Cornwall ON – Kevin Parkinson is not happy with our MP Mr. Guy Lauzon. Mr. Parkinson wrote a piece about Credit Card interest rates and sent our MP a letter. Mr. Parkinson has asked us to print this chain.
Thank you for sending me your email regarding credit card interest rates. I do agree with you that Canadians need access to consumer credit on terms that are fair & transparent. I believe that the best consumer protection framework includes competition, full fee disclosure & choice. We’re protecting consumers who use credit cards with our new regulations to require clear & simple information, require clear & timely advance notice of rates & fees changes, and limit credit business practices not beneficial to consumers. With better information, Canadian consumers can better make informed decisions. We’re helping consumers understand their options. The government has also established Canada’s Task Force on Financial Literacy to inform a national strategy to improve financial education. I would like to thank you again for taking the time to share your thoughts with me.
Guy Lauzon, MP
This was in response to Kevin’s query.
In the April CIBC VISA card statements, an updated Cardholder Agreement was enclosed explaining some recent changes.
Written in legal language that is difficult to read and understand, as of September 1, 2010 cardholders will be paying more interest on their purchases. It matters not that banks continually show record- breaking profits even during a recession, they consistently change the rules to skim more profit from the working class and middle class people.
I contacted the CIBC VISA Centre to confirm my understanding of these changes. Here is a concrete example of how the new policy is intended to work.
A VISA cardholder has a balance of zero. He spends $100 in month #1 and makes a $10 payment.
The balance on the card for the next month will be $90 plus interest on the full $100 because only a partial payment was paid.
In month #2, the person spends $200 so the new balance will be $200 + $90 + interest + interest on all the new purchases!
In other words, the bank does not give you a chance to pay the $200 without interest, because a full payment was not made on the account the previous month. So essentially, the bank punishes you in month #2 because you only made a partial payment in month #1. The banks call this ‘residual interest’.
It gets worse.
This policy does not apply if you live in Quebec- only if you reside in one of the other Canadian provinces. In Quebec, the banks are not permitted to charge ‘residual interest,’ so using the above example, interest would not be charged on the $200 in month #2 if it was indeed paid in full by the due date.
In conclusion, there are several questions here:
Why is the Canadian government allowing the banks to charge residual interest at all, since it is unfairly punitive and adds large amounts of interest and creates more consumer debt.
Why have the banks implemented this change in the middle of the worse global recession since the 1930’s, as people are struggling to stay out of debt?
Finally, why is Quebec the only province in Canada to get preferred treatment by the banks?
People in Canada need to send this letter or one similar to their MP and MPP asking them to investigate this matter, and put pressure on the banks to remove the residual interest clause before September 1, 2010, and put this money back in to the pockets of Canadian taxpayers, except those in Quebec who are already exempt from this usurious interest grab by the banks.
And this was the letter that Mr. Parkinson sent to Mr. Lauzon in reply to Mr. Lauzon’s response.
Dear Mr Lauzon:
I am disappointed that I sent you factual information about how VISA Infinite imposes residual interest on all provinces except Quebec, but your response did not answer my question.
The point is, your government is protecting cardholders in Quebec but not in any other province. I want to know why that is the case.
I hope that now you will understand my question, and that I expect a direct answer, not some talking points or copied material that has been used elsewhere.
Sitting in the House of Commons too long has an adverse effect on honourable members, since rarely does any question in the house get answered. Answers tend to be long winded rhetoric, very similar to the answer which you provided for me.
I look forward to your response.
Thank you for your cooperation in this matter.
So Cornwall and Canada; is Mr. Parkinson over reacting to Mr. Lauzon’s reply? What do you think of this issue? Feel free to post your comments below.
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