To help protect Canadians from underhanded credit card practices, GreedyRates has done a review of the cardholder agreements from Canada’s leading issuers. We looked for hidden fees and charges clouded in obscure language even the wisest legal counsel would have to read twice or thrice to understand. The verdict? We found two Canadian banks using particularly unfair and deceptive credit card practices to jack interest rates on unsuspecting Canadians.
PC Financial Mastercard with a not so “fresh” idea:
We’ve all seen the “free food fast” claims of PC Financial, but how about a “free rate hike” instead. Little did we know that PC Financial Mastercard, may increase your credit card interest rate from 19.75% to 24.95% at its sole discretion following a review of your account use, credit bureau or credit history. The exact language reads as follows:
“We may, with prior notice, increase your Purchases and Cash Advances rate to the Performance rate of 24.95% following a review of:
- your account use (including whether you exceeded your credit limit or had any dishonored payment transactions), or
- your credit bureau reports and credit history.”
Regardless of whether or not you’ve been paying your credit card bill on time, if they find anything on your credit report or credit score they don’t like (they don’t say what), they can bump up your interest rate to 24.95%. Moreover, if you use your account in a way they don’t like (they don’t say how), they can increase your rate at their discretion. They’re not accountable for providing any reasons why your rate increased – all they do is reserve the right to ding you, provided they notify you in advance, when they want.
This type of predatory lending practice has no place in Canada and we think it’s a “rotten” idea.
Canadian Tire Mastercard a potentially bad “Option”:
Are you one of the 4.5 million people with a Canadian Tire Mastercard or thinking of getting one? Watch-out! While the cards are advertised with a 19.99% interest rate, the fine print states that they may approve you with a 25.99% rate. The exact language reads as follows:
“If you are not approved for a card at these rates, Canadian Tire Bank may still issue you a card at an annual interest rate of — 25.99% for all charges.”
Now that’s just wrong. Before any of us apply for a product, especially a financial product, it should be crystal clear what product we’re receiving in advance. This type of bait and switch practice employed by Canadian Tire Mastercard has the potential to cause serious harm to unsuspecting applicants who think their receiving one rate and then get charged a rate that is 30% higher and buried in the fine print! Could you image if banks were allowed to do that with a mortgage? We’d all being playing Russian Roullette.
We reviewed the cardholder agreements of RBC, TD, CIBC, BMO, Scotia, Chase, Capital One, MBNA, Amex and Walmart and none of them have similar terms. While all have a penalty rate in the event you miss a payment(s), none use the bait & switch strategies employed by President’s Choice Financial or Canadian Tire Mastercard as described above.
We would encourage all of our readers to share this with their unsuspecting friends and colleagues, let PC Financial and Canadian Tire Mastercard know of your disappointment and contact your Minister of Parliament or the Financial Consumer Agency of Canada to ensure consumers are protected from this type of trickery that has no place in Canada.
In the meantime, if you have one of the above mentioned cards, use our credit card comparison tool to help you find the best credit card in Canada for you.