Self-employed Canadians are increasingly using credit, cutting back on groceries to cover bills — can they escape this continuous loop?

Here’s a look at the cycle, who is most exposed, and what you can do to break free of the cycle of debt.

How are Canadians using credit to cover the basics?

In an August 2026 Equifax Canada survey, 29% of Canadians claimed using more credit to pay for food, utilities and other essentials compared to a year ago. Nearly one in four respondents expect to pay only the minimum amount on their credit cards, and 32% have slashed their grocery bill and other essentials.

Food costs are a significant strain. Dalhousie University’s Agri-Food Analytics Lab found that one-third of Canadians are dipping into their savings, or are borrowing money to purchase groceries.

That’s the debt loop: buy groceries using your card, with the minimum payment taking less out of the budget, but increasing the balance after interest kicks in. And next month, you reach for the credit card again. Wash, rinse, repeat.

Which Canadians are most at risk?

As of 2023, roughly 2.65 million Canadians were self-employed, or 13.2% of all workers, according to Statistics Canada. More than 25% had gig work as their main job.

An Equifax Canada survey also found that younger households and families with children are the hardest hit. Canadians under 55 were twice as likely as older Canadians to use more credit to cover essential expenses — 36% versus 18%. For households with kids, it was as high as 42%.

Why the debt cycle is harder to break when you’re self-employed

Self-employment income rarely arrives on a set schedule. A client’s payment may be late, a contract might end and the rent is still due. Accessing credit becomes more common to bridge the gap, a gap that keeps widening.

You’re also missing the safety nets most salaried employees have. Self-employed workers can’t collect Employment Insurance (EI) if work dries up. However, you can opt in to EI special benefits, such as sick leave or parental leave, but you need to pay the premiums yourself rather than as a deduction from a paycheque.

And let’s not forget tax remittance. You have no employer holding it back from each pay, so an unexpected tax bill could land after you file. If you owe more than $3,000 in tax, the CRA may require you to pay in quarterly instalments. And if you miss setting that money aside ahead of time, your tax bill could end up on your credit card, too.

What can you do?

• Set tax money aside first. Put tax savings into a separate account. Move a percentage of each payment the day it comes in. Use a self-employment income tax calculator to estimate what you owe, or ask an accountant what percentage matches your income level.
• Build emergency savings in a high-interest savings account. Start with an amount that covers one month of expenses, then aim for three months and up to six months. But in the meantime, even a small cushion can help break the habit of using your credit.
• Pay yourself a set minimum “salary.” Run all your business income through one account. From there, pay yourself a set amount to your personal account every two weeks, leaving the rest in your business account. When a tight month comes up, draw on the buffer instead of charging a credit card.
• Put money on your most expensive debt first. Credit cards often charge between 19.99% and 29.99% in interest on unpaid balances. Pay more than the minimum on the card with the highest rate, and the minimum on the rest.
• Double-check your benefit entitlement. Make sure you file your taxes on time with the CRA so you don’t miss out on the GST/HST credit or other benefits based on your tax return.
• Get free help early. Don’t wait until your finances become completely unmanageable and you’re overwhelmed. A non-profit credit counsellor can review your finances and help you structure a debt repayment plan before the situation becomes painful. You can find one through Credit Counselling Canada.

Self-employed Canadians are juggling the same rising costs as other Canadian workers, but without the benefit of a steady paycheque or employer benefits to soften the hit. While you may not be able to control when clients pay, you can reserve a portion of each payment — creating a buffer for those lean months that can help you break the credit-debt cycle.