Canadians under 35 are saddled with debt – and buy now, pay later ubiquity isn’t helping

Mark Kalinowski has been a credit counselor for almost 14 years, helping people of all generations manage their debt. But this year, more than a quarter Most of the clients he saw in his Calgary office were under the age of 35.

“They’ll come in and sometimes they’ll cry, sometimes they’ll be angry, they’ll be very, very frustrated because they don’t know why their life is on hold,” Kalinowski said.

The Credit Counseling Society – the debt management non-profit where Kalinowski works – expects to serve more people aged 18 to 34 in 2025 than at any other time in its history, its spokesperson told CBC News.

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Many people have a mountain of student loan debt. Some people are facing the difficult task of managing credit cards for the first time. Still others are facing high costs of living against slowly rising wages.

As if that weren’t enough, Kalinowski and other experts say the ubiquity of “buy now, pay later” plans is exacerbating the problem and exacerbating the debt crisis among people in their 20s and 30s.

“I wouldn’t say they feel frustrated, but they feel a little lost and they don’t know how to regain attraction,” Kalinowski said.

Buy now, pay later loans ‘difficult to manage’

The problem people under 35 face isn’t necessarily that they’re accumulating debt — it’s where the debt comes from, said Jody Letkiewicz, an assistant professor at California State University who is currently on leave from York University in Toronto.

“It’s not necessarily, ‘Oh, they’re just going out and partying and spending and shopping.’ It’s just like basic consumption smoothing. It’s trying to pay the bills,” she explained.

This kind of consumer debt shows “warning signs” of a fragmented economy, Letkiewicz said. “Because when people are late on them, it tells us that they’re not able to meet their cost of living.”

The rise of buy now, pay later plans, which allow consumers to purchase an item online and pay for it in manageable pieces, is an important piece of the financial puzzle.

are researchers still trying to understand How consumers interact with buy now, pay later plans. A peer-reviewed study published in December 2024 found that young consumers in the US more likely to be used Plans to shop online more than older demographics, and are likely to spend more as a result.

Another published in March last year found that US consumers who used buy now, pay later explosive growth in bank overdraft fees and credit card interest and charges compared to those who do not use the services.

There is less research on the Canadian side. Whereas A recent pilot study The Financial Consumer Agency revealed that 18-34 year olds surveyed used online buy now, pay later schemes at a far higher rate than any other age group, although the representative sample is too small to generalize its findings – 66 people in total.

However, Letkiewicz points to the ubiquity of services like Klarna, Affirm and PayPal – which are now available to Canadian consumers shopping online – as a potential red flag.

“It’s easier to get a credit card, it’s easier to get a payday loan. And so I think that’s part of what’s happening — it’s become a lot easier and it’s not all in one place,” Letkiewicz said.

“So it’s not like, ‘Oh, I have $30,000 of credit card debt.’ It’s like, ‘Oh, I’m paying this, and this paying this, and this paying this,’ and it becomes really hard to manage.”

‘Less equipped’ to deal with economic fluctuations

It’s not unusual for younger groups to miss credit payments at a higher rate than older generations, according to Rebecca Oakes, vice president of research at credit reporting firm Equifax in Toronto.

“Generally speaking, they’re less equipped to manage ups and downs in the economy and things like that,” he told CBC News.

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However, internal data from Equifax shows that the average balance of people under 30 who have a credit card has grown faster than other demographics over the past two years.

That group has seen the sharpest increase in missed payments on credit cards last year, according to Equifax research.

Nearly one in 20 people between 18 and 35 missed a credit card payment during the third quarter of this year, According to EquifaxThe crime rate for people aged 18 to 25 stood at 2,11 percent, which is 16,58 percent higher than the same quarter last year,

Meanwhile, TransUnion’s recent third-quarter credit industry report showed that the delinquency rate for people born between 1995 and 2010 increased eight basis points to 1.29 percent compared to the same period last year.

About 84 percent of those customers have credit cards, while 61 percent of those born between 1980 and 1994 had credit cards at the same age.

According to TransUnion, the younger group is missing fewer payments than the older group when they were the same age, and their balances aren’t as high either.

However, a pattern of missed payments is becoming stronger, according to Oakes.

“While we have seen more stability with some older consumers, younger consumers are still struggling and still seem to be racking up their missed payments,” he said.

Credit counselor Kalinowski says he sometimes works with clients for years. “If it impacts their credit in a big way when they’re young… it sticks with them for six or seven years until it wipes out their credit report.”

But they’ve also found that younger customers are more likely to seek help first.

“It’s more socially acceptable in their eyes to say, ‘Look, I have money problems. This is something I need to talk about and go and try to fix as quickly as possible,'” he said.

“The brilliant thing about it is that the sooner you try to solve a problem, the sooner you find your solution and move on with life.”