Ottawa’s new regulations on pre-paid credit cards will restrict expiry dates and maintenance fees.
The Canadian capital city is banning the practice of charging a fee to keep the card active and expiry dates which may lead consumers to lose their money.
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The new rules aim at promoting greater transparency, as consumers will be able to see any fees eaten away for using the pre-paid cards.
Unlike conventional cards, these cards’ balance cannot go below zero. The consumers have to pre-load funds in order to use the card for purchases and cash withdrawals.
These cards are often offered as gifts and can be sold by both retailers and financial institutions.
Regulation change occurred following consumers’ complaints about unfair fees and unclear terms of use. There were also protests over potential losses of card holders’ funds when expiry date is reached.
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By GlobalDataMinister of state for finance, Kevin Sorenson said: "Funds cannot, in general, expire. Nor can financial institutions impose dormancy fees or maintenance fees within the first year of the product’s activation."
These rules which are going to be imposed in May, are in line with Harper government’s ‘consumer first’ political agenda.
Maxime Bernier, minister of state for small business called them an ‘addition to the consumers’ toolkit.’
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