New credit card rules are an eye opener for most users

Not long ago, The Canadian Government came out with new credit card rules to protect consumers. Since January 1st 2010, credit card issuers are required to:-

  • High-light interest rates and fees on documents such as credit contracts and application forms.
  • Inform how long it’ll take to pay off the balance at the minimum monthly payment. (A balance of $1,000 at 18 % would take more than 10 years to pay off.)
  • Provide a 21 day interest free grace period on new purchases if the outstanding balance is paid off by the due date.
  • Ensure payment in excess of the minimum goes to pay down the balance with the highest interest rate first. ( If there are multiple parts to your account with different interest rates.)
  • Obtain consent for credit limit increases.
  • Limit debt collection practices used by merchants.
  • Cancel over-the-limit fees arising solely from holds placed by merchants. (Gas stations and hotels often place holds on credit cards for several days which can push consumers beyond their limit.)
  • Provide advance notice of interest rate increases prior to them taking effect

Just being aware of these new credit card rules can make you think twice about borrowing and only making the minimum payment.

The rules are an eye opener for how credit card companies have been operating over the years.

They emphasise the fact that it can take years to pay off the balance in full and that the interest paid will often add up to more than the purchases made.

The government acted responsibly by implementing these new credit card rules.

Our society is burdened by debt and if these new rules encourage just one person to reduce their debt load, then the government has done a good job.

Credit cards have become almost indispensible to the average person. It is next to impossible to buy an airline ticket or rent a car without one.

They offer a great convenience. You can purchase items without showing many pieces of ID or carrying large amounts of cash. You also have convenient record of purchases.

They can become a burden however, when you don’t pay your balance in full per payment cycle.

You are essentially paying a high interest rate (18% or more) on your purchase of groceries,clothes, tools or restaurant bills.

Become aware of these rules governing the companies that issue them. Examine statements more closely and try to join the 70% of cardholders who pay off their balances each month.

Click on the link below for more information:-

Department of Finance Canada

Return from Credit Card Rules to The Budget

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