The new realities of the COVID-19 pandemic are creating major economic and financial distress for consumers across the globe. Many jobs in the Canadian economy are already affected or at risk. To help organizations make decisions at a time when information on consumer impact is still emerging, TransUnion is conducting research on consumers’ perceptions, expectations and ability to pay their bills. Here’s an overview of the main findings from the Wave 6 Report — based on data collected the week of June 29.
Shifting to recovery
The level of financial hardship experienced by consumers is again slightly lower than the previous month. Government relief and financial forbearance programmes are also playing a role in shifting mindsets toward recovery and moving forward with life.
Fifty-six percent say household income has been impacted
The proportion of consumers negatively impacted by COVID-19 increased by just one point to 56%, still well below the April high of 63%. Perhaps a more telling metric is 25% of respondents saying they don’t expect to be impacted — the highest since the survey started. It seems the perception is the worst may be behind us.
Baby Boomers are showing news signs of struggling. Wave 6 data shows 46% indicated a negative impact (up six points from our previous survey), possibly because this cohort has exhausted savings or investments and is now feeling greater pressure.
Fifty-seven percent affected by reduced hours or job losses
Of the consumers who are financially affected by COVID-19:
- Thirty-nine percent indicated this was due to a reduction in working hours (up from 34% in the previous survey)
- Eighteen percent stated they had lost their job (unchanged)
- Eleven percent were small business owners reporting a loss of income or having to close (down from 16%)
Sixty-five percent concerned about ability to pay bills and loans
The length of time consumers estimate they’ll be able to maintain bill payments is growing. Over 65% believe they can maintain payments for at least one month (up six points from Wave 5). However, 17% say they can maintain payments for less than two weeks (down four points from Wave 5).
Impacted Canadians said they’ll not be able to pay:
- Credit card debt (46%; unchanged since Wave 5)
- Auto loans (16%; down from 21% in Wave 5)
- Personal loans (19%; up from 15% in Wave 5)
- Medical bills (11%; up from 10% in Wave 5)
Requests for mortgage relief were among the most common deferral requests to lenders during the period.
Budget shortfall is C$922.20
On average, consumers who are affected expect they’ll be short by C$922.20 when paying bills or loans. This amount is up from C$832.10 in the last survey but lower than the high of $1,035 recorded in late April.
To increase cash flow, consumers are withdrawing or borrowing. Over one in three affected consumers say they’re borrowing against investment and retirement funds. Respondents opening new credit cards or using cards for purchase or balance transfers have increased.
- Twenty-three percent plan to borrow money from a friend or family member (down from 27% in Wave 5)
- Nine percent said they’ll take out personal loans for short-term liquidity (unchanged)
- Twelve percent said they don’t know how they’re going to pay (down from 14%).
Forty-two percent discussing payment options with lenders
An increasing number of consumers surveyed indicated they’re receiving some form of financial accommodation. Many are not making full payments during the crisis.
Business loans are the most common product for financial accommodation (59%), followed by private student loans (26%), personal loans (15%), and mortgages (14%).
Of consumers with financial accommodations:
- Thirty-two percent would prefer a repayment plan
- Twenty-eight percent want to extend the deferral
- Fifteen percent would like to pay off all postponed payments with a lump sum
More targeted consumers are acting on fraud schemes
Half the consumers surveyed said credit monitoring during the pandemic is at least moderately important, and nearly half (46%) said they’re checking their credit score at least once a quarter. However, 31% don’t monitor their credit score at all.
We’ve developed several resources to assist businesses and consumers in navigating this difficult time. To learn more about our weekly consumer research and download the latest reports and infographics, visit transunion.ca/financial-hardship-study