Credit card fees under scrutiny
By Gordon Powers, Sympatico / MSN Finance
U.S. credit card companies are working hard to ensure that customers keep up their payments, clamping down on payment deadlines, fees and grace periods, says the Baltimore Sun. The grace period is the time between your statement date and when a payment is due.
That’s because the Federal Reserve decided to revamp rules governing penalty fees and rates starting in 2010. Card issuers will then be required to send a bill at least 21 days before the due date giving card holders more time to make payment before getting hit with a late fee. And vendors won't be able to raise rates on existing card balances until a payment is more than 30 days late.
Will we see similar moves in Canada? We might, particularly if Pierrette Ringuette, a Liberal Senator from New Brunswick, has her way. She’s been pressing the government for regulation on interest rates and statement deadlines, as well as merchant fees, since it shut down in December.
Right now, Canadian banks and other credit-card issuers determine their own grace periods, which vary from about 17 to 25 days. And their interest rate setting practices are generally described as opaque.
While direct movement on credit card rates and fees likely won’t form part of today’s budget, Finance Minister Flaherty clearly wants to tighten the rules here as well. Without the ability to regulate credit cards directly, the best he could do would be to instruct the finance committee to hold hearings — likely a popular move.