BMO Report: Half of Canadians’ Savings Affected by Summer Spending Habits
- One third of Canadians acknowledge spending more during the summer season
- Two thirds say their travel plans are being greatly affected by the fluctuating dollar
- Half expect to pay off less debt than usual during the summer
- One third find it difficult to get back on track financially after a period of high spending
As temperatures soar so does Canadians’ spending, and while many don’t feel guilty about enjoying the season, half (52 per cent) admit that their summer habits have negative long-term effects on their savings, according to a new BMO summer spending report.
One quarter (28 per cent) of Canadians say they go into debt during the summer due to their spending. Another 27 per cent dip into their savings to support their spending and 13 per cent forego saving and paying off debt altogether to enjoy the season.
Still, the BMO summer spending report, conducted by Pollara, revealed that Canadians are aware of their tendency to over-spend in summer and are taking steps to counter it:
- Compared to last year, fewer Canadians plan to increase their spending this summer (down to 32 per cent from 45 per cent);
- 25 per cent of Canadians will hold off on travel, for budgetary reasons, this summer; and
- 15 per cent feel they have too many other financial commitments to travel at all this summer.
Further, the BMO report found that 47 per cent will restrict their travel to domestic trips to avoid fluctuating foreign exchange rates, or opt for a staycation (14 per cent), to get the most bang out of the Canadian buck.
“We’re noticing disparities across regions right now, with B.C. and Ontario continuing to drive Canadian consumer spending, thanks to strong demographic trends, low interest rates and favourable labour market conditions. On the flip side, oil-producing provinces-Alberta, Saskatchewan and Newfoundland & Labrador-are seeing spending track below year-ago levels as those economies grapple with recession and the fallout from lower oil prices.” said Robert Kavcic, Senior Economist, BMO Bank of Montreal.
Canadians and their Credit Cards
Almost half of Canadians (48 per cent) admitted to paying off less of their credit card balance during the summer months than they normally would. For the 41 per cent who carry a balance, which sits at an average of almost $3,000, enjoying the season can have longer term implications.
Nick Mastromarco, Managing Director of Loyalty and Partnerships, BMO Bank of Montreal, encourages those who plan to use a credit card for summer spending to take advantage of credit card rewards programs that many cards offer to help offset their costs.
“While setting a budget is important year round, seasonal spikes in spending are common for Canadians, and those who gravitate towards reward programs when considering how to pay for purchases are wise to do so,” said Mr. Mastromarco. “Cash rewards, for example, can be used flexibly at any time, regardless if summer plans include travel. In essence, redeeming rewards can help smooth out any spikes in spending, enabling you to get the most out of the summer season.”
|Summer Spending at a Glance|
|Will use credit to pay for summer spending||28%||43%||34%||25%||27%||24%||26%|
|Find it difficult to get back on track after higher summer spending||35%||43%||29%||37%||40%||35%||35%|
|Will incur a small amount of debt as a result of summer spending||35%||51%||36%||29%||37%||39%||35%|
|Will pay off their credit card balance from summer spending ‘when they can’||56%||79%||45%||54%||68%||65%||59%|
Tips for Sound Summer Spending
Speaking to a financial advisor regularly can help prepare for periods of accelerated spending, but BMO also recommends some simple tips to ease the strain of summer expenses:
- Consider local activities that have minimal associated costs. You can visit http://bit.ly/25KvIFU for a great resource to see what events are taking place in your area;
- Create a budget that still allows for regular saving and a predetermined schedule for paying down debt, even if the amount differs from other times of the year;
- Consider switching your primary credit card to one with rewards benefits if your current card doesn’t offer any; and
- Capitalize on limited-time credit card promotions, such as earning 2x the rewards with a BMO CashBack MasterCard for the first six months*.
To learn more about BMO’s credit card offerings and limited-time summer promotions, visit: http://www.bmo.com/main/personal/credit-cards/bmo-cashback-mastercard
Get 2% cash back with a BMO CashBack MasterCard for the first six months.*Limited time offer. Terms and Conditions apply, visit bmo.com/double for details.
The survey results cited in the Bank of Montreal Summer Spending Report, conducted by Pollara, are compiled from a random online sample of 1,003 Canadians, 18 years of age or older with surveys conducted between May 16th and 19th, 2016. A probability sample of this size would yield results accurate to ± 3.1 percent, 19 times out of 20.