New Credit Card Regulations to Improve Protection for Consumers
Minister of Finance Releases New Credit Card Regulations to Improve Protection for Consumers 2009-048 (May 21, 2009)
Delivering on the Government’s promise to help consumers of financial products, the Honourable Jim Flaherty, Minister of Finance, today released new proposed regulations aimed at limiting business practices that are not beneficial to consumers and providing clear and timely information to Canadians about credit cards.
“Close to 25 million Canadians have credit cards, and most of them pay their balance in full, which is a great credit to how prudent Canadians are generally,” said Minister Flaherty. “Through Canada’s Economic Action Plan, we are helping consumers by mandating a 21-day grace period on new purchases made with credit cards during the month, when a full payment is made at the end of that month.
“As for those circumstances when Canadians don’t pay off their outstanding balance, we want to ensure they are treated fairly, that interest rates and penalties are clearly shown, and that companies use only appropriate debt collection practices.”
The proposed Credit Business Practices Regulations will:
- Mandate an effective minimum 21-day, interest-free grace period on all new credit card purchases when a customer pays the outstanding balance in full.
- Lower interest costs by mandating allocations of payments in favour of the consumer.
- Allow consumers to keep better track of their personal finances by requiring express consent for credit limit increases.
- Limit debt collection practices that financial institutions use in contacting a consumer to collect on a debt.
- Prohibit over-the-limit fees solely arising from holds placed by merchants.
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