Lines of credit: rights and responsibilities

From: Financial Consumer Agency of Canada

When you obtain a line of credit with a federally regulated financial institution (FRFI), the institution must disclose certain information to you either in your credit agreement or in a separate disclosure statement.

Some information must be provided in an information box at the beginning of the credit agreement or in a separate disclosure statement:

  • the initial credit limit, if it is known at the time
  • the annual interest rate, or the method for determining the rate if it is variable
  • the date from which interest is charged, and information concerning any grace period that applies
  • the minimum payment during each payment period and the method for determining it
  • any foreign currency conversion fees
  • any annual fees
  • any other fees that may be charged
To see an example of an information box for line of credit agreement, visit webpage Credit agreement for a line of credit.

Your credit agreement or disclosure statement must also include:

  • each period for which a statement of account is to be provided
  • the property, if any, in which the federally regulated financial institution takes a security interest under the credit agreement
  • information about any related optional service that the borrower accepts, the charges for each optional service and the conditions under which the borrower may cancel the service, if that information is not disclosed in a separate statement before the optional service is provided
  • a local or toll-free telephone number, or a telephone number with a prominent indication that collect calls are accepted, that the borrower may use to get information about the account during the institution’s regular business hours

If the initial credit limit is not known when the initial disclosure statement is made, your financial institution must disclose it in:

  • the first statement of account you receive or
  • a separate statement that you receive either before or at the same time as you receive your first account statement

Statements

Your financial institution must also give you, once a month if not more often, another disclosure statement that contains:

  • the period covered and the opening and closing balances in the period
  • an itemized statement of account that discloses each amount credited or charged, including interest, and the dates when those amounts were posted to the account
  • the total payments and the total credit advances and non-interest and interest charges
  • the annual interest rate that applied on each day in the period, and the total of interest charged under those rates in the period
  • the credit limit and the amount of credit available at the end of the period
  • the minimum payment and its due date
  • your rights and obligations regarding any billing error that may appear in the statement of account
  • a local or toll-free telephone number, or a telephone number with a prominent indication that collect calls are accepted, that the borrower may use to get information about the account during the institution’s regular business hours

Exceptions

You might not receive the additional disclosure statement if there have been no advances or payments and:

  • the outstanding balance is less than $10, with no interest or fees being charged or
  • your credit agreement has been suspended or cancelled due to default and the bank has demanded payment of the outstanding balance

Advertising

If a federally regulated financial institution advertises a line of credit by promoting

  • the annual interest rate or
  • the amount of any payment or
  • any non-interest charge

the institution must disclose the annual interest rate and all non-interest charges at least as prominently.

What you should do if you feel your rights are not being respected

If you feel that a federally regulated financial institution is not respecting your rights, contact the Financial Consumer Agency of Canada.

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