New Prepaid Credit Card Rules

First Published Date: May 24, 2014

As prepaid credit cards’ popularity jumped, so did the various fees associated with them. Once credit card companies saw these credit cards were in high demand, they did not waste a moment coming up with innovative ideas to attach various bizarre fees that can be charged when you buy and use prepaid credit cards. Such fees include maintenance fees, activation fees, ATM fees, and possibly more.

As consumer complaints start piling up, the federal government had no option but to start restricting some of these fees. These new rules have come into effect starting in May. Let’s look at some of these rules.

– A ban on maintenance fees for at least one year once you start using it.

– No more expiration date.

– All the required info related to the fees and using cards will have to be clearly visible and simple enough so consumers can see, read, and understand them before buying.

– The Financial Consumer Agency of Canada (FCAC) will monitor and enforce these rules.

– All federally regulated institutions will fall under these rules.

Prepaid cards are similar to credit cards, except that you will have to pre-load funds before you start transactions like credit cards such as making purchases and buying online. Although prepaid cards are a relatively new concept, their popularity recently skyrocketed. According to an estimate, the prepaid card industry is worth $850 million.

These new rules imposed by the federal government are definitely steps in the right direction to protect consumers. However, these could have been done some time ago and there was no need to wait for consumer complaints to start piling up.

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