Archived - Backgrounder: Banning Unsolicited Credit Card Cheques—Amending the Credit Business Practices Regulations
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This initiative follows up on Economic Action Plan 2011 commitment to assist consumers in managing credit indebtedness and making better-informed financial decisions. The Government of Canada is looking to increase financial literacy and ensure that Canadians have the knowledge and the tools to act on the information they have available to them.
Providing consumers with information that leads to a better understanding and better management of their credit improves their decision making. Moreover, ensuring that information is available provides consumers with the ability to make an active choice to receive credit card cheques, which will allow better-informed decisions.
A number of credit card issuers offer credit card cheques allowing funds to be withdrawn directly from a credit card. These cheques are considered to be cash advances, which can accrue higher interest rates and fees and do not allow an interest-free grace period.
The Government proposes to ban the distribution of unsolicited credit card cheques by federal financial institutions. The proposed regulations would amend the Credit Business Practices Regulations to require federal financial institutions to obtain the express consent of borrowers before distributing credit card cheques to a card holder.