Kevin Parkinson – Reality Check – CIBC Visa Cardholders Charged More Interest in Ontario than in Quebec – Cornwall Ontario – May 7, 2010

CIBC Visa Cardholders Charged More Interest in Ontario than in Quebec

Your browser may not support display of this image.Cornwall ON –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!

Your browser may not support display of this image. 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:

Your browser may not support display of this image. 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.

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  1. I think you’ve actually got it backwards. The interest policy in the Rest of Canada will be aligned with, and starting September 1st, the same as Quebec. This is a response to a legislative change, that affects all credit cards in Canada. Interest will be charged on money you’ve borrowed through card purchases, only if you don’t pay you balance by the due date. You can now borrow interest free for any particular month, as long as you pay your balance in full by the due date for that month.

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  3. I sent a copy of this article regarding favourable interest rates for Quebecers than other provinces to MP Guy Lauzon’s office. This is the same guy who is always asking us how we are doing, if there is anything he can do for us, etc. etc.

    Well, I wasn’t satisfied with Mr. Lauzon’s answer because he avoiding answering the question about why Quebecers get preferential treatment. So, he told me to contact Mr. Flaherty’s office which I did.

    That was almost three months ago and still no reply. Where is the representation here?

    Give Mr. Lauzon something more difficult than organizing a passport clinic and he comes up short.

    I’m still waiting.

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