New Credit Card Rules For Canadians

Posted: 27 Jan 2011 04:00 AM PST

Do you know where your money is? Well, you may not be able to account for the whereabouts of all of it, but you should soon be able to figure out how to keep more of it! Your government and newly elected math tutor and debt 'babysitter' hopes so by virtue of some new rules and regulations regarding you, your bank, and your balance owing.

In late 2010 – under the ever-widening umbrella of their "Economic Action Plan" – the Canadian Government, "…is taking action to limit business practices that are not beneficial to consumers, and require the provision of clear and timely information to Canadians about credit cards."

To be both concise and specific, there are a handful of changes being made to all credit card related paper(s) that come into contact with the Canadian consumer. These changes include: a "summary box" that lays plain your interest rates & fees, a calculation of the time it will take to repay your balance if only making minimum monthly payments, as well as advanced disclosure of interest rate increases to the consumer and consent for credit limit increases.

In addition to the above-mentioned changes, there will also be a 21-day grace period on all new credit card purchases, but only if the consumer pays the balance in full. To simplify, here is the Government's very own example:

Rajiv made a new purchase on May 5. His statement covers transactions he made between May 1 and May 31.

His statement shows the due date for his payment as June 21. This means that he will have a 21-day grace period from the last date included in the statement (May 31), provided that he pays the balance in full by June 21.

So basically you can buy something and not have to worry about the interest on the purchase even if you're nearing the end of the month, but if you neglect to pay off the balance after the 21-day period, you're more than likely going to be back-charged interest by the bank or institution…

If you're interested in learning more about the changes, you can take at look at the government's own webpage or check out the Financial Consumer Agency of Canada's website,

It will be interesting to see how this will affect the balance wheel of Canadian commerce. The implications for the consumer are obvious: through increased awareness and transparency with Federally Regulated Financial Institutions, the average amount of consumer debt should decrease. As a result of this, the economy will see less debt overall which obviously means a better balance sheet for Canada at the end of the day.

At the same time, I am reminded of one of the timeless maxims from economics that you must understand not only the immediate impact, but the overall impact of a decision to all groups. In essence, you must not see the forest without the trees, or the trees and lack of the forest. Let's face it: credit card issuers make a lot of money off of misinformed people and I feel that the Government has recognized this fact and decided to take action on it. It seems to be their hope to mediate more transparency, honesty, and awareness between the consumer and his wallet. It appears to be an admirable decision on the surface, but what effect will this have on retailers?

People that are spending more wisely, keeping a more watchful eye on their financial picture, and who are more informed as consumers may not be as likely to max out their plastic at Wal-Mart or Sears for Christmas. While this may have the detrimental effect (for the retailer) of less revenue generated by their best friend, credit cards, there may be a bigger issue at stake: why are we spending so much more than we earn, and what does it say about Canadians when their Government has to step in and provide them with the tools for basic math?

Dollar Matters: Random Hodge-Podge

Posted: 26 Jan 2011 09:05 AM PST

I’m going to be honest. I slept in today. So for today’s Dollar Matters, I’ve got some random stuff from around the web. But, the good news is, it’s all mostly relevant to YOU.

What Obama’s State of the Union Could Mean for Your Finances

This one from CBS MoneyWatch is mostly relevant for U.S. readers. But, since I’m a Yank, I believe that even if you aren’t American, it is almost always interesting to see what sort of money-type information finds its way to the State of the Union Address.

How to Evaluate My Salary

Green Panda Treehouse offers interesting insight in how you can compare your salary now to what you think you should be making.

Your Personal Rate of Inflation

Forget “official” information about inflation. Oblivious Investor offers solid information on what goes into the CPI, and how it might differ from your real rate of personal inflation. You can also learn what to do about your personal rate of inflation. (Big Cajun Man has a great post on fuel prices and the CPI.)

Financial Documents: Keep, Scan or Shred?

Bargaineering breaks down what to do with certain financial documents. A helpful way to know exactly what to do with all that paper that is probably sitting around your house.