A 17-year-old Albertan gets her first credit card – and she qualifies for a $5,000 limit because she works 10 hours a week at McDonald's. She doesn't read the contract's fine print about interest rates and paying off the balance. She gets in over her head. Her parents are on the hook.
A senior with a $30,000 pension has a credit card with a $5,000 limit and 11-per-cent interest rate. But he is sent a new one – and he reads the fine print: His limit has been increased to $30,000. He says no. The credit card company says sorry, that's the only card they can issue him.
He refuses it.
MPs' mailboxes are stuffed with stories like these – a reason why James Rajotte, a Conservative MP from Edmonton, is pressing his own government to act on measures to increase the financial literacy of Canadians.
He wants consumers, who are bombarded with so many choices when it comes to personal finance, banking, investing and spending, to beware – and be aware.
"You do hear some sad stories," says Mr. Rajotte, who is also the chairman of the powerful Commons finance committee. "I deal with a lot of seniors who are having challenges making ends meet and have made decisions in the past that make their present decisions that much tougher."
This week, he introduced a private member's motion in the Commons calling on his own government to act on recommendations from the Task Force on Financial Literacy, which reported last December. He doesn't want the report to gather dust.
So he is pushing – he wants financial literacy to be taught in schools, beginning in elementary schools and becoming progressively more sophisticated through the higher grades. While education is a provincial responsibility, the federal government can be persuasive.
The veteran MP learned his lessons the hard way when he got his first credit card and promptly bought an expensive car stereo that took months to pay off at a high interest rate.
Now he pays off his credit-card purchases within days – and he wants to help other Canadians with a one-stop website that would consolidate all sorts of information on financial-literacy programs and initiatives.
But mostly, he wants to provoke a discussion and debate on this populist, pocketbook issue.
This week, his motion was quietly debated in the Commons for an hour; it will have another hour of debate before being voted on. No new law will be created, but if the motion passes, which it is expected to, it might just poke the government into action.
Even the opposition, which has been screaming about Tory tactics in jamming through bills, is for the most part on side.
"It takes the goodwill of a sitting member of the government to bring forward an issue that the government should be doing themselves," says Glenn Thibeault, the NDP's consumer protection critic.
He characterizes this as a "good first step" but still believes the government favours corporations over consumers.
"It's not the consumer that caused the economic downturn in 2008," Mr. Thibeault says. "So you know what? We have to look at equal responsibility in all of this and to make sure it's not the fault of the consumer … financial literacy is an important step to make sure our economy is continuing to grow, because if people aren't making the right financial decisions we are going to see problems get worse, not better."
Mr. Rajotte's motion comes as Bank of Canada Governor Mark Carney and Finance Minister Jim Flaherty are warning Canadians about their soaring household debt. The average Canadian owes $1.51 for every $1 of annual income.
One of the "best" ways of addressing these personal-debt issues is by making sure Canadians are financially literate, Mr. Rajotte says.
Just this week, too, the government introduced new pension legislation, which gives the private sector a bigger role in helping Canadians save for their retirement.
But it also puts more responsibility on Canadians to play a bigger role in investing their retirement funds.
"We have very much changed as a society," Mr. Rajotte says, noting that the days of working for one company for 35 years and retiring with a pension are over.
"People have to be more knowledgeable about financial literacy in the sense of, in the past, they worked for one employer and had a pension plan," he says. "All they really wanted to know was if they were going to have an ongoing pension and what it was going to be ... [Now]they have to recognize that the economy has fundamentally changed so they need to, in fact, be more aware of the various options out there."