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New Transparency Rules For Credit Cards Come Into Effect Jan. 1

The federal government is delaying the start date for a key element of credit card reform meant to increase transparency for card users.

The Finance Department has published new rules that come into effect in the new year, but says it won’t implement a mandatory 21-day interest-free grace period until next September.

The announcement posted on the department website says that starting Jan. 1, credit card issuers must provide a “summary box” on application forms detailing interest rates and fees.

As well, banks must inform clients how long it will take to repay their balance if they only make minimum payments each month, give notice of changes in interest rates and require approval before increasing the credit limit on a card.

“Our government understands the pressures Canadians face in these tough economic times,” said Finance Minister Jim Flaherty in a statement. “The last thing they need is a surprise on their credit card statement.”

But Liberal critic Dan McTeague said the measures were at best window dressing and will do little to address the unfair practices of credit card companies and banks.

The MP said the government had an opportunity to eliminate “dual-cycle billing” to limit interest charges to unpaid portion of a bill, rather than to the entire amount, make opting out easier and to give a break to merchants on the fees they must pay.

“This is window-dressing,” he said. “Overall, it misses the point.”

Even though the changes are modest by critics’ estimation, they were vigorously opposed Canada’s banks during public hearings earlier this year. They argued that they were unneeded since 70 per cent of users paid their bills in full on time, and costly to administer.

Critics, however, called on the government to go much further, including limiting the top interest rate that could be charged on cards.

The government statement gave no reason why it was delaying enacting the 21-day grace period until September. The grace period would prevent banks from charging interest on all new credit card purchases when a customer pays the outstanding balance in full.