Monday, April 8, 2002
OTTAWA - Today, as the Financial Consumer Agency of Canada (FCAC) released its Spring 2002 report revealing that credit card interest rates are at record high levels, the Canadian Community Reinvestment Coalition (CCRC) called on Secretary of State John McCallum to back his opinion that interest rates are "grotesquely high" with action to protect Canadians from further gouging. The CCRC also criticized FCAC Commissioner Bill Knight for continuing to blame financial consumers, instead of retail and financial institutions, for causing the ongoing credit card gouging.
"The government can require companies issuing credit cards to prove that their interest rates are reasonable and don't amount to gouging," said Duff Conacher, Coordinator of Democracy Watch and Chairperson of the CCRC, "and the FCAC Commissioner should be urging the government to take this action to protect the right of shareholders to know the source of company profits, and the right of consumers to protection from gouging."
The FCAC's report reveals that the spread between the Bank of Canada interest rate and average credit card rates is now higher than it has been since rate tracking began in 1978. The average spread for standard credit cards is now 16.2%, 9.52% for low-rate cards, and 26.55% for retail store cards.
Banks and retail companies claim that their interest rates are justifiable because of the costs of operating their credit card divisions, but all have refused to conduct an independent audit of their credit card operations and disclose the results publicly to prove that they are not gouging Canadians.
"The Liberal government, and now the FCAC, imagine that Canadians can protect themselves from credit card gouging, but with all credit card companies charging record high interest rates it is simply irresponsible to continue to blame financial consumers and refuse even to launch a review of the reasons for ongoing high rates," said Conacher.
In 1996, a majority of members of Parliament signed a petition calling for a decrease in credit card interest rates, and the House of Commons Industry Committee held hearings on the issue in February 1997. The 1997 election was called before the Committee reported, and Finance Minister Paul Martin, former and current junior finance ministers, and former and current industry ministers have all refused to initiate a review of credit cards for the past five years.
Canadian Community Reinvestment Coalition
P.O. Box 1040, Station B, Ottawa, Canada K1P 5R1
Tel: (613) 789-5753
Fax: (613) 241-4758
Copyright 2002 Canadian Community Reinvestment Coalition