Canadians are feeling increasingly worried about their personal debt, with an increasing number close to being unable to pay the bills every month as higher interest rates start to make an impact, a new Ipsos survey suggests.

More than a third of the over 2,000 respondents to an online survey done for the MNP Debt Index said they have no money left at the end of the month after paying bills and are unable to cover their payments.

In the online survey, conducted by Ipsos in December for insolvency trustee MNP Ltd., nearly half of the Canadians surveyed — 48 per cent — said they are now $200 or less away from not being able to meet their monthly financial obligations.

The 48 per cent figure is eight points higher than the same survey in September.

Because it was an online poll, the MNP survey applied various quotas and weighting factors to the results, to ensure that the sample's composition reflects the overall population according to census information. But because it was compiled online, it is not randomized — and as such does not have a margin of error that can be expressed like it can be in randomized telephone or in-person polls.

The survey suggests that households have started to feel the pinch from the Bank of Canada's two interest rate hikes last year and from higher rates from some of Canada's largest banks on both mortgages and lines of credit.

Just last week, the Royal Bank of Canada, Toronto-Dominion Bank and CIBC raised their benchmark five-year mortgage rate, and more lenders are expected to follow. As homeowners must renew their mortgages, they will be facing higher costs.

Other survey results:

Canadians have an average of $631 left for discretionary spending at the end of the month once their monthly bills are paid — down 15 per cent from September.

Nearly half did not think they would be able to cover all living expenses in the next 12 months without going further into debt.

Nearly 40 per cent regret the amount of debt they have taken on.

"The results highlight just how financially vulnerable Canadians are," said Grant Bazian, president of MNP Ltd., one of the country's largest insolvency firms.

"Even small interest rate increases result in escalating financial strain and anxiety," he added.

Fallout from higher rates

The sobering results come ahead of a widely expected interest rate hike by the Bank of Canada on Wednesday. That could mean still higher borrowing costs down the road for homeowners with a mortgage or people who are trying to pay down a line of credit.

With more increases expected this year by the central bank as it continues on the path to normalize rates, Canadians are becoming more concerned about how to make ends meet.

Nearly 40 per cent of the respondents said they were already beginning to feel the effects of higher rates, compared to 37 per cent in September.

Meanwhile, more than 40 per cent said they were afraid of getting into financial trouble if rates went up much more.

Laurie Campbell, CEO of Credit Canada said a move higher by the Bank of Canada on Wednesday will definitely play on the psyches of people in debt.

"As interest rates climb, those individuals that may have mortgages or lines of credit are going to be significantly affected, because it's evident they're already struggling if they can't pay off their credit card debt," Campbell said.

'Financial blues'

The Financial Blues Survey, a survey of 1,550 Canadians conducted by polling firm Leger in the the first week of 2018, was released on Monday — so-called "Blue Monday" because it supposedly represents the saddest time of the year.

The survey, done for Credit Canada and the Financial Planning Standards Council (FPSC), showed that one in five Canadians has a credit card balance larger than their savings accounts.

"Canadians are not being able to pay off credit card debt, because they don't have savings," said Campbell. "That's troubling because credit card rates hover between 19 and 25 per cent generally and, at those interest rates, debt snowballs because of interest added onto the outstanding debt."

Among younger Canadians between 18-44 years of age, 68 per cent of respondents said they were "blue" about their finances at this time of year, compared with over 40 per cent of those aged 45 and older.

But Canadians aren't paying debt down, despite facing the prospect of higher interest rates..

"While Canadians say they are heeding rate increase warnings, they are still reliant on credit to make their household budgets work. The result may be a dangerous debt trap that will be impossible for some to ever get out of," said Bazian.

Campbell added that she was concerned with the pace of the central bank's move to higher rates, considering consumers have gone years without seeing any increases.

"I hope there's some recognition of the precarious situation many Canadians are in and the fragile environment they're living in when we see almost half of Canadians are only $200 away from meeting their financial obligations," she said. "That to me sets an alarm that needs to be heard."

Her advice to those in debt trouble is try to get rid of the high interest debts first.

"We're still sitting at relatively low interest rates in Canada, and we expect there may be more increases over time. So while the rates are still relatively low, people need to get their financial affairs in order," said Campbell.