Canadians under 35 are debt-stressed — and buy now, pay later ubiquity isn’t helping

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

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

Credit Counseling Society, the nonprofit debt management organization where Kalinowski works, served more people aged 18 to 34 in 2025 than at any other point in its history, a spokesperson told CBC News.

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Many people have mountains of student loans. For some, this is the first time they are faced with the daunting task of managing a credit card. Still others are coping with the high cost of living against a backdrop of 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 fueling the debt crisis among people in their 20s and 30s.

“I won’t say they feel hopeless, but they feel a little lost and don’t know how to gain momentum,” Kalinowski said.

Buy now, pay later. Debt is 'difficult to control'

The problem facing people under 35 isn't necessarily that they're accumulating debt—it's where it comes from, explains 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 hanging out and hanging out and spending money and shopping.' This is similar to basic consumption smoothing. He’s trying to pay the bills,” she explained.

This kind of consumer debt is a “warning sign” of economic collapse, Letkiewicz said. “Because when people are late on this, it tells us that they are unable to cope with their cost of living.”

The proliferation of “buy now, pay later” plans, which allow consumers to buy an item online and pay for it in small installments, is an important piece of the financial puzzle.

Researchers still trying to understand How consumers interact with buy now, pay later plans. One peer-reviewed study published in December 2024 found that young U.S. consumers I'm more likely to use it plans for online shopping compared to older demographics and are likely to spend more as a result.

Another survey released last March found that U.S. consumers, accustomed to buy now, pay later, saw sharp increase in bank overdraft fees and credit card interest and fees compared to those who did not use the services.

There is less research on the Canadian side. Bye recent pilot study The Financial Consumer Agency found that 18-34 year olds surveyed used online buy now, pay later plans far more often than any other age group, a representative sample too small – just 66 people – to generalize the results.

But Letkiewicz points to the ubiquity of services like Klarna, Affirm and PayPal now available to Canadian consumers shopping online as a potential warning sign.

“It’s easier than going out and getting a credit card, it’s easier than getting 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 in credit card debt.' It’s like, ‘Oh, I’m paying this payment to this, this payment to this, this payment to that,’ and it becomes very difficult to deal with.”

'Less prepared' to cope with economic fluctuations

According to Rebecca Oakes, vice-president of research at credit reporting company Equifax in Toronto, younger people often miss loan payments at a higher rate than older generations.

“Generally speaking, they're less prepared to deal with the peaks and valleys of the economy and things like that,” she told CBC News.

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However, internal Equifax data shows that people under age 30 with a credit card have seen their average balance grow faster than other demographic groups over the past two years.

This cohort also saw the fastest increase in missed credit card payments over the past year, according to the Equifax study.

About one in 20 people aged 18 to 35 missed a credit card payment in the third quarter of this year. according to Equifax. The delinquency rate among youth ages 18 to 25 was 2.11 percent, up 16.58 percent from the same quarter last year.

Meanwhile, TransUnion's third-quarter credit industry report recently showed that the delinquency rate among those born between 1995 and 2010 rose eight basis points to 1.29 percent compared with the same period last year.

About 84 percent of these customers have credit cards, compared with 61 percent of people born between 1980 and 1994 who had credit cards at the same age.

The younger group misses fewer payments than the older group did when they were the same age, and their balances aren't as high, according to TransUnion.

However, Oakes said the rate of missed payments is becoming more consistent.

“While we're seeing more stabilization, perhaps among some older consumers, younger consumers still seem to be struggling and still seem to be increasing their number of missed payments,” she said.

Kalinowski, a credit counselor, says he sometimes works with clients for years. “If they have a significant impact on their credit score when they're young… it tends to stay with them for six or seven years until it's removed from their credit report.”

But he also found that younger clients were more likely to seek help.

“In their eyes, it’s more socially acceptable to say, ‘Look, I have money problems. That's something I'm going to have to talk about and try to resolve sooner rather than later,” he said.

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