Rates.ca Resources & News

Canadians Are Shopping Without a Plan for Post-holiday Debt

Woman wearing sunglasses, warm coat and hat, holding lots of multi-coloured shopping bags against blue background

Canadians are shopping impulsively and overspending during the holidays, according to a recent national survey conducted by Rates.ca. Among impulsive shoppers, 73 percent of Canadians admitted they were likely to buy gifts for friends, while another 69 percent reported they were likely to buy meals on impulse.

That’s why it’s not surprising 49 percent of Canadians reported overspending on the holidays last year. However, a worrying 40 percent of Canadians admitted to shopping without a plan to pay it off later.

These numbers reflect the lack of financial literacy regarding credit products and the impact it has on Canadian families after the holidays.

RATES-006_2019_Holiday_Budgeting_And_Debt_Infographic_x2_FINAL.png

Impulse Buys Regional Breakdown

Some provinces are more generous than others. Atlantic Canada, Manitoba, and Saskatchewan are most likely to buy gifts for others on impulse (83 percent respectively). While, British Columbia is the least likely (65 percent).

Percentage of Canadians who buy gifts for others vs themselves on impulse:

Province Gifts for others Gifts for themselves
Atlantic Canada 83% 33%
Quebec 73% 46%
Ontario 71% 39%
Manitoba/Saskatchewan 83% 38%
Alberta 74% 41%
British Columbia 65% 36%

Manitoba and Saskatchewan aren’t just generous they are also charitable, with 27 percent likely to make impulse donations, along with Alberta. On the other hand, Quebecers (46 percent) are more likely to buy gifts for themselves on impulse than the rest of Canada (38 percent).

The provinces that are most likely to make these impulsive purchases are:

Province Impulse Purchase Provincial Average Canadian Average
Atlantic Canada, Manitoba, Saskatchewan Gifts for others 83% 73%
British Columbia and Ontario Meals 71% 69%
Quebec Entertainment/Events 50% 48%
Quebec Gifts for self 46% 40%
Alberta, Manitoba, Saskatchewan Charitable donations 27% 24%
British Columbia Travel 25% 18%

Household Holiday Spending

Nearly half (49 percent) of Canadians overspent on the holidays last year, with 12 percent of those spending $500 or more than they planned. Only a fraction of shoppers (5 percent) stated they underspent. However, 32 percent of respondents reported sticking to their budget.

How Canadians spent last holiday season:

Spent on holidays last year Age <55 Age 55+ With children <18 No children <18
Overspent 51% 44% 60% 44%
Overspent by less than $100 15% 12% 14% 14%
Overspent by $100-$499 24% 20% 29% 20%
Overspent $500+ 12% 12% 17% 10%
Right on budget 30% 37% 24% 36%
Underspent 5% 5% 6% 5%
Underspent by less than $100 2% 2% 2% 2%
Underspent $100-$499 1% 2% 2% 1%
Underspent $500+ 2% 1% 2% 1%
Don’t know or prefer not to answer 14% 15% 10% 15%

A household breakdown of these numbers points to families with children feeling the pinch the most. More specifically, 60 percent of families with children under the age of 18 reported overspending on the holidays last year. This may be related to advances in technology, high tech toys, and brand reach, creating higher expectations around the holidays.

How Canadians Managed Holiday Debt

Over half (54 percent) of Canadian holiday shoppers have a plan on how to pay for impulsive holiday spending. However, 24 percent of Canadians dipped into their savings to reduce this debt.

Almost a quarter (21 percent) of families with children under 18 sacrificed in other areas to manage their celebration-related debt.

Meanwhile, Canadians age 55 and over and those without children are indifferent about holiday debt. Fifty-one percent of Canadians aged 55 plus were more likely to ignore this debt compared to those under 55 (34 percent). Similarly, Canadians without children under the age of 18 were far more likely (46 percent) to do nothing about their holiday-debt compared to those with children (27 percent).

How Canadians approached their debt following the holidays:

Debt management Age <55 Age 55+ With children <18 No children <18
Spent less in other areas 35% 23% 39% 27%
Took money out of savings 23% 25% 25% 23%
Paid the minimum on my credit card statement 15% 9% 18% 11%
Created a new stream of income 8% 2% 10% 5%
Opened a transfer balance credit card to manage my credit card debts 7% 3% 9% 4%
Increased my credit card limit 6% 2% 8% 3%
Took a personal loan to consolidate debt 5% 1% 7% 3%
Borrowed money from friends and family 5% 1% 6% 2%
I didn’t do anything 34% 51% 27% 46%
Don’t know or prefer not to answer 7% 5% 7% 5%

How to Plan for Holiday Spending

It is important to make lists and set a budget before you start your holiday shopping. It can be easy to put a gift in your cart for the mailman, your kid’s teacher, your great-aunt twice removed, and your best friend’s dog. But five dollars here and there can really add up. Cutback on the unnecessary items and remember if you didn’t plan for it, don’t buy it!

According to Statistics Canada, the average annual net saving for all Canadian households was just $852 in 2018 — leaving no room for impulsive spending.

This is what you can do to stick to the budget:

  1. Make a list: Decide in advance on who you want to buy for and the value of the gift.
  2. Set a budget: Set aside money each week in advance of the holidays. If you planned for the items on your list and you find an item on sale you may end up underspending.
  3. Use your rewards: Cashback and rewards credit cards typically offer points or money-back that you can use toward your credit card balance or merchandise. Consider using your rewards towards holiday purchases or paying down your post-holiday debt.

This can help you avoid unexpected surprises on your next bill and avoid gaining interest on your credit card balance.

However, if swiping your credit card comes too easily, consider reducing your credit limit or leave your cards at home. Carrying cash can be a good visual representation of just how much you are spending.

About the Survey

An online survey of 1593 Canadians was completed between October 4-7, 2019, using Leger’s online panel. The margin of error for this study was +/-2.5%, 19 times out of 20.