Canadians to get break on credit card bills

Finance Minister Jim Flaherty announced plans on Thursday to impose a new set of rules on the credit card industry. The proposals do not regulate fees or interest rates, but they do offer some relief to consumers.

CTV Calgary: Sue French reports on the changes to credit card rules

The federal government has announced changes to the way Canadian credit card companies operate.

CTV Edmonton: Rob McAnally on the breaks the regulations give Canadians

Credit card companies will give customers a three-week grace period for all credit card purchases. This is one of several new industry regulations that were announced by Finance Minister Jim Flaherty on Thursday.

CTV Winnipeg: Stacey Ashley on new rules for credit card companies

If you own a credit card you could benefit from some new rules set out by the federal government, but some are already saying the moves do not go far enough to protect consumers.

CTV Toronto: Pat Foran on what the rules mean for consumers

As reported, the federal government has introduced new rules for credit card companies, but it won't cap interest rates. Pat Foran has more.

CTV Ottawa: Norman Fetterley on why changes weren't made to interest rate limits

Rule changes for credit card issuers will give consumers more information and a three week grace period on new purchases. The regulations however, do nothing to limit interest rates.

CTV Newsnet: Mel Fruitman, vice president of Consumers' Association of Canada

Experts say the new regulations will solve some of the most insidious practices of the credit card companies, and it's a step in the right direction to control the amount consumers pay in interest fees on their credit cards.

CTV Newsnet: Finance Minister Jim Flaherty speaks from Toronto

Finance Minister Jim Flaherty unveils new credit card regulations Thursday, which will make their statements easier to understand.

CTV Newsnet: Finance Minister Jim Flaherty takes questions in Toronto

Finance Minister Jim Flaherty takes questions from the media after unveiling new credit card regulations Thursday, which will make their statements easier to understand.

CTV Newsnet: Catherine Swift, Canadian Federation of Independent Business, on the impact of the new rules

New rules announced by Finance Minister Jim Flaherty are a good start, but there is still a long way to go, and credit card issuers need more harmonized rules.

CTV Newsnet: Roger Smith on the expectations of Flaherty's announcement

Finance Minister Jim Flaherty will announce new credit card rules to protect Canadians, and while greater disclosure is expected, no cap on interest rates is expected.

Watch: See all Videos in the Player

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CTV.ca News Staff

Date: Thu. May. 21 2009 5:56 PM ET

Credit card companies will be forced to give customers a three-week grace period for interest on credit card purchases, one of several new industry regulations announced by Finance Minister Jim Flaherty on Thursday.

"Federally regulated credit card issuers will have to provide consumers with a minimum 21-day, interest-free grace period on all new purchases when the consumers pay their balance in full by the due date," he said at a Toronto news conference.

Flaherty said that most credit cards currently offer 15-to-24 day grace periods, with the majority offering the three-week grace period required under the new regulations.

But many of these companies also charge consumers on the interest that accrues during the grace period, he said, even if their balances are paid in full that month.

This can also be true if a consumer carries a balance from one month to another.

"If a consumer carries a balance from one month to another, some cards give that consumer essentially no grace period on new purchases," Flaherty said.

"They charge interest on the full balance immediately on both the previous balance and the new purchases."

Later in an interview on CTV's political affairs program Power Play, Flaherty hinted the new measures were a tough sell to the credit card companies.

He said the profits they made from accrued interest were "very substantial."

"It has been profitable for some of the financial institutions the way the calculations were being done. And we wanted to ensure a clear 21 day grace period uniform for all the financial institutions, which is a cost for them," Flaherty told CTV's Tom Clark.

Flaherty also hinted that the government is keeping an eye on other cards.

"We also have issues coming down the road with respect to debit cards as well," he said.

The grace period is one of several regulations the government announced.

Another major change is that credit card companies will have to print "all salient information" in a summary box on monthly statements, clearly showing the annual interest rates for purchases and cash advances.

"This will improve clarity and move this information out of the fine print," Flaherty said.

The new information box must also contain the credit card's annual fee, information that is often missing on current credit statements.

Flaherty said the same summary box must also give consumers an indication of how long it will take them to pay off their balances if they stick to paying only the minimum monthly payments required by the credit card companies.

"This will help consumers get a truer picture of their debt-load as they pay it off and manage their affairs," he said.

Credit card companies will also be expected to follow several other new regulations, including:

Credit card companies will require the "express consent" of consumers in order to raise their credit limits
Consumers will not have to pay over-the-limit fees due to merchant holds / pre-authorization holds
Credit card companies will be required to give consumers advance notice of interest rate increases on monthly statements, if such increases will occur during the next statement period
Consumers will also get advance notice when low, introductory interest rates are about to expire, or when a penalty rate will be imposed due to late balance payments
Credit card companies will be restricted in the time periods in which they can hound contact consumers for debt collection
All payment allocations to credit card companies should be applied in favour of the consumer

The new regulations, however, will not cap the interest rates that credit card companies impose on consumers.

"We have choice in credit card interest rates in Canada," Flaherty said, explaining the government's position on the matter.

"There are some low interest rates on some of the credit cards. There are dozens and dozens of options for consumers."

Instead, Flaherty said the government's concern is to ensure that consumers have "easily available, clear information so that they can make informed choices about what credit card suits them and the cost of that credit card for them."

Flaherty said the changes were part of the Conservative government's plan to improve the financial literacy of Canadians.

"With better information, Canadian consumers will be able to make better decisions, but only if they are equipped properly to do so," he said.

Comments are now closed for this story

Francis in Windsor
said

it's unfortunate there is no supernatural governing on the earth. In Canada people pay too much tax, it's ridiculous. Taxes should be lowered by 80% percent. A lot of the taxex that we pay go for strange things. I suggest lower the tax, and remove the gst.

25 with GREAT CREDIT
said

To: Jay

I�m 26; I had my first home by the age of 25. Not all young people feel entitled to everything. Some were raised well by their parents and were taught to save for what they want.
I am also a creditor, and I�ve seen many 40, 50 even 60 year olds with WAY MORE INCOME then I, feel WAY MORE ENTITLED, and spend, spend, spend till bankruptcy.
Learn some facts before you discriminate by age.

ibivi
said

This is nothing but window dressing. Frankly, Flaherty should be ashamed to even make such a hollow announcement. Interest rates on credit cards should be tied to the prime rate plus enough for a reasonable profit for the service. I have credit cards that charge 28%. I always pay the full amount owing because I refuse to pay their outrageous interest. One company actually lower their rate recently. I was shocked!

CTV needs to run double message boards:
said

one for intelligent commentators on current events;

and the other for C-label party hacks posting the talking points e-mailed to them from C-label Party Central Committee.

Reg
said

Anything that takes $$s away from the credit card company/consumer "relationship" will be passed on to the businesses who take credit cards.

It is basically a lose/lose situation all around (except for the cc companies of course)

Kevin
said

It's how banks make their money. This blows me away. If the banks charge a lower APR, they'll have to charge higher fees. My VISA has an APR of 9%, if people want a lower APR, call the bank and threaten to cancel the card if they dont give you the lowest rate. If you want a rewards program such as a Scene VISA, or Air Miles, you'll have a higher APR because the bank reimburses the company for the rewards. Is it really worth having a card at 20% APR and paying a hundred dollars in interest a year, to get a free $10 movie pass? This whole notion is silly.

Mar
said

Hopefully these changes will show people who use credit cards like a free loan will realize it costs a lot to have them and pay interest on them. Use some other form of financing purchases, its much cheaper, just think, even lines of credit at prime plus 3% are only 5.25% instead of 28%, doesn't that sound better? And why should the government be saving Canadians from making stupid financial decisions, its time we look after ourselves. We have the ability, now its time to use it. Even if you hit hard times, plan ahead, set up a line of credit, borrow against your home, I bet the interest rates on most other options are much less than credit cards.
And to those saying we are just following the Americans, well of course we are, where do you think Visa comes from? Its not a Canadian company that is for sure. So of course in North America we try and coordinate our policies on cross-country industries and services, to not do so would be stupid and counter-productive. Why is it ok for all of Europe to now coordinate things like this and its seen as innovative and a good thing, yet coordinating in North America is bad? Face the fact that we share this continent with the US and we rely on them for trade as they rely on us for certain things, how about stop bashing them and work with them, there is a novel idea. Stomping our feet and snubbing them only makes us look childish and petty, plus we are a small player on a large international stage, it doesn't hurt to play nice with our large neighbour.

Financial Literacy
said

Wow, a lot of people sure seem angry at the banks and the government.
Fact of the matter is, it isn't rocket science to read the terms of your credit card and know it can be very expensive to carry a balance. I haven't carried a balance in years, and find credit cards a convenient way to shop online, track my spending, avoid carrying lots of cash, and defer payment during the grace period for free.
The very few times I've had a problem of question, I've always found the credit card companies very helpful and easy to work with.
The problem lies with lack of personal responsibility and accountability for the money people borrow and spend all to freely, and lack of financial literacy. These rules will help some people, but they won't make a difference to me.

Kevin Lafayette
said

Stop and think about what you are really asking for here. What happened to GM when they allowed the government to come in and "help" them? Do you know what the scariest words in the English language are, according to Ronald Reagan?

Limit Interest Rates
said

Well this is all fine and dandy...but what about the exorbitant interest rates? That is what the gov't should be legislating.
I agree with another poster that CC interest rates should be limited to a certain percentage above prime. He suggested 5% but even 10% would be better than it is now.
A lot of people who experience hard times can't pay their bills off at the end of the month; these are the ones the CC companies prey on.

Jay
said

Veronica
I would like to say the min age raised to 25.Its seems more and more people under 25 more then anyone else spends what they do not have.They buy buy buy then worry about paying after.

Sean in ON
said

alot of good comments have been made as I'm sure all will agree. Most people are aware of credit cards and their pitfalls. The fact of the matter is people get trapped like being addicted to cigarettes and the like. One organization that should regulated or put out of business is PAYDAY LOANS. They are truly taking advantage of the people who have fallen on hard times.

Matt
said

Marg,
This is Canada, the whiny socialists want the government to do everything for them.

They want everything, they don't want to work or pay for it, and everything that is wrong is someone elses fault.

There are two types of people in Canada.

1. People who don't think they or other people are capable of taking care of themselves and don't want to take responsibility for their decisions, therefore they want the government to take care of everything.

2. People who realize that the first group is also running the government and would rather take responsibility for themselves, instead of the government that isn't likely to to do a better job of it anyway.

David MacKenzie
said

It�s a good positive start in helping Canadian�s cope with this deep economic downturn.

Rob NS
said

Some good work here done by the conservatives...good goverment.

While the Liberals just play election games...the tories are doing a good job trying to improve Canada position during this world wide recession.

And I love the new tory ads...they are so true..paint Iggy with the brusg he deserves...and his weak response is not even true...trying to drag other Canadians into his sinking boat...

Karen
said

People in Canada do no know how good they have it. I am a Canadian living in the USA. The credit card companies here can actually raise your interest rates by huge amounts at any time. For instance if you have a credit card with a 8 % interest rate and they suddenly decide that your credit score is no longer as good as it was when you applied for the card, they can 'double the interest rate or even increase it to more than double.
So, they offer you the card at a low rate....let you spend all the money you want and then, decide that suddenly your credit score isn't as good as when you applied and double your interest! and THEY GET AWAY WITH IT!!...
We applied for a card with Washington Mutual and had a 7.5 % interest and a limit of $6500. We were always paying more than our minimum due on the card. It was not maxed out!
Then...after three years, on the 'second page' of our statement, they announced that we could close the card and keep the same interest or keep it open and have our interest doubled...WHO in their right mind would keep the card open?? Unfortunetly, we were out of the state doing disaster insurance work from the hurricaines, last year, for three months and dind't even look at our statement. We stilled paid the bill, online, but never actually saw the statement. We weren't using the card , at all!
Be very very thankful for the banking system in Canada..American banks are as crooked as they come. I worked in banking in Canada for 7 years and moved to the USA. I am appalled by the way the banks are run here.

Sid
said

Too little too late for most of us.

JP
said

@Matt,

What you don't realize is that the financial system is NOT meant to be beneficial to anyone BUT those who own it. Yes you can ride waves and do well here and there WITHIN the CONTEXT of the system, but what you don't realize is that we are all meant to be indebted to it, forever. All money IS DEBT.

What Zeitgeist Addendum for more info.

Dean in YYZ
said

To all crying about credit card reform: TOUGH !

Nobody is forcing anyone to have a credit card.If you are a person who cannot handle owning 1 then GET RID OF IT.
Now you will have to learn to live with in your means.

O and to all Liberal big mouths out there.GIVE IT A REST,your pathetic useless party was in control of this country for almost 2 DECADES.
Did absolutely nothing concerning this matter.Yes it was already on the radar,some 10 yrs ago.But as usual chose to do nothing about it.

So shut up with the following Americans lead crap.
Liberals are no better.

MJ
said

I agree the interest rates is the problem. The only word for it is legalized loansharking!

John
said

The best investment you can make is paying off credit card debt. The worst investment is acquiring credit card debt. If you can't pay for it in the next 30 days, don't charge it on the card. Do that and you will never be in financial trouble.

Mary Campbell
said

While changes are being made to credit card regulations, could we also have the issue of credit card fraud, addressed. Many countries have had microchips in their cards for years,how come Canada is so slow with customer protection from fraud?

Jay-To
said

"We have choice in credit card interest rates in Canada"

That's a laugh. The only choice is to be gouged. Flaherty had his chance but I guess he didn't want to angers his best buddies at the banks. We all know who the conservatives are. The CPC have been trying to portary themselves as for common people. They never have been, and never will. They are all about business to the detriment of people. Liberals wouldn't have done much better but at least they don't pretend do do nothing under the guise of something.

LH
said

Do people not realize that credit card companies are not banks?Yes, banks give out credit cards, but the overarching entity that is "visa" is not a bank! They are not tied to bank of canada rates because a credit card is a privilege, it is not meant for everyone and it is an incredibly risky loan as there is more credit card fraud than "line of credit" fraud. Lowering interest rates will just get people in more trouble and as one poster pointed out these fees will just be taken in other ways so everyone suffers.

As it stands now, you only pay interest if you carry a balance, simple solution, don't carry a balance. If you have to use other forms of payment, like a line of credit, don't use a credit card. And as one poster suggested, for those things you need a credit card for, use a pre-paid card. Also, credit card rates are high because they are easier to get than lines of credit and many other types of loans, as a result the risk is higher so the interest rate is higher. And the bigger question, why do you need the government to protect you from the credit card companies? Can you not protect yourself by not using them or only using them in a financially smart way? If you cannot afford 28% interest then DON'T USE A CREDIT CARD, its not hard, why can people not understand this? I for one always pay off my balance, if I can't afford to I don't buy whatever it is or at least don't put it on a credit card. If rates are lowered it will just mean I will have to pay higher fees to compensate for those who carry balances and used to pay higher rates.No thanks

DaveY
said

It's amazing to see how many commenters continue to blame the gov't and the banks for personal debt when there are so many alternatives.

There is already a law concerning interest rates / usury.

Where is the personal liability & responsibility ?
Oh, yeah and the old "banks make too much money".

Rather have them lose money like in the states? Ho much faith woudl you have in money-losing operations? They are not charitable foundations. Much of the pension money in Canada is invested in our financial sector.

Credit Card companies are the last to get money from bankruptcies, they take responsibility for an awful lot of fraud and they provide a free service to anyone who pays the balance on time.

Just like the Ontario lottery ad says: "Know your limit, play within it".

Ed L
said

I can't believe all this whining. (I guess it explains all those Liberal votes.) I've used (no-fee) credit cards for 35 years and it's been very profitable! I use them for everything. My Amex is typically $1500 with another $500 on Visa (some merchants don't take Amex) every month. I get a rebate of 1.5% on Amex and 1% on Visa. The amount due is paid every month via PAP. So far I've paid zero interest or fees in 35 years while collecting a few hundred dollars in rebates every year.

Frankly, I couldn't care less if the interest rate was 100% since I never pay it. Neither should anyone else. If you can't afford to pay for something immediately, don't buy it, or else get a proper loan (e.g., for a house, car) at a reasonable rate.

The new regulations are reasonable tweaking to help people understand the rules, but I'm sure most can't be bothered to read anything, no matter how bold the print and prefer the famous Canadian refrain: "The government should DO something."

Marg
said

I think it is time that people took responsibility for their own actions. Do we want government to regulate everything we do? I know I don't. Interest rates are high, but if you shop around, you can negotiate. I don't charge anything that I know I can't pay off in time to avoid paying interest. Government's aren't here to solve all of our personal problems. Too much government is not a good thing.It sounds like some of you would prefer to live in a country where government controls and regulates everything. I think you would find that is not an ideal way to live.

devolin
said

I�m so sick of hearing people complain about banks and interest rates. You need to start to realize that your banks are not different then any other business. They don�t work for free, which I�m sure you people don�t either.

If you don�t want to pay interest rates, then save your money and purchase your items with CASH!! Stop feeling so entitled to everything. People today want everything and they want it now, for free, without working for it. GET OVER YOURSELFS.

bernie
said

Why don't we have a high school program that teaches our future generations the hard facts about credit?

By being patient and not maximizing credit, meaning being able to pay the most if not the FULL balance versus the minimum within the time deadline will cost little in interest cost.

The payment amount that you are required to pay is usually 3% of the balance meaning $15 on a $500 balance. If the interest is 19.9% and the billing period is for 31 days, the interest costs are $8.45 meaning that you only paid $6.55 leaving a balance owed of $493.45.

Do the math, play with the numbers and when you understand all the implications related to credit, the odds are that you will make better decisions.

Suck it up
said

Ya knowing the truth really helps out. :(

Sort of like knowing the price of gas is around a buck a liter when it is $59 a barrel.

You best just suck it up!!!

Matt
said

@JP,

You need to see the even bigger picture.
If people understood and used the financial system better it could be win-win for both parties. But people don't understand it, and they don't use it properly. We have some competition, but people don't take advantage of it.
For example some people, on this very thread, complain about the annual fee on their cards, and do nothing while almost all issuers have no-fee cards available.

Sure the banks want to earn money from you, that's why they offer as many services and options to you. It's up to you to decide which options you wish to take advantage of.

Having a wide variety of options available is good for the both of us. A properly working financial system needs BOTH parties to do their part, and consumers today aren't doing theirs.

Fool
said

Hey people, I have an idea. Why don't all Canadians not spend more than they have. This would prevent paying outrageous interest rates. The government should not have to step in for people's gluttony and greed for money and products. If you can't handle a credit card, don't have one.

This is Canada ! Ehh?
said

Why did we have to wait for the Americans?
Is Ottawa incapable of coming up with good solid and sound policies on their own?
How come we cannot have a vision and a mission for ourselves.

Why not just ask Obama to lead this government as well!!!!

Veronica
said

i haven't read all of the comments yet, but I'm surprised that so many do not seem concerned about the Government's signal failure to do one of the most important things - capping the interest rate. It's ludicrous that some companies, notably the department stores, can charge 28% interest on an unpaid balance. I wonder that consumers don't simply take out a personal loan or a line of credit instead, and repay at less than 10%. This usurious interest rate is the worst thing about credit cards. Most of the new regulations are either already being implemented, or bring no real relief to the consumer. One exception is the proviso that the companies can no longer charge interest on new purchases when there's an unpaid balance. I pay my balance in full each time. Unfortunately, through circumstances and unawareness, I had not always done so, and as a consequence have paid several thousand dollars over the years in interest charges. Now I'm poorer but wiser.
As other comments have noted, consumers need to educate themselves on the wise use of credit. But if there was an interest cap, companies would not be begging people to sign up for their credit cards ("you can be approved in 5 minutes). Hard to resist, eh?

Joel in ON
said

In response to:
guppies
"Why he worry about Credit Card for now.
Don't he got any better things to do.

He really screw us (Canadian) up on income fund reform a few years back and send millions millions and millions to drain in one night. And now he want to protect us for dollars and cents...what a joke."

Guppies: Flaherty is worried about credit cards now since the system could be improved to remove deceptions. He is the finance minister so this is exactly the type of problem that should raise concerns.

I am assuming that you mean EI reform instead of 'income fund reform'. How did Flaherty "send millions and millions to drain in one night"? It was finance minister Paul Martin in a liberals government that decided EI money should be used to pay off the debt. Now he wants to protect us from misleading/confusing credit card information, not save Canadians 'dollars and cents'.

I think a number of people on this board make negative comments simply because a conservative MP made an announcement.

Balgonie Bob
said

The biggest reason that our Canadian banks are considered the best on earth is because they are allowed to rape the proletariate to ensure profitability year after year. More competition would go a long way to remedy the CC issue. The only alternative for some people to get out of the credit card debt is more self control. Perhaps teaching our children self control and a sense of responsibility is where we should start. Hey all you parents out there, I'm not talking about teaching them in school.

Larry I Ontario
said

This is ridiculous. Flaherty blew a great chance to really clamp down on them. What a joke. This is no different than the goverment getting on to the greedy oil companies. Our govenment is useless!

Mike
said

I don't think anyone who has credit card debt is looking to put the blame on somebody else or for the government to save them from their debt.
The issue is that CreditCard companies are allowed to gouge Canadians with outrageous interest rates. Most who pay their balance in full or are lucky enough to have a low interest card don't realize that those who carry a balance for what ever reason are being crushed with high interest rates. Minimum payments are usually a few dollars more than the monthly interest charged. This is the case with only a few thousand dollars as a balance. This does not mean that they are financially irresponsible or are bad Canadians.
It's those who are low income who usually pay the highest rates, 20% or more.
We should all be outraged that a company be allowed to charge a rate of prime plus 20%.
Time for a lot of the people commenting here to get off their high horse.

Reece
said

What?? Obama is forcing lower interest rates during the down turn. Our gov't is only having the credit card companies tell us in clearer language how much we're getting screwed?

Gee...thanks, Harper.

Glenn again
said

To Mr. "Liberal rates no longer", I don't see that the Conservatives did anything either with Credit card companies but have them report more detail of the rates to us. I'll read tomorrow' paper to see but I think this exercise in new rules for credit is worthless. didn't lower one thing or stop the bank machine charges at all. It's crap.

Govt for Corporations Natty,ON
said

An exercise in Cosmetics DEVOID of substance.
Preventing GOUGHING is the issue, there is no valid reason for Credit Card Interest to be over 20% above Prime.

Davey boy
said

Ok Matt your right. People need to be responsible for there actions. What they spend and how they pay there debts. Unfortunately some people over spend and don't pay they cards off causing them to default. Doesn't this sound an awful like big business (Air Canada. GM oh and the Government) I see huge debt huge deficit huge spending and of course huge Bailouts each and every time. What about the little guy Matt? What about the little guy? Should he not be given these same opportunities to be bailed out or saved from excessive debt and increased bankers greed. Think that over.

JP
said

@Matt,

You need to see the bigger picture. If people understood the monetary system, it would NOT be so easy for the owners of it to fleece the populace and indebt everyone to it...

- which is the goal.

mrprtr
said

One practice that must be stopped is setting the payment due date on a day when the banks do not process payments, i.e. setting the payment due date this month to May 18 (Victoria day) when the last practical chance to process the payment would be the afternoon of May 15. In effect, the bank is allowing only 18 days grace.

The financial software packages that manage the due date have a 'no bank holiday' feature that's part of the purchased code. The banks chose to ignore this setting (and then claim it would cost millions to adjust). There right in a sense: the actual change request would be under $10K, but the banks will lose tens of millions in earlier cash availability or interest payments triggered by their not processing payments on the due date.

How about SEARS cards?
said

how about the practice of sears?
Did you know that if you pay off your card in full and request to close your credit account with them that they will refuse to close it?
It's true!
They said to us that they stopped closing accounts 10 years ago.
They refuse to close our credit with them under any circumstances.
We were shocked!
and very frustrated.

We want nothing to do with them and want the account CLOSED.
AND now this $2500 credit just sits and can be easily accessed by anyone who gets their hands on a few bits of info about us.
Which shouldn't be too hard as sears keeps sending us a statement with all the needed info.
This should (or probably is) be illegal for them to do!
I find a lot of the credit company's practices appalling.

For example, if you miss a payment by a week (which can happen very easily by accident when one is so busy working - to pay off one's credit-LOL) they can put a 'black eye' on your credit report and this makes it easier for them to keep you with them as other lines of credit will be harder to access. This also happened with our Sears card.

Oh and FYI, all the overpriced name brand clothes we bought at sears with said card have all since fallen apart.
My advice: pay cash at cheaper stores and live life debt free or as little debt as possible.

Mike BC
said

A lot of lip service by Flaherty. The interest rates ARE the problem!! Sure, those who pay off their balance every month couldn't care less but for those of us who carry a balance or use cc for big ticket items are still screwed if we plan to pay it back over time.

How is a 19 to 24.99% rate for a presidents choice MC fair?
How is 28% rate for a store credit card fair?
Dozens of other choices, yeah right.. lol. How many of you have tried to get another low interest card only to be denied.
I wonder how much Flaherty was paid by the bank and credit card lobbyists.

Those who suggest that having credit is a privilege or that we should use payday loans can bite me.

This is typical of how ineffective this Government has been. I'll tell you one thing, I won't make the mistake of voting Conservative again. C'mon people wake up, Conservatives and Liberals have only proven to be a bunch of crooks. Vote NDP

reporting from Ottawa
said

My concern about the parents not teaching the proper use of a credit card was because the amount of talking my parents did with us in regards to credit cards was minimal at best. I have avoided credit-card-debt-hell because I am no fool, and perhaps one could argue that my parents successfully taught me to not be a fool and therefore that is all that is required. However the subject of credit cards and their proper use did not come up and I was left to discover/learn on my own. I am just wondering how many people who are in credit-card-debt-hell and are not fools, but simply are not familiar with the idea that having a credit card does not mean you have money and they should not be treated like money.

That was not worded very well, but you get what I am saying? How are they getting into credit-card-debt-hell? Is it because they do not understand that using it is to live beyond your means?

Personally I think the high rates of credit cards are a symptom of Canadians generally proper use of a credit card. That being that we mostly pay off the entire bill before interest is accrued. Therefore, the credit cards have to have high interest to gain income for them from the few payments we miss. That is why for longer-term debts you use loans, morgages, or credit-lines instead of credit cards. Their rates are lower as they are designed to be more long term.

Dunny from Manotick
said

One small step for mankind that won't change much. All you name calling Conservative haters out there need to get a life.

Wayne in Bathurst
said

What a waste of time! Why didn't Flaherty attack the real issure. The loan shark interest rates! Then again, what else could we expect from expect the conservatives. Don't want to unset the greedy share holders in the banking industry, now do we?

Matt
said

Despite what some believe, it is not the job of government to protect you from yourself. If you can't afford to pay for something within a month or two of putting it on your credit card, DON'T BUY IT.

Maybe there should be a warning lable on every credit card statement: LIVE WITHIN YOUR MEANS.

Matt
said

JP,
Actually the people who own and control the money system WANT you to understand how it works.

The whole system would work better if people understood it and used it properly. They would save billions in explanations, customer service expenses, lobbying and credit losses if people just understood how to use the products and services they are purchasing.

I don't control the money system, but like almost every other Canadian, I DO own a small part of it.

By owning a small part, almost every Canadian mutual fund or pension plan holds at least a portion of assets in financial company stock.

PVT
said

Every province in Canada should mandate a course in personal finance as part of high school curriculum - maybe a semester of Math could be used up for this. It would benefit students much more than learning some of the math skills they will never use in the real world.

guppies
said

Why he worry about Credit Card for now.
Don't he got any better things to do.

He really screw us (Canadian) up on income fund reform a few years back and send millions millions and millions to drain in one night. And now he want to protect us for dollars and cents...what a joke.

Keith in Brampton
said

These are all really just minor tweaks. The impact for most people will be negligible (unlike in the States, where card issuers have had far less regulation, leading to all kinds of deceptive practices that would be illegal here).

The one big thing Flaherty should have done - but didn't - was introduce a "floating cap" (or caps, if he wanted to differentiate between categories of cards), wherein card companies would be limited to a maximum of X% over the Bank of Canada rate.

Despite the precipitous drop in prime rates, very few card companies have dropped their lending rates. This may ive them a better return on their loans, but it is choking credit availability and unnecessarily lengthening the recession.

As these card companies are partially to blame for the current situation, it's time they play the part of good corporate citizens and drop their rates. And since they haven't, Flaherty should have seen it as his duty to give them the proper government "assistance" and introduced a floating cap.

guppies
said

Credit card usually is for some people that have job/money and is a symbol of Success.

Like Gold Visa, Plat card.

I am talking about 20 - 30 Yrs ago. That you need to make $ XXXXX to get one.

Not anymore. At long as you want one. They will issue you. If you can't paid back in time and paying high interest is the game you have to play.

Control, Control, Control is the key.

If Jim worry about us. Why not create a new Credit Card call "Bank Of Canada" Jim Flaherty Visa. Grace period 6 weeks, low interest rate.

And for bad account no problem. Tax payer will cover it.

JEP
said

For more info on how our monetary system works, look up:
"Zeitgeist: Addendum".

Shirley
said

People need to show restraint - use a credit card responsibly - we always want someone else to blame. Yes the credit card companies play a part of the whole picture but let's face it, it comes down to personal responsibility.

Maria-Toronto
said

These new "rules" are a start.

They should also eliminate the yearly fee sometimes administered to have certain credit cards...I don't know why some charge the customer to have their credit card besides the obvious which is to make money off of us.

But I guess the best rule for all of us to follow is, if you don't have the cash, don't buy it! for the interest rate kills your bankbook.

korie
said

In this time of economic uncertainty there is one thing for sure...the credit card companies will bend you over and spank you, just like they have always done and like they will always do!

i know the pits that a credit card can dig, it is hard and you find yourself relying on them more and more just to get by, then they raise the limit and you spend and spend, again, just to get by. a vicious cycle perpetuated by greedy corporate groups.
consumers need to be smarter! try to leave the card alone, just for a few months, it gets easier and when you only spend what you have you find that you make better decisions about what you buy.

good luck to all of us out there who are carrying huge balances...pay them off if you can and keep money in your pockets instead of in the pockets of some fat cat!

TimT
said

RE: Canuck Abroad

What you likely are missing here is that the tories are -following- the lead of the democrats in the US. You know, those wascally wiberals you seem to dislike so much...

guppies
said

I have no problem using Credit Card. Don't care about the interest they charge and I paid in full 99.99% all the time.

I use it because I don't need to carry cash, give me extra protection for purchase item/good.

Credit card company don't want you to paid in full to start with. This is how they make the money from.

If you have control, you have no problem. Longer Grace period don't help much.

Jim Flaherty should spend more time on other issue than this.

Don't he know we are in recession now. And he worry that we use the Visa and can't pay back in time and Visa charge us arm and leg after...lol

He should spend more time on tax cutting for low income family "now" instead.

Jim in Ottawa
said

I don't see how this is a federal government issue at all. As far as I am concerned, borrowing unsecured money from a credit card company is a private transaction carrying a high degree of risk of default for the credit card company. The only person to blame if you miss your payments is the person staring back at you in the mirror, not Jim Flaherty.

This is one of those rare times where the status quo is fine. No need to change anything in the credit card industry.

JP
said

They don't teach people about the monetary system in school because the people who own and control the monetary system don't want you to know.

Shannon in Sudbury
said

Finance education is what we need. The average child is not exposed to the financial basics needed to survive in this world, let alone plan for their financial future. I had some exposure as a teenager and I have no debt besides a mortgage. I make a point to reading, talking and meeting with educators. People need to learn the financial lingo and learn to manage their financial risks. Letting the government do it for you simply enables you into 'watching the world' go by. If you watch someone exercise, do you lose weight? Time for people to learn some basic survival and math skills.

Debt 101
said

Handling Debt 101 should be a main course in high school as mentioned by other posters. Capping the tricks card companies use to lure money out of your pocket is good. Now if we can do something about the cable and phone companies!

Graeme
said

I think this is a good first step.

When it comes to government regulation, I believe in personal freedom of choice, but also companies being transparent. While this won't change much fundamentally, it should at least increase transparency and get rid of some of the more "sneaky" things these companies do.

At least interest rates are normally obvious to consumers, who need to exercise some self control. I have a credit limit that as a student I never should have logically qualified for, but I can control myself and only spend what I can pay off (which most months is around 1/6 of my credit limit).

Edmonton Jim
said

The most appalling matter in this regard, is the fact that the prime rate has fallen dramtically in the last few months...but not the rate of interest we pay on credit cards. An economy driven by greed and not reality is bound to fail! Guess the U.S.A. is finding that out today!

Duane Oshawa
said

I am a Card carrying Conservative member, embarrased by this lame brain, idiotic mess of nothing proposed by Flaherty. If the NDP would strengthen level of candidates, I would hold my nose and vote for Layton.

Rollingdice
said

I think the idea of needing consent to raise your limit is a great one. I'm sure I'm not the only one to get into trouble this way.

MAL
said

There aren'tdozens and dozens of options Flaherty... there are options for folks who have secured deposits which are the low interest cards and there are options for working folks which are the 15-25% cards. Basically if you NEED a credit card, you're going to get hit. And don't even THINK about moving to a better address or a better job, both are credit killers. Yet another waste of time from Ottawa.. and still WHERE IS THE ECONOMIC RECOVERY FUNDS and their associated jobs.

Mike B
said

its about time but what about the interest rates are they going to lower it.The bank rate is not bad but card companies charge a lot more and if they give a grace period the collection company which belong to what ever card company will call you like right now and call 3-5 times a day or 15 times a week.I agree that credit card companies should let you know when your amounts will increase instead of boosting them when they feel like itor once you have had a card for a year in good standing.

H.J.Sanou Kitimat
said

Never mind using cc, what I want is a discount when I pay with cash or cheque, instead of paying cc handling charges the retailers pay, which would discount the prices by around 7%, which is worse than the GST folks.

Brenda
said

A.R.
We are on the way to becoming "one" unified country, the North AmericanUnion.US/Canada/Mexico. This is why we're all running with the same rules..who will ultimately run the whole show is anyones guess. But it's not going to matter who is in "power" here, NDP, Liberal or Cons.

Steve the Pundit
said

The question is: can we protect people from their own ignorance? All the government is trying to do here is make things more clear and concise.

It's not the responsibility of the government to stop people from making bad decisions if all the facts are clearly presented. A lot of what's being proposed addresses that.

That said, people still need to be responsible for their financial decisions, and to exercise a little common sense:
- department store credit cards have ALWAYS had outrageous interest rates and serve no purpose other than "Club Z" points or similar. You don't need one.
- there are different types of credit cards available, depending on whether you want free "points" or "rewards", but remember nothing is "free"; the trade off is a higher interest rate (and a big annual fee). Forgo the frills and get a lower rate card (usually with no annual fee).
- you can't pay off one card by transferring the balance to another card. The only way this might work is if you destroy the first card so you can't run that one up again.
- if you EVER take advantage of "DON'T PAY FOR A YEAR", put a big red circle on the calendar on the due date, and START PUTTING MONEY AWAY TOWARDS IT. Don't ever do one of these deals if you don't know how you'll pay for it later.
- if you can't control your spending, get a card you can "pre-load" (like pre-paid cell phones); once you've burned up that amount, take your bags and go home, your shopping trip is DONE.
- if you have one or two bank-issued credit cards with decent limits and low interest rates, THAT'S ALL YOU NEED!

None of these steps requires government intervention; just a little knowledge, willpower and common sense.

DHancock
said

It's good to hear that Credit card companies now have to print the additional information on account statements. Very beneficial

Lets talk about credit and debt. Consumers tend to spend more than what their income will allow via means of credit. So if I don't have the patience to save for that latest gadget, then I should adhere by the rules/guidelines outlined by the financial institution that provides me the credit and expect no intervention from the Government when I fail to comply to the agreement.

Last point. There should be some mandatory Credit/Debt management course taught in high school (as pointed out in a previous post). This would give everyone an equal amount of knowledge into personal finances, debt and credit and how the system works.

Dean WPG.
said

TOO ALL OF YOU COMPLAINING ABOUT THE INTEREST RATE!!

DON'T RUN A BALANCE ON THE CARD.

It's simple and straight forward. Credit Cards are a tool NOT a necessity.

grace
said

These changes will help educate some irresponsible credit card users, i.e. those who max out their accounts and pay only the minimum every month. Glad to see rates were not capped so that living on credit will be less prevalent.

As many have pointed out, credit cards are for convenience but must be paid out in full every month.

Frank
said

Cannon fodder, smoke and mirrors. Typical political bull when the real problem is interest rate gouging. Goodbye Tories I am sorely disappointed with your performance and extremely angered at another Liberal Government. I hope Iggy is more centralist than left wing. Lets see how long it is before we get the carbon tax. Oh well at least we don't live in Britain.....oh wait a minute our parlimentary system is a carbon copy of theirs. Man no matter which way you look you have to become a politician to get the real perks.

Robert Smith, Calgary
said

To those who recommend caps on credit cards - wake up! Interest rates reflect the risk of the loan. Credit card debt is unsecured and dependent on the stream of income of the holder - hence, risky. Forcing credit card companies to reduce the interest rate will cause credit card companies to either find other means to get the funds or will cause them not to issue credit cards to certain individuals. While many likely think this is a good thing, these people need to think about the fact that those who are denied credit cards but need funds will find others to go to (i.e. black market). While I am not an expert in black market credit, I'm guessing that the cost of failing to repay are a little steeper. While bankruptcy may be unfortunate, it is better than being beaten up and threatened.

Paul
said

Pay off your credit cards and pay cash from now on. That will fix these gougers

J.D. Lees
said

Regarding the comment: "This Government really thinks that Canadians are morons..."

Those who say interest rates should be capped or controlled and that Canadians need to be "protected" by the government are the ones who regard Canadians as morons. Flaherty is right.

As long as good information is provided, people should be free to make their own decisions and deal with the consequences. No one ever need pay interest on credit card purchases if the monthly balance is paid off. People who want the government to "protect them" from making private purchasing decisions probably want the government to come and wipe their runny noses, too.

Flaherty saw USA doing something about cards
said

so he figured he should at least appear to be doing something about credit cards too.

So that's what he did: appear to be doing something.

Conservatives never do anything useful because that would be what they call socialism.

Anne
said

There are a lot of sanctimonious comments here about the "fools" that use cc/can't afford to use them/don't pay them off. Well, try being in a position of lost work, or a work salary with nothing much left over for a rainy day and have something happen that requires money, no option. Or, putting food on the table for your children, or, a child needs dental work and there is no dental plan.

The rates are far too high. It amounts to usary. So temper your comments with a little compassion for those less fortunate.

A.R.
said

I didn't realize that in Canada we elected Obama as well. Why is it that a conservative Canadian government is implementing these nanny-state rules so often on the heels of the Americans.

Credit cards are a product offered in private businesses. Government has no role. If people are stupid enough to sign up, not pay off their balances each month and continue racking up bills...that's their choice.

Where does this end. If I go to the store and buy 100 t.v's is it the governments job to tell the electronic store that they should give me a piece of paper that says how much I have spent, how long it would have taken me to save that money if I had been saving "X" dollars a month?

Sean - Kingston
said

Re: Capping rates... the government has no place in capping rates. Usury laws at over 60% per annum so 28% is not bad! You want to point the finger at high rates, look at any pay day loan company on any street corner. But, how can we force private enterprise to lower rates. It's up to the consumer to make an informed decision and unfortunately it's life today - buy now - pay later. If the government introduced real tax credits that made sense - like say give $750 tax credit to people with a beacon score of excellent, $250 for average and below that NOTHING - might be an incentive for people to stop impulse buying and just "throwing it on the card". I've been in finance and mortgages for 18 years. It's just getting worse... Time for people to take responsibility of their own finances. What a waste of tax payers money to change statement information and grace periods. How about mandatory credit education in high schools for example?

Don Toronto
said

Once again the PC Government is claiming 'credit' for nothing. The majority of credit cards already comply with the 'new' rules.
This is similar to the 'recent tax cuts' where most of the cuts from increases in personal amounts had already been agreed years ago to keep in line with inflation.
Are people really that stupid?

G
said

Stop crying and asking the government to fix your problems. Don't use a credit card if you can't afford to pay the balance, don't buy the things you can't afford. A credit card company is a private company - you don't have to use their product - no one forces you. And the government should not intervene in the private business and decide the rates/fees a company(ANY PRIVATE COMPANY) can charge for their products/services.

Broke canadian
said

Why would the government cap rate... look at the Profits the banks make... they make more money off those through the Income tax... So like normal The governement is helping the banks and big business and the little guy get kick.... anyone making min. payment should say screw it and declare bankruptsy, the government will step in a bail out a bank or 2

Walking Man
said

Reading the comments on this issue is certainly entertaining at least.

I wonder though why it is that people in general are always looking for someone to save them? Most times a given situation is of their own making, in this case credit card debt & its ramifications.

I got a chuckle from one comment about � a parent teaching their children the proper use of a cc� these are the same ones who may have a problem of their own, how could they teach anybody?

The reality is, if you have a credit card use it responsibly. Don�t abuse it and then cry out to be saved, especially by this or any other government. Maybe if one had a good c/rating then a small overdraft at the bank might be a good alternative, only pay when you use it. A credit card is a good useful tool at times, use it respectfully and it won�t bite you.

Ross
said

What will this do? Just show us how we are getting ripped off! Seriously Flahrety, GET A RAL JOB!!!

Darren
said

How about a new law to combat deadbeat Canadians who should be using credit cards, as they raise the costs for the rest of us.

al from calgary
said

To Allan:
If your paying or not using credit cards why do you care what they charge. I recently bought furniture on my credit card and the store went into bankruptcy before it was delivered. I received everything back from Visa and they will deal with the store, if not for them I would have had to chase the company for my 2500.00 deposit, and I would have been so far down the line that I would never have gotten a cent back. Also when I purchase things on my card I get an extra years warranty on what I purchase. I save my money for what I want and then when I have enough I purchase on my credit card and then pay it off when the bill comes so I pay no interest. I also get back 1% of my purchases at the end of the year si I basically make a profit of about 150.00 per year on my card. So if people would just think first credit cards are very useful if used properly

Frank (Toronto)
said

Canada must move in unison with the U-S on economic issues like this, the auto-sector issue, etc, because they are an integrated marketplace.

That means, for example, if Canada were to impose tougher credit card rules and the U-S didn't, it puts the companies and consumers at a competitive dis-advantage, and do further harm to the economy. Overall, the Canadian marketplace is about 10-15% of the size of the U-S, so that would be crippling. The same principle applies in the auto sector. At the time, many wondered why Canada waitied for the Obama administration to move first with gov't bailout cash & reforms?

Well, had Canada ponied up billions in bailout cash, and the U-S auto sector disappeared, Canadian taxpayers would have flushed their money down the toilet, as the U-S side represents 80% of the industry, and Canada's sector would collapse without it.

The new credit card rules are a welcome first step. As the economy improves, hopefully Ottawa will continue to bring credit card companies in line.

CB in Ontario
said

Let me get this straight...

The interest rate will still be 20ish percent. I'll get a 21 day grace period (which I was getting 26 days before) and now the credit card will have to explain and SHOW IN DETAIL how they are screwing me. At least before, I didn't have to see how bad it was...

Sometimes ignorance is bliss.

Toothless changes...

Kim Insley - debt free and proud !
said

I can't help but laugh at most of the comments on here. Once again Canadians blaming their government , but in this case it's for the consumer overspending. Think about it , isn't it halarious ?

No one is holding a gun to your head when YOU choose to fill out those in store credit cards and accept the terms that go with it. No one is forcing you to spend money you don't have because you " need that item right now". PLEASE..... the consumers have done this to themselves. Start a budget and spend less than what you make, trust me it works !

Try turning that finger around and point it at yourself.

Mark
said

Very weak and the bank Lobby wins yet again. Hard caps on interest rates need to be mandated so banks stop ripping off consumers. Finance companies are the worse often charging extortion type rates over 30% on a loan and even chartered banks charging 18 to 21% in this climate are ripping off consumers big time. They should be able to charge no more than 5-6 points over the set prime rate.

Sick
said

Maybe the problem is not the banks but that people behave like little kids and can't control their purchasing habits and can't pay their card in full.
People need to better manage their finances. Again the government needs to step in because the people can't control themselves

Gilles Woodstock On.
said

Way to go Gov't A.H. Interest rates are the issue here note admin inviocing paperwork YO FOOL.
Get with the program Flaherty

Jim-Surrey
said

What a let down. The interest rates they charge are outrageous and that is what should have been dealt with.

That is the biggest abuse by the credit card companies. I for one CUT mine up years ago and the only issue that happens is when you want to buy on line or rent a car they want a credit card. So these businesses better come up with other options.
PayPal says they accept debit BUT they don't so other options need to be found if they want consumers who don't use credit cards to buy products or services this way.

NOT GOOD ENOUGH JIM!!!!!

Terry in Pickering
said

If you can't afford to get a credit card, don't, the interest rates are pathetic and how do these people sleep at night with a interest of 28%, enough already...28% interest on a 1000.00 just think about it and the minimum payment is what 20 bucks.

Again no money no funny..

Matt
said

Quite honestly most people are.
1. Too lazy to bother paying off their card in full.
2. Too stupid to realize how much they are wasting.
3. Have such poor credit that a credit card is the BEST deal they can get.

The proposal helps
1. Minimum standard grace period to help these people.
2. Simpler explanations of how much you are wasting on interest. Similar to the "cost of borrowing" statements I see on my other loans and mortgage.
3. Not much help here, but if they cap rates, the banks will simply deny credit to them.

People who spend more than they can afford will have problems no matter what laws we make.
These people need to learn how to handle credit properly, and have them take responsibility for their own behaviour, or we must simply deny them credit.

I don't like denying citizens the ability to do things simply because some who don't want to be held responsible for their own actions.

SH in Kitchener
said

If you're financially irresponsible enough to carry a balance from month to month, well, the 28% is the cost of your irresponsibility. Having a credit card for emergencies? Well I have one but I also have a Line of Credit at prime set up with my bank just in case. Sorry, the credit card interest rates include a convenience fee as far as I'm concerned, so, you want to use them, be prepared to pay.

Bill Moyer Trenton
said

Big Deal! So they have to tell you that you are paying a fortune in interest, but they are still allowed to charge you a fortune in interest. Paying your bill off every month is the only way to avoid the debt trap. I would like to have seen rates capped at prime +10% and then the Credit Card Companies would have been forced to select their customers a bit more carefully. Why should every Tom, Dick and Harry get a credit card, regardless of credit history? I don't like being given a 19% interest rate (perfect credit) to make up for some bum who skips out on his/her bills. As a business traveller, I have no choice but to carry a card, and if I want to avoid exorbitant fees, I have to accept a card with a 19% interest rate. It is a shame that the Gov�t does not see this as a problem.

jay
said

Keith H
You really beleave it should be all on the cc company and not the holder.

Darrin
said

How about giving Joe Public a bail out and blanking my credit card balance? They are still doing it for automakers...I would help me more then them.

RD
said

Let's start spending now!!!! WHat has changed, the rates are still sky high and we are being robbed!!

Alex (Toronto)
said

Banks are using windfall profits from credit card fees to pay for their speculation in real estate markets. Consumers lose at both ends. Finance Minister Flaherty makes a non-announcement to distract attention from his non-action on other priorities.

The reason action is required now is the economic crisis combined with historically low interest rates.

Putting a cap of prime plus 12% would not make banks suffer but would allow consumers to both have an opportunity to escape the worst debt spirals but also to benefit from lower interest rates as much as banks do.

"G"
said

These credit card companies are as bad as the mafia, except they don't break your legs when you don't make a payment, not yet anyways :-(

reporting from Ottawa
said

"As well, credit card companies will no longer be allowed to apply payments to lower-interest debt only. ... That will change with the new regulations."

Most of the changes appear to be cosmetic at best, except for the above one, which I find to be very good. However, as per the usual Conservative style, we had to wait for the United States to take a leadership role in this before we followed. While the NDP have wanted increased credit card regulations for quite some time, though I disagree with the interest rate Cap concept they would want to implement.

Ultimately the proper use of a credit card needs to be taught, and here is where we bring in the parents again. Teach your kids the proper use of a credit card. If a person gets themselves into credit-card-debt-hell, it was that person that caused the problem sure, but who was teaching them how to use the credit wisely? Was it the parents or the television?

Kris D.
said

So they're making the bills "easier to read"? Wow, thanks Jimbo! What an awesome display of legislative action!!

And here I thought they would follow the Democrats in the US who just sent a REAL credit card reform bill to Obama to sign, which included reforming how much and when banks can jack up interest rates.

But, um, thanks for making my bill easier to read... It was just so complicated to understand before...I guess?

Learn the issue before speaking
said

Liberal rates no longer said:

Why didn't the Liberals ever help curtail the excessive rates charged by credit card companies?

Seems whenever you want something done it takes Conservatives to do it.

WHAT exactly have this government done to curtail the excessive rates? Where do you see any actions on that? Do you even understand the issue?

Gerry from Ottawa
said

I don't use credit cards, however many of you may be surprised to learn the amount of dollars in interest that is now being charged if you do not pay your entire bill before the end of the month. My brother didn't receive a bill last month.

On approximately $2000 of balance, Mastercard was ready to charge him $280 bucks interest. So if you look at it hat's about $3360 in annual interest on $2000 balance. That works out to 168% interest annually. It may actually be less expsnsive to go to Big Augie the mob guy for a loan.

NAU
said

Anyone else notice that Canada cannot seem to make up its own regulations, but always follows the US? Another step closer to North American Union - an idea that I don't like.

peterO
said

All this talk about new credit card rules - and this is what we were waiting for?

Wow hardly worth the wait. Would have loved to see more done on the issue of over-the-top interest rates.

Here we go again....
said

This is nothing more than falling in line with the policies announced by the Obamassiah. Auto bailouts, credit card rules and destroying the Country just like what is happening in the U.S. How about some made in Canada ideas and polices instead of cuddling up to Mr. Hopey Changey?

Canada Goose Whistler
said

Thank you: R in Sask!!! you hit the nail on the head with the facts!!!

Jen
said

At last the government is actually doing something about the credit card industry and the way they do business.

I hope that their next over-haul is cellphone companies and the dreadful way they do business.

Walking Man
said

I don't know about the rest of you, but on the cards I use I carry a balance protection insurance. The cost is relative to the unpaid balance. This is being pushed more & more to the consumer.

So please explain, just how the poor banks are losing money on unpaid debt.

Wendy
said

Great!!!
Now the credit card companies will have to raise interest rates to carry debit for another 21 days.
This government has the economic smarts of kids in the sand box.
Harpers call for the Mulroney inquiry 16 million.
This government keeps spending our money we get absolutly nothing in return.
Oh except attack ads interrupting my evening tv viewing.
The Mulroney government left us with 42 billion debit. Harpers deficit will be in the neighborhood 100 billion.
Please it's time for a liberal government to dig us out of this mess the cons put us in.

J in W'burg
said

What a waste of government time and money (wait...that's our money!). If you can't understand your CC bill and how a credit card works then don't get one! But I guess it's too late for some people.

meerkat
said

This is just smoke and mirrors. The Tories are on the way out without ever having the majority to make the changes they wanted. Canadian just didn't trust them... Stunts like this one, are among the reasons why we will be saying 'so long' to Stevie and his cronies.

Nick in Gatineau
said

They just don't get it.

People will use their credit cards more often if the interest rates are capped depending on the type of credit the customer is applying for for.

Major credit cards (Visa, MC and AMEX) should be capped at a maximum of Prime + 2 %.

---Right now, most offer less than 10 the 1st year, then it climbs to 18 %.

All STORE Credit cards should be capped at 10%

--- Average right now is 18 to 28 %.

All credit agencies like Citifinancial should be capped at 15%.

--- Right now they are averaging 28%.

So think long and hard before buying a big ticket item under these terms.

Rick in NB
said

To MR. Flaherty,

Grandstanding is an art best performed by politicians. But as a student of the Art you should remember "rule 1". You should always have something to grandstand about.

Sylvain NB
said

Remember that you not only pay high interest but you also got hit a the store as they have to pay a fee for having the service therefore their prices are higher to cover that fee that the credit card impose on them to provide the service so double WAMMY

Poor Citizen
said

The gov't failed to realized that the victims here are the poor and the needy that can't afford to pay cash. Not doing anything on the interest rate does not help at all. We know that paying just the minimum will end us up paying 10X the original cost but what choices do we have when we don't have the money to meet both ends meet?

R in Sask
said

So ridiculous, I work for one of the Big 5 banks, our rates are disclosed to people on our website, our in store brochures, and even when we market the visa. When rates go up you get a notice in your statement that clearly states the rate increase, but most people just throw that away.

It's the consumers' fault for one either overspending. Two not looking at their statements to watch for any rate increases or product change.

This also just shows our government has nothing else better to do because all this is already done.

We need a new government!

Doris in Surrey BC
said

Liberals were a sleep at the switch for 13 yrs.
New Liberals are against everything they were for, they seem to be against the old Liberals policies.
Oh yeah times have changed, they invent more stuff stuff than Edison ever did.

John
said

Much ado about nothing

WESTERNER
said

Well the banks gain again on the cards with high interest rates even though the prime is low. this should be changed to reflect a cap based above prime but not exceedingly so they still make a profit but not gouge. Those that abuse and do not pay should be held accountable at a higher rate - why penalize those that pay off???? Also, kids/adults should only get enough credit to prove themselves first then gain according to wage review/payment history.

If they don't make timely payments or spike the card LOWER THE CREDIT LIMIT!! You're giving people the key to the vault - but not holding them accountable for their actions when they abuse privilges! Too much credit on a low wage - give your head a shake bankers - you created the problem by giving to much credit with people who haven't proved themselves credit worthy. This so called Credit revamp means nothing basically - and life goes on - "till debit due us part".

TC
said

I had a card at zero balance for months and then the fee put me into arrears. Having the date for renewal fee on the statement would have helped. It was my fault for not checking my statement that month but still, it made me angry.

If you don't like the rate, try getting another card with a lower one. Don't use store cards, they are almost always 28.8% even with the "interest free" period deals.

Credit is not a right. You must qualify. Live within your means.

Bob
said

I think Usury would best describe these interest rates.
The difference in interest on our saving compared to our loans is staggering.
I would be happy with 1/4 of what they charge on credit cards on my savings !

liz ottawa
said

I disagree that explaining how credit card debt can become insurmountable is a bad thing because often those most vulnerable to having big debt do not really understand how that works.

Wondering are rates so high because of people declaring bankruptcy and who end up not paying the debt? then the bank has to suck up the loss. So in other words, we are paying the high rates for those people who are bad at managing their money and living within their means.

I am totally vigilant about credit card debt and pay my balance off every month in full. it is astounding how much they charge per day if they receive it even a few days late or if it is not the exact amount. I have also noticed that if you over pay your balance, as I did last December by mistake, paying my visa twice in 1 month, they do not give you commensurate interest on the credit you have in your account. something kind of wrong with that I think.

They are gouging for sure and the people who end up paying are those who are not that great at managing their money and debt, and usually have less money to work with. not everyone makes a good income and I feel fortunate that I make a decent income but I do not hanker to own everything I see. I drive a now 14 year old car and have a tv that was bought in 1992.

Double D
said

Get a new Job Flaherty, this finance work ain't for you! Custodian would be a better promotion! Or Grabage pick up!

Ben Doverson
said

It's not the credit card companies that is the problem. It's people that don't pay their bills. This will only encourage those that don't pay their bills to borrow money they can't afford to borrow.

This government really has to go, it makes no sense. This is what started the global crisis, people borrowing money they can't afford to borrow.

Ann
said

Is it not sad yet again the federal government has to regulate huge banks not to be corrupt. Then again how stupid are you, or greedy are you to jack up your credit card bills when you have no money. Hmmmm. Regulation for the idiots. Have Canadians become that idiotic?

K.Matroskin
said

There is another issue not addressed here. Quietly and for years credit card companies have increased service fee they charge sellers (retailers, etc.) for each transaction. It allows credit card companies to make huge money even without customers carrying balances. It also drives overall price level up. Of course, this increase is passed to customers, i.e. all of us including non-cardholders.

However, small retailers and similar sellers cannot do this in very competitive marketplace so they refuse to take credit cards more and more often. Taxi drivers told me that they pay fee 7% for each credit card transaction, and these guys cannot increase their prices.

So, when you give the guy 10% tips, it in fact leaves him only with 3%. This is ridiculous and government should do something to keep these fees on reasonable level of 2-3%, no more. Forget balances, they rob all of us on every transaction.

Glenn
said

What a complete failure by gov't on controlling banks and credit card companies.
complete failure.
Who can we vote next for, NDP.

Liberal rates no longer
said

Why didn't the Liberals ever help curtail the excessive rates charged by credit card companies?

Seems whenever you want something done it takes Conservatives to do it.

Keith H.
said

This legislation does not go far enough to protect the most vulnerable consumers. Credit card companies who charge appalling interest rates, should not be allowed to 'invent' new expensive charges, like 'overlimit' fees. If the card didn't allow the consumer to go over his/her limit in the first place... there would be no need for an 'overlimit fee.' These fees are usually $20 + per month! Why won't the government step in and put some tangible limits on these big companies??

BGD
said

Sounds like the banks who bank roll the political parties have won out again. the govenment had no spine be it the present government or anyother in the past. They just look at their party's balance sheets and then shake hands with the local banker how probably behind the scenes gave the party a loan at prime. Nice what. The consumer gets screwed again in the name of profits. It is odd that with a recession the banks are still making profits in the billions of dollars.

Matt
said

You can't regulate the consumer behaviour.

I like the mandatory minimum grace period.

As far as interest rates, I really don't care, I've only ever been charged interest because I accidentally missed a payment or didn't pay the bill in full (paid $xx.12 instead of $xx.21). For the second one they waived the charges.

If rates are capped too low, they will simply refuse credit to those with poor credit ratings.
Those individuals will have even worse access to credit and will have to resort to payday loans, or worse.

5% above prime isn't high enough to compensate for the risks of high risk clients. You have to remember the credit card companies make a profit even if you pay your balance in full every month. If you can't do that, there is a much higher risk that you're going to default, then they get nothing.

Canadian Expat
said

We continue to make sure we remove the word "free" from free enterprise and allow business to dictate the terms and conditions of borrowing, exactly the problem that got us in to this problem. Laissez Faire has been supplanted by Government, who can't run their business is now running ours!

Nancy: This is a Good start
said

Changing rates without advanced notice is unfair.
Glad to see the credit card compnaies held to account.

R D
said

Big deal, Flaherty. So, you're going to make it easier for people to read how they're getting ripped off. How about putting some real teeth into your "new rules". Gradually raise the minimum payment from 2% to 5% where it used to be, for starters. What a waste of time holding those parliament banking hearings.

Allan
said

This just shows how gutless the Conservatives are when it comes to reform anything.

In the US they're bringing in big changes to credit card interest rates - how do the banks get away with charging 19-21-26-28% interest when they are only paying at most 3-5% on deposits?

The banks tell us it's because so many people default on their payments. Well, that's the banks' fault, not mine. I pay my bills, why should I subsidize their bad business practices?

If the banks lose money on some cardholders, then cut them off! Don't make cards so easy to get.

Some of these rates are akin to loan sharking.

Norm
said

These rules are useless. Alot of work that does me nothing.

Thank you for wasting my tax dollars

daveyboy
said

ohhhh! way to save the people from the vultures. this will improve nothing and as a result of these skimpy measures be prepared for more bankruptcies and defaults.

Wayne Ayre
said

Now how a new rule for phone company invoices

Dan from Northern Ont
said

Putting payments towards the highest interest item just makes sense.

dawn
said

the cons seriously need to get some original ideas instead of following the united states in everything they do...if the obama administration hadn't introduced credit card changes then the CONS wouldn't have

Charles
said

The current interest rates of 28% or more are far higher than prime of any bank (sometimes 6 times higher or more). The BoC put the interest rates at 0.25% not long ago .... this measures are helpful only to see how are you been strip of by the credit card companies

I was really expecting something more "consistent". But again,.... how can you expect a conservative to shoot his own foot ...:-)

Flaherty is wrong, as always!
said

Without a hard cap on interest rates, all of this is really minor and useless. Flaherty is just posturing now. There is very little value to Canadians in his proposal. Then again, long proposals with no value for Canadians are THE trademark of this Government.

Flaherty, go tell your master that Canadians are not duped by your long winded proposals that offers Canadians no real protection. This Government really thinks that Canadians are morons....we will answer them at the next general election!

BanksrGreedy
said

These credit card "rules" are a joke!

The problem is the interest rates!

How about you cap interest rates at %5 above prime!

Steve G
said

In addition to the statement that it would take "X" years to pay off at minimum payment, it should also say that you will have paid $X by that year-hopefully it would be a wake up call to a lot of people instead of them paying interest rates which amount to legalized loan-sharking.

I think high schools should have a required course in basic personal finance to hopefully help people from getting caught in these traps.

Mike in NS
said

The best way to stop Credit Card debt is to not have a CC! If you need to have one for emergencies or buying online tickets and hotels for travel, pre-pay a re loadable card. CC's aren't the only way to get credit. Buying term deposits and holding a line of credit on your chequing account work too.

Canuck Abroad
said

It's good to see the "pay off" calculation in there.
Hopefully now people will see that the conservatives get things done. Do you think the Liberals would have ever done something like this? Har har. They probably would have directed the interest over 18% into Liberal coffers since no one donates to them.
I've worked for a credit card company before and I know they are making way too much money from unfortunate individuals who can't afford what they buy.

Matthew in Ottawa
said

So how was does this 'bill of rights' change anything regarding the operation of credit cards? Frankly, I find the mandate to show the implication of not paying off your balance a waste of time and effort in this entire 'reform' process. Honestly, how many consumers do not realize paying $20 a month does nothing against a debt of $1000 not even considering the ~28% interest? If you answer is many perhaps there are other issues at play here.

Mike in ON
said

Capping the rates isn't necessarily a good idea. On the positive side, it would mean that those who use their credit cards for emergencies wouldn't then be saddled with killer interest payments.

On the other hand, it would also make it easier to saddle oneself with debt, as the repercussions in terms of interest rates would be easier to swallow. Additionally, the banks and credit card companies would have to make up the revenue some other way, most likely by adding annual fees onto cards that don't currently have any. In other words, we'd still be paying the price, however, it would be in the form of fees, rather than interest.

The "time to pay off" line is a good one, and hopefully, many will see it as a wake-up call, and not get into the black hole of credit card debt.

Whether they change the rules or not, the best policy is still to pay off your debts as fast as possible, before they snowball into something unmanageable.

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