There's some relief in sight for people with credit card debt. Today the federal government announced legislative changes coming this fall that should help.
When you apply for credit or a credit card the bank will have to disclose in a summary box at the top of the document all fees including annual fees penalties and interest rates.
Right now they can hide in the fine print. Also, if there is a low introductory rate -- they have to disclose the higher rate and remind you when the rates are going to change. They will need your permission -- to increase your credit limit. And every month they must tell you on your statement - how many years it will take you to pay it off if you pay the minimum -- that could be a shocker to people.
Canada's Finance Minister made the announcement today. He said with better information Canadian consumers will be able to make better decisions,
And credit card companies would also be required to apply your payments to the highest rate of interest first. Many companies have low interest rates for balance transfers and high interest for new purchases -- and over time all your payments go to the low interest part leaving you with high interest debt to pay back. That won't be allowed any more.
So some of the changes will save you money -- other changes amount to better disclosure on how much you're really paying but it's up to you to take action to save money by paying off the debt.
The government is also proposing a 21-day interest-free grace period on all new purchases.
Let's say you didn't pay off your card in full last month. All companies charge you interest on the left over balance but some also charge interest on all your new purchases too. The new rule would be -- if you pay off the old balance and the new purchases --they can't charge interest on the new stuff you bought.
What is not included in this bill is any move by the government to limit or cut interest rates on credit cards. And that has critics from other political parties to special interest groups demanding stronger action.
With a report from CTV British Columbia's Chris Olsen
