New Credit Card Regulations

The final seal of approval is being placed on Canada’s credit card regulations, with the vast majority of the rules to take effect on Jan. 1st, noted Finance Minister Jim Flaherty.

The federal government has cut banks and other federally regulated credit card issuers some slack on one key rule; the new 21 day grace period has been delayed its implantation until Sept 21st, 2010.

Banks have argued that the regulation will cost the industry million, and can have unintended consequences, such as reducing the available credit for some consumers.

The new rules will give consumers a minimum 21 day interest free grace period on all new purchases when they pay their outstanding balance in full by the due date.

The federal government is now requiring that a summary box is provided on credit contracts and application forms that clearly state the key features, such as interest rates and fees. It must also inform consumers on how long it would take to fully repay their balance if they only take the minimum payment each month.

The federal government is also requiring that banks give consumers advance disclosure of interest rate increases prior to taking effect, even if the information has been included in the credit contract.

It will also be required that express consent from cardholders is needed for credit limit increases, requiring allocations of payments in favour of the consumer when balances are transferred to low-interest cards and limiting certain debt collection practices used by financial institutions.

The new rules will also ban over-the-limit fees solely arising from holds placed by merchants.

Bank of Montreal (BMO) has announced that it will be enhancing the redemption benefits on its Gold Air Miles MasterCard starting on November 1st (details can be found here).

Toronto-Dominion Bank (TD) has announced a promotion called the “TD/AAdvantage Platinum Visa Card Trip of Your Dreams contest”. Those who are approved for a TD/AAdvantage Platinum Visa Card from TD Canada Trust between Sept. 28th and Oct. 30th are automatically entered into a draw to win the trip of their dreams. (Full details can be found here)

Flaherty’s final regulations do not differ from what was initially proposed in May.