Finance Minister Jim Flaherty Thursday released new proposed regulations for Canada’s credit card industry.

The new rules are aimed at “limiting business practices that are not beneficial to consumers and providing clear and timely information to Canadians about credit cards,” the government says.

The proposed Credit Business Practices Regulations will:

• Mandate an effective minimum 21-day, interest-free grace period on all new credit card purchases when a customer pays the outstanding balance in full.

• Lower interest costs by mandating allocations of payments in favour of the consumer.

• Allow consumers to keep better track of their personal finances by requiring express consent for credit limit increases.

• Limit debt collection practices that financial institutions use in contacting a consumer to collect on a debt.

• Prohibit over-the-limit fees solely arising from holds placed by merchants.

In addition, amendments to the Cost of Borrowing Regulations will:

• Provide clear information in credit contracts and application forms through a summary box that will set out key features, such as interest rates and fees.

• Assist consumers to manage their credit card obligations by providing information on the time it would take to fully repay the balance, if only the minimum payment is made every month.

• Mandate advance disclosure of interest rate increases prior to their taking effect, even if this information had been included in the credit contract.

Close to 25 million Canadians have credit cards.

The proposed regulations would apply to credit cards issued by federally regulated institutions. Some provisions in the regulations would have broader application to other financial products, such as fixed- and variable-rate loans and lines of credit.

“These proposed amendments will ensure Canada remains at the forefront of consumer protection in the financial services sector,” says Flaherty.

The regulations will be published in the Canada Gazette on May 23, and the deadline for submissions is June 13.

On Wednesday, the U.S. Congress finalized legislation that will bring sweeping changes to the U.S. credit card industry. The changes are intended to protect U.S. consumers.

Among the changes are new restrictions on giving cards to minors, and a requirement that credit card companies give 45 days notice before raising rates.

Canada’s banks can already only issue cards to people who are of the age of majority in the province that they live in unless they have a co-signer.

IE