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

Mark Kalinowski has been a credit counsellor for nearly 14 years, helping people of all generations manage their debt. But this year, more than a quarter 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's on hold," said Kalinowski.

The Credit Counselling Society — the debt management non-profit where Kalinowski works — served more 18-to-34-year-olds in 2025 than at any other point in its history, its spokesperson told CBC News.

Many have a mountain of student loans. Some are facing the daunting task of managing a credit card for the first time. Still others are navigating the high cost of living against slow-growing wages.

As if that weren't enough, Kalinowski and other experts say the ubiquity of "buy now, pay later" plans are compounding the problem and fuelling a debt crisis among 20 and 30-somethings.

"I won't say that they feel hopeless, but they do feel a little bit lost and they're not sure how to gain traction," said Kalinowski.

The problem that those under 35 face isn't necessarily that they're accumulating debt — it's where the debt is sourced from, explained Jodi Letkiewicz, an assistant professor at California State University currently on leave from York University in Toronto.

"This isn't necessarily, 'Oh, they're just going out and partying and spending and shopping.' This is just like basic consumption smoothing. It's trying to pay bills," she explained.

That kind of consumer debt shows "warning signs" of a fractured economy, said Letkiewicz. "Because when people are late on those, it tells us that they're not able to keep up with their cost of living."

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

Researchers are still trying to understand how consumers interact with buy now, pay later plans. One peer-reviewed study published in December 2024 found that younger consumers in the U.S. are more likely to use the plans for online purchases compared to older demographics, and are likely to spend more as a result.

Another, published in March of last year, found that U.S. consumers who used buy now, pay later saw sharp increases in bank overdraft charges and credit card interest and fees compared to those who didn't use the services.

There's less research on the Canadian side. While a recent pilot study from the Financial Consumer Agency showed that the 18-34 year olds surveyed used online buy now, pay later plans at a far higher rate than any other age group, the representative sample is far too small — 66 people overall — to generalize its findings.

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