Credit cards: right to information

From: Financial Consumer Agency of Canada

When you apply for a credit card

Any time you receive a credit card application from a credit card issuer, you have the right to certain information. Key features of the card agreement, such as the card’s interest rates, fees and other charges, must be clearly set out in an information box at either the beginning of the application or a related document that you receive at the same time. For more information, you can see an example of an information box.

When you apply for a credit card, you agree to accept all of the terms and conditions, including interest rates and fees. Read the entire application carefully before submitting it.

When you get your credit card

When your credit card arrives, it must have a credit card agreement or contract with it. You should read the agreement carefully to understand your responsibilities and the terms and conditions of using the card. Keep the agreement for your records. If there is something you do not understand, contact your credit card issuer.

Similar to the credit card application, your credit card agreement also has to have an information box that clearly outlines key information. This information box may be at the beginning of either the agreement or a related document that you receive at the same time.

With your monthly credit card statement

Once you have your credit card, your issuer has to send you a statement every month. Your credit card issuer may provide you with a written statement or an electronic statement, if you consent to receive required information in electronic format rather than as paper documents. The statement must include the following information:

  • your outstanding balance (you have to pay this amount in full by the due date to benefit from the interest-free grace period on new purchases)
  • an estimate of the length of time it would take to pay off the balance in full if you paid only the minimum amount required each month
  • a description of each transaction made during the period covered by the statement, and the amount charged, including interest
  • the date each transaction was posted to your account
  • the amount credited or charged during that month for each of the following:
    • purchases made
    • cash advances received
    • payments made
    • interest charged
    • non-interest fees charged.

Exceptions:

Your credit card issuer does not have to send you a monthly statement if:

  • there is no outstanding balance at the end of the period
  • you have defaulted on your payments and the issuer has notified you that the credit agreement has been suspended or cancelled.

Also, your credit card issuer can send you a statement only every three months if the following three conditions are met:

  • there have been no charges or payments
  • the outstanding balance is less than $10
  • no fee or interest is being charged or accumulated.

When your credit agreement changes

If your credit card issuer changes any features or any of the terms or conditions of your credit card, the issuer has to give you the details of these changes in writing at least 30 days before the changes go into effect. Your credit card issuer may provide this information to you in writing, or electronically if you consent to receive required information in electronic format rather than as paper documents.

Your credit card issuer also has to get your permission before raising your credit limit. If you agree verbally to an increase, your credit card issuer has to confirm the change in writing no later than your next credit card statement.

Exceptions:

There are some changes to the terms and conditions of your credit card for which advance notice is not required. However, the changes have to be disclosed to you in the next statement you receive after the change is made. These changes are:

  • an extension of your grace period
  • a decrease in the interest rate
  • a decrease in a charge that is not related to the interest rate
  • a decrease in your credit limit
  • a change to any optional service you accepted
  • if you have a card with a variable interest rate, the change in the benchmark rate or base rate to which it is linked (also known as the reference rate)
Table 1: Example of an information box for a credit card
Initial credit limit $5,000
Annual interest rate or rates

These interest rates are in effect the day your account is activated.

  • Promotional rate on purchases: 4.99% for your first three monthly statements
  • Purchases: 19.75% following the promotional period
  • Cash advances: 21.5%
  • Balance transfers: 21.5%

Your interest rate will increase to 24.75% on your next statement if you:

  • make a late payment
  • go over your credit limit
  • make a payment that is returned
  • fail to meet any of the terms in the cardholder agreement
Interest-free grace period

21 days

When you use the card to make purchases you will benefit from an interest-free grace period of at least 21 days if you pay off your balance in full by the due date.

There is no interest-free period on cash advances or balance transfers.

Determination of interest

If interest is charged, it is calculated on your daily average balance and charged monthly to your account on the last day of your billing cycle.

Minimum payment

2% or $10

Your minimum payment will be the greater of 2% of the outstanding balance owing as shown on your monthly statement, or $10.

Foreign currency conversion

2%

We will bill you in Canadian currency if you use your credit card account to make transactions in foreign currency. We will convert the amount directly to Canadian dollars at the exchange rate in effect at the time we post the transaction to your credit card account.

When the transaction is posted to your account, in addition to the exchange rate, you will be charged a foreign currency conversion rate of 2% for each foreign currency transaction.

Annual fee

$50

To be charged on your first statement and annually on the anniversary date of your first statement.

Other fees

To be charged on the day the transaction occurs:

  • Cash advance: $5
  • Over the credit limit: $20
  • Balance transfer: 1% of the amount transferred
  • Extra copy of your monthly statement: $2
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