Economic uncertainty isn’t stopping Canadians from planning major purchases in 2024, according to a new survey by Affirm, a payment network.
“Canadians are eager for travel experiences but wary of high prices compromising their budgets,” said Wayne Pommen, Chief Revenue Officer at Affirm.
“Our survey found that 71 per cent of consumers are looking for ways to be more financially savvy than in years past, including over how they pay. One way Canadians can take greater control over their finances is through honest financial products like Affirm, as we do not charge any late or hidden fees and enable consumers to pay-over-time at their own pace.
“On the one hand you have people concerned about the economy. We’re all seeing the headlines and everybody’s been in a bit of a funk about that for a number of months now. But at the same time, there is a degree of optimism, especially when people reflect on their personal finances and where that’s going. I think we found that quite encouraging.
“It particularly jumped out that the younger generation are feeling a little more optimistic than the older folks . . . We thought that was significant. And related to that we saw a fair number of consumers planning to make a large purchase in the near future and that speaks again to some consumer confidence that maybe kind of surprised us to the positive side.”
Some key findings from the survey:
- 82 per cent of Canadians plan to make a major purchase in the coming months;
- Younger generations were more likely to plan a major purchase this year, with 94 per cent of Gen Z and 90 per cent of Millennials planning to do so, compared to 82 per cent of Gen X and 72 per cent of Baby Boomers;
- Vacations were by far the most likely big purchase for Canadians (45 per cent), followed by a car (25 per cent) and furniture or decor (23 per cent). Technology (22 per cent) and tickets to an experience (21 per cent), such as a concert or sporting event, also ended up on consumers’ spending shortlists to round the top five categories;
- 41 per cent of Canadians expect it will be difficult for them to stay on budget this year, while 24 per cent are unsure of their budgets. An overwhelming majority of these consumers (71 per cent) cited high prices as their biggest challenge, followed by an uncertain economy (36 per cent), and not having enough money to make ends meet (31 per cent);
- 58 per cent of consumers are looking for greater transparency from their payment options, and 48 per cent want increased flexibility;
- 29 per cent of respondents believe the Canadian economy will improve over the next 12 months and 45 per cent expect their personal financial situation will improve over the same period;
- 64 per cent of Gen Z consumers and 59 per cent of Millennials believe their finances will improve over the next 12 months, both of which were roughly double in comparison to Gen X (37 per cent) and Baby Boomers (31 per cent);
- Gen Z (49 per cent) and Millennials (41 per cent) were also significantly more likely to say their personal financial situations had improved over the prior year compared to Gen X (26 per cent) and Baby Boomers (25 per cent).
Affirm is integrated at checkout across more than 279,000 retailers including partnerships in Canada with Amazon, Apple, Samsung, Hudson’s Bay, Browns Shoes and CheapOair. Consumers can buy now and pay over time at stores with Affirm with no hidden fees—not even late fees.
“There are more options now than there used to be for people to make these types of purchases and not end up in revolving credit card debt, taking risks, hit with late fees, etc.,” said Pommen.
He said the buy now and pay later option is becoming more popular.
“When we see inflation, when we see economic stress, people will cut back on spending but they’ll also say well how can I make these purchases that I really want to make and what’s the smartest way to do that. So what we’ve seen is that customers are getting more and more savvy about the fact that if you put something on a credit card and you don’t pay it off in full every month you’re paying 20 plus per cent revolving interest, you’re paying late fees. If you put it on say a store card, you could be paying deferred interest and getting these unsavory bills where the interest is retroactive.
“We don’t do any of that. We just take a purchase. We split it up over time. It’s very clear. There’s no hidden fees. No late fees. No revolving account like on a credit card. And we think more and more people understand this. None of this existed in Canada a decade ago and now it’s fairly mainstream with us we think as the leader.”
