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12/22/2009

FCAC encourages consumers to become familiar with new credit card regulations

OTTAWA, December 22, 2009 – New regulations on credit cards and other financial products, such as fixed- and variable-rate loans and lines of credit, will come into force on January 1, 2010. This means a number of important changes — particularly better communication of information — for consumers of financial products and services offered by federally regulated financial institutions.

“These new regulations tie in with one of our major objectives: helping consumers gain a better understanding of financial products and services,” explained Ursula Menke, Commissioner of the Financial Consumer Agency of Canada (FCAC).

The new regulations will come into force in two phases: January 1, 2010, and September 1, 2010.

Entering into force on January 1, 2010

• Summary box containing all prescribed information
  Federally regulated financial institutions will have to include a summary box at the top of their credit card application forms and agreements. The information should clearly indicate key features, such as interest rates, grace periods and fees.
  
  
• Consent for credit limit increases
  Federally regulated financial institutions will have to obtain your consent before increasing your credit card limit.
  
  
• No over-the-limit fees due to holds
  Federally regulated financial institutions may not charge over-the-limit fees due to a temporary hold of funds on your credit card. However, this restriction does not apply when you make a purchase that would bring you over your limit in any case during the time the hold is in effect.
  
  
• Debt collection practices
  New federal regulations will apply to debt collection practices of federally regulated financial institutions.
  
  
• Joint borrowers
  If you, together with another person (s), apply for a loan from a federally regulated financial institution, all borrowers must receive the information documents, except in the two following cases:
  
  
  1. when all the borrowers agree, orally or in writing (on paper or electronically), that only one borrower will receive the information documents
     
     
  2. when at least two borrowers agree, orally or in writing (on paper or electronically), that one borrower will receive the information documents on the other's behalf; in this case, the borrowers who did not give their consent must also receive the information documents.
     
     

Entering into force on September 1, 2010

• Minimum 21-day grace period on credit card purchases
  You will not pay interest on new purchases for 21 days after the statement date if you pay your balance in full by the current month's due date. This provision will apply even if you have an outstanding balance from the month before.
  
  
• Allocation of credit card payments
  If you pay more than the required minimum on your credit card, federally regulated financial institutions have to apply any payments made in excess of the required minimum using one of the two following methods: to the balance with the highest interest rate and to other balances in decreasing order of interest rate; or on the relative proportion of each.
  
  
• Credit card statements
  Credit card statements issued by federally regulated financial institutions must indicate how much time it will take you to pay the current balance in full if you pay only the required minimum each month.
  
  If you have a fixed-rate credit card and the interest rate might increase over the next period, the financial institution must notify you in advance about the increase on the statement it sends you, and it must specify the new rate.

FCAC encourages you to learn more about the new regulations by visiting its website: fcac-acfc.gc.ca.

About FCAC

With educational materials and interactive tools, FCAC provides objective information about financial products and services and informs consumers about their rights and responsibilities when dealing with banks and federally regulated trust, loan and insurance companies. Through its financial literacy program, FCAC helps Canadians increase their financial knowledge and confidence in managing their personal finances. FCAC also makes sure that federally regulated financial institutions respect the laws and agreements that protect consumers.

You can reach us through the FCAC Consumer Contact Centre by calling toll-free 1‑866‑461-2232 (TTY: 613-947-7771 or 1-866-914-6097) or by visiting our website: fcac-acfc.gc.ca.

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Media relations:

Sylviane Desparois
Media Relations Officer
613-941-4990
sylviane.desparois@fcac-acfc.gc.ca

Amélie Sirois
Communications Officer
613-941-1526
amelie.sirois@fcac-acfc.gc.ca