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Credit Card Regulation Means Tougher Times for Consumers
By admin | May 4, 2009
The Canadian government is working towards regulating consumer credit cards. Canadian Finance Minister Jim Flaherty believes that these regulations will aide consumers by helping to reduce high credit card interest rates. While some support Flaherty’s mission at hand, others are not so quick to jump on the credit card regulation boat.
In fact, some (including MasterCard Canada president Kevin Stanton) believe that "…regulatory price controls will suppress innovation, reduce competition and harm consumers" (CBC). While Canada’s Finance Minister and major credit card companies battle it out, Canadian banks are viewing the governmental promise of regulation in a whole different kind of light.
Banks are acting as quickly as possible by keeping a close eye on all accounts, and "…simply reducing the available credit where (they) feel that it is absolutely necessary" (CIBC). This means that fewer credit card and loan applications will be approved.
Large credit limit cuts have already been made when it comes to high risk clients, and those that are seeking new credit cards are being outright denied. As banks continue to cover their assets, consumers are beginning to turn to alternative lending sources.
Non-traditional lending companies are now playing a crucial role within the lives of consumers. As more and more banks strive to limit their losses, consumers are left to fend for themselves. What consumers are finding is that private asset based lenders are a lot more forgiving than those of the traditional sort. In fact, those consumers that are in desperate need of a loan are far more likely to be approved for that loan through a private lender.
Private asset based lenders now play a large role within the financial lives of most consumers. Unaffected by constantly fluctuating government regulations and crack-downs, private asset based lenders are providing many consumers with an appealing financial option. The number of people that will no longer be able to gain a traditional loan is quickly growing, which makes private asset based lenders the best possible loan choice available.
While the government of Canada has not yet put the final touches on its credit card regulation plan, the wheels of this plan are already in motion. Unwilling to wait and see how this governmental plan will impact bank business, Canadian banks have begun to turn away most consumers. As traditional lenders become more and more stringent, consumers in need of a loan are finding shelter with private lenders.
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May 5th, 2009 at 10:37 am
Wow, some really great information here. I always thought that regulation of credit cards would be a great thing. It’s interesting to see another side of the story.
May 5th, 2009 at 10:41 am
I’m glad you enjoyed the article and found it informative. We love to hear our readers comments and suggestions, so please keep writing in!
May 5th, 2009 at 10:53 am
The global economic decline is really frightening me. I am glad that you guys are discussing finances in relation to the current events. Can you blog about how to save money and how to be eligible for different government programs? Thanks a lot.
May 5th, 2009 at 11:01 am
Thanks Nathalie! I’ll see if we write some posts relating to savings in the coming weeks. I know it can be hard to figure out where it’s safe to invest at this point.