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					                                     Credit Cards
                                                                                                                May 2009

Fast Facts:
•   A credit card is a convenient and flexible payment tool for both consumers and retailers.
•   Credit cards provide interest-free credit from the time of purchase to the end of the billing period.
•   Since more than 70% of Canadian households pay their credit card balance in full each month1, the effective interest
    rate for the majority of credit card users is zero.
•   For those who choose to carry a balance:
         • Credit cards offer access to unsecured credit (no collateral required)
         • There are more than 60 low interest rate cards on the market.2

The bottom line:
•   Canadian consumers have tremendous choice in selecting a credit card.
•   The majority of Canadians use their credit card wisely.
•   Credit cards offer valuable benefits for both consumers and retailers.

Credit card benefits                                            •   Increased sales; ability to offer customers a variety
                                                                    of payment options.
A credit card is a convenient and flexible payment tool
accepted in 170 countries and at 30 million locations
worldwide.                                                      Competition and choice
                                                                When making a purchase, consumers can choose to use
For Consumers:                                                  cash, cheques, debit cards, as well as unregulated
•   Access to unsecured credit (no collateral required          electronic payments services like PayPal.
    against amounts charged).
                                                                When it comes to choosing a credit card, banks offer
•   Interest-free payment from time of purchase to the          consumers a wide variety of products. Customers may
    end of the billing period.                                  choose among standard cards without an annual fee,
•   Instant payment of purchases, allowing for instant          premium cards that offer rewards and features, and low-
    receipt of goods and services.                              rate cards for when the interest rate is a key
                                                                consideration influencing the card choice.
•   24/7 access.
                                                                •   Hundreds of institutions in Canada, including banks,
•   Fraud protection with zero liability to the consumer in         credit unions, retailers, caisses populaires, trust
    cases of fraud.                                                 companies and finance companies offer credit card
•   Other rewards and benefits, such as air travel                  products.
    points, car insurance, damage and loss insurance,           •   There are more than 60 low-rate cards on the
    and extended warranty programs.                                 market.
For Retailers that accept credit cards:                         •   68.2 million Visa and MasterCard cards are in
                                                                    circulation in Canada.
•   Fast, guaranteed payment.
•   Reduced cash handling time and costs, and reduced           Consumers are encouraged to learn more about the
    security risks related to handling cash.                    choices available and to select the product that best

suits their needs. Just like any item or service that a                               Canadian credit card customers more than $400April 2009
customer buys, the customer has the control to decide                                 million, representing the losses these customers
on their credit product.                                                              suffered as a result of criminal activities.
                                                                               •      The Bank of Canada rate represents less than one
For longer-term borrowing requirements, a term loan or                                per cent of bank funding and does not influence the
line of credit may be a better choice.                                                pricing of consumer lending, including credit cards.
Consumers should visit the Financial Consumer Agency
of Canada (FCAC) website for an
extensive list of cards and features, and use the credit                       Canadians use their cards wisely
card comparison tool to help select the card that best                         •      A 2009 Boston Consulting Group survey found that
suits their needs.                                                                    more than 70% of Canadian households pay their
                                                                                      credit card balance in full every month, whereas
Strong regulations3                                                                   fewer than half of US households do. 4
Consumers with credit cards from banks are protected                           •      Income is not a factor on who pays off their credit
by Bank Act regulations that require:                                                 cards. Statistics Canada found that the percentage
                                                                                      of low, middle and high income families paying off
•   Disclosure of the interest rate at the time of
                                                                                      their credit cards every month is roughly the same.
    solicitation or application, and on every one of your
    monthly statements.                                                        •      The credit card delinquency rate in Canada is half of
                                                                                      what it is in the US. 5
•   Statements to include itemized transactions, the
    amount you must pay on or before the due date in                           •      Canadians carry an average of two credit cards per
    order to have the benefit of a grace period.                                      household, while US consumers average six. 6
•   Disclosure of the previous month’s payments and                            •      Credit cards account for just 3% of total household
    the current month’s purchases, credit advances, as                                debt.
    well as interest and non-interest charges.                                 •      Banks work with clients who are concerned about
•    Plain language information for customers.                                        their debt, helping them get control of their finances
                                                                                      or choose more suitable credit products. Banks also
•    Rules on advertising.
                                                                                      support non-profit credit counseling services.
•    Limits on consumer liability in the event of fraud.

Credit card pricing
                                                                               General inquiries:
There are a number of factors that influence card fees                         1-800-263-0231 or
and rates.
                                                                               Media inquiries:
•   An interest-free period from purchase to payment,                          Andrew Addison, Manager, Media Relations
    depending on the card, as long as the balance is                           (416) 362-6093 ext.220
    paid in full when owing.
•   Access to unsecured credit where no collateral is                          1
                                                                                 Household Spending Survey, Boston Consulting Group, 2009
                                                                                 FCAC Card Comparison – as of January 2009
    needed, which makes it a higher risk for the credit                        3
                                                                                 Note – these protections only extend to federally-regulated financial institutions (not other
                                                                                 card issuers)
    card issuer.                                                               4
                                                                                 Household Spending Survey, Boston Consulting Group, 2009
                                                                                 Household Spending Survey, Boston Consulting Group, 2009
•   Significant costs to operating the credit card system                      6
                                                                                 Household Spending Survey, Boston Consulting Group, 2009
    including processing a large volume of transactions,
    technology that is constantly updated to support
    transactions, preparing and mailing statements and
    collecting payments and the costs for providing
    value-added rewards programs.
•   Costs to fight fraud and customer reimbursement.
    When fraud occurs, customers have zero liability. In
    2008, financial institutions reimbursed to their

The Canadian Bankers Association works on behalf of domestic banks, foreign bank subsidiaries and foreign bank branches operating in Canada and
their 263,400 employees. The CBA advocates for effective public policies that contribute to a sound, successful banking system that benefits Canadians
and Canada's economy. The Association also promotes financial literacy to help Canadians make informed financial decisions.