GOVERNMENT’S LANDMARK NEW CREDIT CARD RULES WILL BETTER PROTECT CONSUMERS

May 21, 2009

May 21, 2009 – Randy Kamp, MP for Pitt Meadows—Maple Ridge—Mission, welcomed strong new consumer protection rules with respect to credit cards announced today by the Conservative Government as part of Canada’s Economic Action Plan. Among the new proposed rules:

• Clearer Implications of Minimum Payments by improving consumer awareness of the time it would take to fully repay loans if only the minimum payment is made each month
• Summary Boxes on Contracts and Applications will help improve disclosure to consumers by clearly stating key features such as interest rates and fees
• Timely Advance Disclosure of Interest Rate Changes to protect consumers from sudden and poorly disclosed interest rate hikes

“Canadians shouldn’t need a magnifying glass and dictionary to read their credit card agreement or application, and they shouldn’t have to be a lawyer or economist to understand them either,” said Kamp. “We’re forcing greater clarity and more timely disclosure from credit card issuers when dealing with consumers.”

In addition, the proposed new rules will limit other business practices not beneficial to consumers, including:

• Minimum 21-Day Grace Period: all new purchases made within that period to remain interest free if the consumer pays the balance in full by the due date
• Lower Interest Costs with mandatory allocations of favoured consumer payments
• Express Consent Required for Credit Limit Increases
• Limits on Debt Collection Practices
• Prohibit Over-The-Limit Fees by restricting fees due to merchant holds placed on credit cards, protecting the consumer from inadvertent fees they are not responsible for or are not aware of

“When Canadians make the choice to use a credit card, they aren’t signing away all of their rights. Our new consumer-friendly rules will empower Canadians by making it easier for them to shop around for the credit card best suited to their needs without fearing they will be taken advantage of later,” said Kamp. “Our Government’s action is also a key step in improving financial literacy in Canada – a crucial skill in these difficult economic times.”