October 5, 2009
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News: Canada Implements New CC Rules
Canadians will soon benefit from new rules placed on credit card companies limiting unfair and deceptive practices. Finance Minister, Jim Flaherty announced the passing of new credit card regulations that are scheduled to take effect on January 1, 2010 and aimed at increasing transparency and greater clarity in the terms and conditions of card accounts. In his statement, Mr. Flaherty stated that the Canadian Government is very sensitive to the "pressures Canadians face in these tough economic time." Furthermore, he indicated that the new rules are to prevent further surprise on customers when they receive their credit card statements.
Bank representatives have voiced strong opposition to the new credit card rules and maintain that they will end up hurting the consumer in the long run. Additionally, they claim the new rules will limit credit availability and imposes an unfair and difficult time frame in which to implement the new rules. The new rules mandate a minimum 21 day interest free grace period on new purchases if the balance is paid in full which is not scheduled to become effective until September 1, 2010. However, beginning in January, lenders will be required to provide information on each monthly statement as to the length of time it will take the cardholder to repay the debt if only making the monthly payment due. Credit card companies must also provide all terms and conditions of the contract including interest rates and fees on card applications and clearly written in a summary box.
Consumers will also have the right to be notified for approval if the credit card company wishes to increase the account credit limit or interest rates. The new rules mandate that banks apply payment to the highest interest debt first and prohibit over-the-limit penalties due to holds made by merchants. Restrictions will also be placed on the procedures banks use in debt collection. No provision was made to limit interest rates and fees or address interchange fees that have also been the subject of controversy in Canada as well as the U.S. Supporters of these agendas plan to continue the push for action.