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New Credit Card Laws Fall Short
By admin | May 29, 2009
New credit card regulations were recently unveiled by Finance Minister Jim Flaherty. Flaherty’s aim was to control credit card companies while protecting Canadian consumers from increased credit card debt. While Flaherty did manage to add some positive new restrictions that will be imposed on credit card companies, many believe that these new laws fall short of earlier expectations.
The new regulations include a 21-day interest free period on all new card transactions; clearer billing terms; advanced interest rate notice; and other measures that are to be put into effect in order to benefit the consumer. The problem with these new changes is that they do not cover rising interest rates.
Rather than put a cap on interest rates, Flaherty told reporters that the current government "…believes in consumer choice. We are not interested, like some parties, in nationalizing banks. If someone wants a lower interest rate on a card, then they have choices and they can do that (CBC News)."
The issue is that most consumers don’t actually "have choices." Those consumers that have fallen behind on credit card payments often face higher interest rates automatically. These consumers do not have an option when it comes to finding a lower rate credit card.
Amongst those that disregard the new regulations is NDP leader Jack Layton. As Layton (and others) see it, present "interest rates are at an all-time low, yet credit interest rates remain at an all-time high (CBC)." In short, the new changes to credit card laws just don’t make sense to the average consumer.
The average Canadian’s credit card debt has increased dramatically over the past few years. As a result, most Canadians are in over their heads as far as credit is concerned. Without a government proposed cap on credit rate increases, this debt isn’t likely to disappear overnight.
Still, some Canadians may have a way to reduce a large chunk of credit card debt. Private lenders often give out loans that can be used to pay down debt. These loans tend to come in the form of car title loans, which are solely based upon the value of an owned car.
Since private lenders are not concerned with credit history, anyone that owns a car can apply for this type of loan. Once a loan has been approved, consumers can then use the money to pay off credit card debt. Following the elimination of credit card debt, the high interest cards in question can then be cancelled.
While the government might not be stepping up to the consumer protection plate, private lenders are willing to help out those crushed by high credit card interest rates by approving much needed loans.
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