Canada imposes credit card clampdowns

OTTAWA, Oct. 1 (UPI) -- The Canadian government announced new regulations for credit card issuers that redefine payment grace periods and mandates more disclosure on pay-off terms.

Finance Minister Jim Flaherty made the announcement in Ottawa Wednesday, saying the move was to protect consumers, although it would cost banks "tens of millions of dollars," the Canwest News Service reported Thursday.

Foremost among the changes that will be phased in between Jan. 1 and September is that credit card issuers will grant a 21-day, interest-free grace period on all new credit card purchases when a customer pays the outstanding balance in full, Flaherty said.

Additionally, banks won't be able to charge over-limit fees for charges in which retailers such as car rental agencies place holds on the account, the report said. The new regulations also require credit companies to obtain consent from customers before raising their credit limits, the report said.

The new regulations also require credit application forms highlight interest rates and details on how long it would take to fully repay the balance based on minimum payments, Flaherty said.