We know that the current state of the economy can have far-reaching effects including hurting the pocketbooks/wallets of many of your neighbors, friends, and family. But, there’s an effect that may not be as obvious — mental health.
Stress and anxiety sometimes follow the burdens of debt, and that is something that is increasing according to a recent study of Canadian residents along with statistics from Wealth Professional Canada and Yahoo Finance Canada. This paints a picture that it’s now more important than ever to have empathy when it comes to communication with your customers.
A quick look at Canadian debt stats
The feelings that Canadians have toward debt are tied to some startling statistics. Equifax Canada noted in its latest insights report that Canadian consumer debt grew by $80 billion in a year, totaling $2.4 trillion for Q3 of 2023.
There is also more spending via credit cards taking place. Equifax reported that credit card balances reached $113.4 billion, which is a record-setting mark. The study also notes that 6 million new cards were opened from fall 2022 to now, which is a 13.7% increase.
The average balance of credit cards also went up, reaching levels not seen since 2019. The average balance is at $4,100, up by $400 from just the previous month.
The sources of stress
The mental toll of debt was measured along with the statistics above by MNP LTD, who characterized some of what they found as “inflation isolation.” This means that the younger Canadians they polled, as well as those with an income of less than $40,000, are staying home more often or socializing less as a result of financial difficulties.
To that end, 20% of those polled also say they feel like they are socially isolated, and 19% feel a sense of loneliness. This is interlinked with some pessimism about their situation. The poll shows that 33% are not confident that they could cope with the loss of a job or a change in their wages, while close to half state that they can’t cover expenses in the next year without incurring more debt.
What can companies who have debtors do to help with these feelings? We believe that working with customers proactively on solutions to solve their debt with your business and doing this with compassion and understanding, is the way forward not only to help them but to also make sure that debt can be cleared efficiently.
Balancing different aspects of debt collection
As a business owner, ARO can help you with the right type of debt collection for each of your customers. We are skilled at an empathetic approach to this part of doing business and have worked through many different scenarios to maintain the balance between superior customer service and collecting debts that are owed to you. Find out more on our website.