Predatory Credit Card Practices seem to be a hot topic at the moment.  A CBC story suggests that Canadians want a credit card ‘bill of rights’.

Canadians feel powerless when it comes to their credit cards — whether the problem is high interest rates, confusing fine print or hidden fees — and they want a consumers’ “bill of rights” to protect them, according to an EKOS poll conducted for CBC’s Marketplace.  At this time of widespread financial uncertainty, respondents to a four-day survey conducted Feb. 12-16 were asked, “Would you support a credit card bill of rights that would provide legal protections for consumers in their dealings with companies that issue credit cards?”  Eighty-two per cent of respondents answered yes.

The poll was done as part of a larger investigation by the CBC’s investigative consumer program Marketplace (Friday, 8:30 p.m.) into hidden charges lurking on some credit card bills.

There are many causes for concern, with a major one being the credit card loan-insurance schemes.  What is often not mentioned in the promotional literature is how expensive credit card balance insurance can be and how little it often pays off. Fully 51 per cent of those polled in the CBC survey who have the insurance said they did not know it only covers the minimum monthly payments if you lose your job or get sick.

The Financial Consumer Agency of Canada is the government’s watchdog over financial institutions.  It informs Canadians of their rights and responsibilities when dealing with financial institutions and ensures compliance with the federal consumer protection laws that apply to banks and federally incorporated trust, loan and insurance companies.

In the United Kingdom, this type of credit card balance or loan insurance has caused a huge outcry and investigation. It is often called Payment protection insurance (PPI). A BBC article indicates the UK government has cracked down and Loan insurance is to be restricted

Payment protection insurance (PPI) sales will be banned while customers take out a loan.  Such insurance cost borrowers more than £4bn in 2007 and is supposed to repay borrowers’ loans if they fall ill or lose their jobs. Leading providers had faced little competition for PPI and, as a result, had charged persistently high prices.  The Competition Commission’s final set of proposals on PPI is the culmination of a four-year campaign by consumer organisations, and then regulators, against the mis-selling of the insurance by banks and other lenders.

This seems to be a topic that is coming up in a number of countries at the same time.  President Obama is also promising to Address Predatory Credit Card Practices.

Obama and Biden will establish a five-star rating system so that every consumer knows the risk involved in every credit card. They also will establish a Credit Card Bill of Rights to stop credit card companies from exploiting consumers with unfair practices.  Such a Credit Card Bill of Rights will:

• Ban Unilateral Changes
• Apply Interest Rate Increases Only to Future Debt
• Prohibit Interest on Fees
• Prohibit “Universal Defaults”
• Require Prompt and Fair Crediting of Cardholder Payments

It seems clear that such a credit card Bill of Rights will be very well received both in the USA and in Canada.  Certainly it would address many of the credit card concerns expressed in that CBC Canadian survey.

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