Minister trying to help lower credit card interest rates

Walter Noel, Minister of Government Services and Lands and minister responsible for consumer affairs, supports efforts by Secretary of State for International Financial Institutions John McCallum to lower what he terms "grotesquely" high credit card interest rates.

On January 9, Minister Noel wrote to Brian Tobin, then federal minister responsible for consumer affairs, asking that immediate action be taken with respect to exorbitant interest rates. Today, Minister Noel sent a similar letter to Allan Rock.

Minister Noel says: "While most interest rates are tied to the Bank of Canada rate, now at a 40-year low, rates charged on some credit cards, especially retail cards, seem to be excessively high. Given that many credit card issuers are reluctant to reduce interest rates, the federal government must review this matter to determine how consumers might be better protected.

"I do not buy the arguments of the banks that things are okay the way they are and that consumers have lots of choice when it comes to credit cards. If a rate is unfair, it's unfair. It's as simple as that."

Minister Noel advises consumers to shop around before signing credit card contracts and to make sure they clearly understand what they are signing. He says consumers should:

• take time to determine which type of credit card is best suited to their purpose;
• check the annual percentage rate, annual fees, late payment fees, minimum monthly payments, and cash advance fees;
• check all aspects of the card and not concentrate on any one factor such as a rewards program or a low introductory rate;
• consider all options before borrowing on credit cards as interest rates on these cards are among the highest;
• remember that significant savings can be realized when high interest credit cards are paid off with other forms of credit that have a lower annual percentage rate, such as regular bank loans.

Consumers are also advised the Financial Consumer Agency of Canada (FCAC) is a newly-created agency working to protect and educate consumers in the area of financial services. FCAC can be contacted toll-free at 1-866-461-FCAC (3222) or visited at its Web site //www.fcac-acfc.gc.ca.

Media contact: Rick Callahan, (709) 729-4860.

2002 01 21                            3:50 p.m.