayment in the process. Among Canadians with debt, only 21 per cent have had a conversation with an advisor sometime in the last year about strategies to reduce their debt faster.

"Canadians often associate getting financial advice with topics like saving for retirement and investing, but they should also think about making debt reduction part of a broader conversation with an advisor about their overall finances," commented Ms. Kramer. "Reviewing your overall interest costs and determining how best to allocate your money towards your debt can help take years off your mortgage and reduce the amount you pay in interest on a monthly basis."

Making continued progress on debt management will be integral to the long term financial plans of many Canadians, as 42 per cent of Canadians who hold debt see it as an obstacle to their long term financial goals.

"Building savings and putting money away for life events such as your child's education or your retirement are important goals for many of us, and ensuring that you manage your debt effectively while also working towards those goals is key to long term financial success," added Ms. Kramer.

Canadians looking to reduce their debt should consider the following tips and advice:

Meet with an Advisor and Build a Strategy: An advisor can help to identify opportunities to reduce interest costs and structure a repayment plan that allows for debt reduction while also building towards other important financial goals such as building savings.

Pay Higher Interest Debt First: Almost half of Canadians with debt reported making a lump sum payment to their debt so far in 2011. To maximize the effectiveness of these payments, direct these extra funds to the highest interest rate debt you hold to help reduce ongoing monthly interest costs.

Manage and Track Spending: Free services like CIBC CreditSmart can help Canadians stick to their budget. Free to CIBC credit card holders, CIBC CreditSmart allows clients to set a budget limit on each spending category on their credit card, and be notified by phone, email or online message when they exceed their customized budget.

Stay on Top of your Chequing Account: CIBC Mobile Banking allows you to stay on top of your chequing account balance anytime, anywhere. You can check your balance and monitor your daily spending using your smartphone. You can also make transfers to your savings account, or send and receive Interac Email Money Transfers.


Does your current level of debt represent an obstacle in achieving your future financial goals?

A significant obstacle - 9%

Somewhat of an obstacle - 32%

Not much of an obstacle - 29%

Not at all an obstacle - 28%

How much progress would you say you've made on paying down your debt this year?

Very Good Progress - 26%

Good Progress - 35%

Fair Progress - 22%

Poor Progress - 8%

Very Poor Progress - 8%

Percentage of respondents by region who report being debt-free

BC - 37%

Alberta - 23%

Man/Sask - 30%

Ontario - 26%

Quebec - 29%

Atlantic - 29%

In addition to being the most likely age group to hold debt, Canadians aged 35-44 were also most likely to believe their level of debt is an obstacle to achieving their future financial goals at 48 per cent vs the national average of 42 per cent.

Each week, Harris/Decima interviews just over 1000 Canadians through teleVox, the company's national telephone omnibus survey. These data were gathered in a sample of 2,008 Canadians between June 30, 2011 and July 10, 2011. A sample of this size has a margin of error of +/-2.2%, 19 times out of 20.

News source: CIBC


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