We use them all the time – for unforeseen purchases, to shop online or to accumulate points when making everyday purchases. The credit card has been with us since 1951. We still use it often and it remains a very practical device.
Choosing a Credit Card
All credit cards have the same basic features: the possibility of using a certain amount of credit to make transactions and the responsibility to pay for at least part of the transactions after a specified period of time. If all of the transactions are not paid during the fee-free payment period (the “grace period”), interest or other fees will also have to be paid.
As the amount of credit is not fixed (the credit is proportionate to purchases made) and it is not given for a precise period of time (payments may vary), the law speaks of a variable credit contract.
To choose a credit card properly, you have to examine its features carefully:
- reason for the credit: ideally to establish your credit or take advantage of a good offer, and not because your other cards have all been used to the maximum
- special advantages: reward programs, insurance, etc.
- annual fees
- the grace period (on new purchases, it must be at least 21 days)
- fees for currency exchange
- interest rates on transactions and cash advances. Be careful with store cards: their interest rates can be close to 30%.
- the length and conditions of all special offers on new products: 5%, what an excellent rate! But does it apply to all transactions? What are the conditions? And how long does it last?
Credit Card Offers
It’s common to receive personalized advertising for credit cards. However, you should know that companies that issue credit cards are not allowed to do the following:
- send you a credit card that you have not asked for in writing
- renew or replace a credit card when you’ve advised them, in writing, that you want to cancel the card
- issue you more than one credit card with the same number unless you’ve made a written request for this
Before completing an application for a credit card you have the right to obtain some information in writing. The application or a document that accompanies it must include an information box at the beginning that clearly summarizes essential information.
Read it carefully because, when you get a credit card, you are agreeing to all these conditions.
|Annual interest rate or, in the case of a card with a variable rate, the reference rate (index) and percentage that is added or subtracted||E.g., Promotional rate on purchases and the length of promotional periods, annual interest rate on purchases made afterwards, rate on cash advances and balance transfers, rates in case you make late payments, go over your credit limit, fail to respect a condition of the contract, etc.
Interest-free period (“grace period”)
It must be at least 21 days.
The grace period is only for purchases. Cash advances and balance transfers usually generate interest immediately.
Rates for currency exchange and transactions in foreign currencies.
E.g., Balance transfers, cash advances, penalties for going over your credit limit, etc.
The Contract with the Credit Card Company
The contract must be written and include information, such as:
- your name and address
- the name and address of the company issuing the card
- the date and place that the contract was made
- the credit limit
- the amount of membership and renewal fees
- the duration of each period for which a statement is provided
- the minimum required payment for each period
- the duration of the grace period
- the annual credit rate, expressed as a percentage
- fees for changing foreign money into Canadian money
You do not have to sign anything at this point. Issuing the credit card basically acts as the merchant’s signature and your use of the credit card acts as your signature.
Changes to the Credit Card Contract
Over time, your contract might change. Your bank has up to 30 days after a change to advise you, in writing, of:
- an extension of your grace period
- a decrease in fees that aren’t related to the interest rate
- a decrease in the interest rate
- a decrease in your credit limit
- a change to any optional service that you’ve chosen
- a change to the interest rate caused by a variation in the reference rate (for credit cards with variable rates)
For other changes, the bank or must inform you of the change, in writing, at least 30 days before it comes into effect. Further, the credit card company cannot increase your credit limit without your authorization. If you give your authorization verbally, they must confirm the change in writing by the time of your next credit card statement, at the latest.
The Monthly Statement
The monthly statement must be sent at least 21 days before the end of the grace period. It must contain the following information:
- the date of the end of the time period
- the account balance at the beginning of the period
- the date, description and value of each transaction that was made in the account during the period.
- the date and amount of each payment that has been made or of each sum that has been credited during the period
- fees charged during the period
- the account balance at the end of the period
- the minimum payment required for the period
- the time during which you can pay without interest, except for cash advances
Statements That Aren’t Provided – Consequences
If you haven’t received your statement of account, the company cannot claim interest on the unpaid balance, except for cash advances. The situation is obviously different if it’s your fault that you didn’t receive it, for example, because you didn’t advise the company that you changed your address.
A Mistake on Your Credit Card Statement
If you notice a mistake on your credit card statement, you must advise the company that issued the card quickly and in writing. Your notice must indicate your name, the mistake you noticed, the amount of money involved and the reasons for which you think there’s been a mistake.
You can ask the company for a copy of the bills for each transaction made on your account. The company must provide them free of charge.
The company has 60 days from when you send your notice to correct the statement of account or to explain why it refuses to. If it refuses, it must provide you with its proof.
If the company doesn’t answer within 60 days, it loses its right to claim the amount of money that is contested and the credit fees on this amount.
Liability in Case of Loss or Theft of a Credit Card
When you notice the loss or theft of your credit card, you must advise the company that issued the card immediately. From the moment that it’s been advised, the company cannot consider you to be liable for debts that result from use of the card.
Even if you forget to advise the company of the loss or theft of your card, you cannot be held responsible for more than $50.
However, you might have to pay back the credit card company if the company proves that you were very reckless or careless in protecting your PIN (personal identification number).
This article explains in a general way the law that applies in Quebec. This article is not a legal opinion or legal advice. To find out the specific rules for your situation, consult a lawyer or notary.