The U.S. isn't the only nation buried by massive consumer debt.
Several recent studies have found that many Canadians are struggling with tens of thousands of dollars in credit card debt, and 90 percent of those surveyed felt that they were deeper in debt than they were five years ago.
One survey of 4,000 Canadians found that 28 percent of the respondents had no idea what the interest rate on their credit card was; 25 percent of the respondents had consumer debt between $10,000 and $40,000, not counting debt from mortgages; 53 percent of Canadians surveyed said they had no budget for their income.
The top worry for the survey participants was having money saved for emergencies, but 53 percent of the respondents felt they would be able to retire between 60 and 65, despite having little or no money saved.
The surveys were conducted as part of "Credit Education Week," a nationwide event from November 13 to 16, co-sponsored by the global financial industry and Credit Canada, a nonprofit credit counseling service.
The findings substantiate the need for greater education on key personal finance issues including credit, savings, and retirement planning, said Credit Canada's Laurie Campbell.
It is critical for Canadians to have the knowledge and capacity to effectively manage their finances today in order to plan for and build a stronger future.
A study released in October by the Lafferty Group found that while Canadians had fewer credit cards, less debt on their credit cards, and paid their balances in full more regularly than Americans, the number of credit cards in Canada overall actually increased by 7 percent over the previous three years, compared to a yearly one percent decline for American credit cards.
Canada In Crisis
Although the slide of the American dollar against the Canadian loonie has boosted the spending power of Canada's consumers, the country is by no means insulated from the meltdown of the mortgage market and corresponding credit crunch.
The Financial Post reported this week that Canada's major banks were quietly cutting the discount rate on mortgages sold at "prime" interest rates, shoring up bank profits by passing increased costs on to the homeowner.
The Post quoted Monster Mortgage vice-president Vince Gaetano as saying "The banks are going to make their profits somewhere and that's what they are doing."
Royal Bank of Canada, the country's biggest bank, said Tuesday that it would take a fourth-quarter loss of 160 million Canadian dollars, or $167.3 million, as a result of its holdings in securities bolstered by U.S. mortgages. The Bank of Nova Scotia quickly followed suit with an announcement that it was writing down $135 million ($141 million in American dollars) as a result of exposure to the subprime mortgage market.