In the fall of 2009, Jim Flaherty the Federal Finance Minister of Canada made an announcement regarding new rules that would go into effect for Canada credit cards. This new rule went into effect the beginning of 2010, which was designed to make the country’s government, as well as financial institutions create more transparent initiatives regarding credit card offers as a means of providing consumers with a better layer of protection.
The eight rules for Canada credit cards were very clear and all intended to help credit card consumers. Below are the eight new rules that are now in place for the people of Canada.
1. All contracts and application forms for Canada credit cards would not include a summary box. Within this box would be a list of the primary features of the card, providing an opportunity for the applicant to determine the advantages and disadvantages associated with each card of interest without spending countless hours and significant effort researching.
2. Credit card companies and banks are now required to inform applicants and existing cardholders the amount of time it would take for the card’s full balance to be paid in full, if the consumer chose to make only the minimum payment required each month.
3. Interest rates must be lowered by credit card companies and banks as a means of allocating payments that support the consumer, not the bank. As a part of this rule, this would include interest rates charged on different types of cards for various purchases, to include regular purchases, cash advances, and balance transfers, as well as other amounts the cardholder pays over the minimum monthly payment. All of these would all go toward the balance associated with the highest interest rate, or they would need to be spread out over balances per relative size.
4. Next, prior to increasing a cardholder’s credit limit on the Canada credit card, the credit card company or bank would need to receive written consent.
5. The various practices used by credit card companies and banks pertaining to debt collection would need to be limited. This means cardholders could not be contacted to collect debt except on approved hours of the weekday and weekend according to this new rule.
6. Canada credit card issuers are no longer allowed to charge over limit fees to cardholders if the overage amount is due to holds or blocks being placed on the account solely from merchants due to reserving a hotel room or renting a card. In other words, some hotels and rent car companies will charge a Canada credit card a deposit amount, which is then included in the overall rental price. Therefore, if this deposit amount pushed the balance past the approved credit limit, over limit fees cannot be charged.
7. All interest rates must be disclosed to cardholders of Canada credit cards before they go into effect.
8. With this new rule for Canada credit cards, a minimum 21-day interest free grace period is provided on all new purchases whenever the cardholder pays the outstanding balance in full. This means the issuer is no longer allowed to require cardholders to pay prior to the 21 days after the Canada credit card statement has been mailed.
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