Canada Gets New Credit Card Rules

Understanding the New Credit Card Laws

First Published Date: Oct 17, 2010

In an effort to make it easier for customers to pay back their credit cards and not fall behind to the point where they are swimming in debt. These rules actually came in effect on Sept. 1, but many residents of Canada do not know about them. To help educate people on the new rules, here is a brief rundown of what you need to know.

1.    There is a minimum grace period now of 21 days that are interest free on all new credit card purchases when a customer pays the outstanding balance completely.

2.    When a customer pays the minimum payment in excess, meaning they pay more than the minimum payment, the credit card company must allocate the excess so that it is put on the balance with the higher interest rate first, and then distributed proportionally to all other types of balance such as cash advances.

3.    Credit card issuers must inform consumers of their monthly statement and how long it will take to fully repay the balance if only the minimum payment is paid. This gives you a better understanding of how much time it is going to take for you to pay it off if you make no purchases on it.

4.    Another rule is that there must be a complete disclosure of interest-rate increases prior to those rates taking effect at all.

The biggest problem with these rules is that the Canadian public has not been educated on them, so many do not even know that they exist. The main reason is the government has not worked hard enough to publicize the rules, which means that many credit card companies can break the rules illegally, and consumers will not even know that their rights are being stepped on. It is very important that consumers learn these rules and pay attention to their credit cards so they can know whether or not they are being cheated out of the regulations put in effect to help them.

There was a voluntary code in place that would help to stop merchants from paying higher and higher costs from credit card companies but the problem was that credit card companies chose not to comply with it. As a result, those temporary rules became permanent and credit card companies are now forced to follow them, including allow merchants to cancel contracts without a penalty.

Credit card debt can literally sink a household and make it impossible for the house to pay their bills and survive day to day on what they have left. As a result, Canada is making it much easier for consumers to pay their credit card bills by ensuring that there are rules in place to protect the consumer. However, it is up to you as the consumer to know the rules and to make sure that the credit card companies are following them when they are dealing with you. It is your right as a Canadian citizen, so do not let credit card companies off the hook.