Ottawa Urged to Clamp on Excessive Credit Card Rates

A new report commissioned by the Consumers Association of Canada noted that Ottawa should be clamping down on any excessive interest rates and penalty fees charged by credit card issuers during the current review of the credit and debit card industry.

The report goes to say that new microchip protected credit cards should result in lower interest rates being charged on those cards as they are designed to reduce the level of fraud.

Fraud is one of the costs that affect the level of interest rates card issuers charge notes the report.

The report comes in as the federal government starts on a 60 day consultation on its proposed code of conduct for the debit and credit card payment system.

The Consumer Association noted that it generally supports the proposed code, including the fact that it is voluntary, however it is believed that other stakeholders may try to influence federal Finance Minister Jim Flaherty to make changes.

The code is designed to address the claims that merchants have made, with dealing with global credit card giants, payment processors and big banks over card fees.

One of the most important points of the code is giving the ability to merchants to cancel their credit card acceptance contracts without penalty following notification of a fee change.

Additionally, banks would issue premium credit cards only to consumers who request of consent to them.

The Consumer Association commissioned its report in response to a series of proposals that have been put forth by a Senate Banking Committee on credit and debit card payments last June.

Flaherty’s proposed voluntary code is the government’s response to the Senates committee’s proposals.