By Nikki Jamieson
Sunny South News
Lethbridge MP Rachael Harder has tabled a bill aimed to provide more protection to customers from credit card companies.
On Oct. 31, Harder tabled her private member’s bill, C-419: An Act to amend the Bank Act, the Trust and Loan Companies Act, the Insurance Companies Act and the Cooperative Credit Associations Act (credit cards), or the Credit Card Fairness Act.
Harder said that when she was first elected, one thing she looked forward to was the opportunity to talk to people from all parts of the country, and over the years, she has heard many stories.
A common theme in many of those stories is people being concerned over affordability and making ends meet.
“When I sit with Canadians, they’re telling me they’re carrying more debt then over, and the facts show me that as well,” said Harder. “And of course, another way the conversation goes is to credit card use, and unfortunately, people are finding it really difficult to be able to pay their bills and make ends meet, and as a result, people often turn to credit card use in order to be able to do those things, whether that’s putting food on the table, buying clothing or paying off a household bill. As a result then, more and more debt is being incurred.
“For example, when I look at the stats, in 2017, Canadian families, on average, spent $544 more on just interest charges, then they did the year before. So we’re seeing how credit card debt and the interest that’s being paid on credit card debt is impacting families and their ability to achieve financial freedom and financial security.”
In response to these concerns, Harder’s bill presents seven reforms aimed to increase transparency on practices in the credit card industry and allow consumers to make informed choices when using their credit cards.
If passed, it would ensure that:
– If a cardholder pays at least 95 per cent of outstanding balance on the card before the payment due date, then the bank would not be able to charge interest on the amount paid on or before the due date. They would only be able to charge interest on the amount outstanding after the due date.
– Payments made by the cardholder are applied to balances with the highest interest rate first, before being applied to balances at a lower interest rate.
– Banks are required to disclose on the monthly statement how much interest the cardholder has paid in the past 12 months.
– Marketing materials are required to clearly state the annual fee, annual interest rate and the period of time until the introductory rate ends, along with the interest rates that will apply following that period.
– Banks are prohibited from increasing interest rates retroactively on the cardholder’s outstanding balance owing.
– Banks are required to provide an online mechanism to allow consumers to cancel their credit cards and decrease their credit limit. Currently, a cardholder must do so over the phone or visit the bank in person.
– Provide legislation that states that banks must obtain a cardholder’s consent before increasing their credit limit.
A lot of the amendments to the various acts the bill proposed have to do with interest rates. Using the example of the second measure proposed, Harder said that the practice of banks who apply payments towards the lower interest rate first “isn’t very Canadian”.
“Canadians tell me they don’t think that’s fair, that that payment should be able to go towards the highest interest first.”
Harder hopes that by bringing forward the Credit Card Fairness Act, she can help ensure that consumers are treated with the fairness and the respect they deserved.
“At the end of the day, it’s up to us, as legislators, to stand up for the consumers, stand up for the taxpayers, stand up for the credit card holder,” said Harder.
“The big banks sure aren’t going to do it, so that’s my responsibility as a member of parliament, and I take that responsibility very seriously. So my endeavor, with the Credit Card Fairness Act, is to do just that.”
Harder notes that it is expected for people to have a credit card, and you need to have one to do things such as book a hotel, car rental, or flight. Without a credit card, it would not be possible to do these things.
“Given that is in existence within our society, that that’s a norm and expectation, then there needs to be fairness that is created within credit card use.”
According to Harder, the amendments proposed in the Credit Card Fairness Act are in line with similar regulatory practices in the U.S.A., Australia and the U.K.
“Really, this is in line with what other countries are doing, and it’s time for us in Canada to advocate on behalf of the consumer, and make sure they’re respected by the big banks.”
Although there is no exact date for when the Credit Card Fairness Act will be debated and given second reading, it will happen within the next few months.