Madam Speaker, I will be sharing my time with the member for Burnaby—Douglas.
We have had 20 years of studies. In 1990 the New Democrats said that the credit card companies were ripping off regular Canadians, consumers and small businesses. A study done by the standing committee in 1990 recommended that we cap the interest rates to 8% above prime. No action has been taken all these years.
The credit card companies are continuing to rip off young and old Canadians and businesses, big and small. There are 11 ways they do it.
Rip-off one is the interest rate offered by bank issued credit cards goes to about 19.9%, almost 20%, even though the Bank of Canada interest rate is extremely low. The interest rate is going down, yet the credit card rates are going up. The interest rate offered by retailer-issued credit cards is even worse. If people go to the Government of Canada website and choose a credit card, they will see the interest rates offered by these companies range from 24% to 28.8%, almost 29% interest.
Rip-off two is the consumer pays interest not on the current balance, but on the previous month's balance. For example, people who owe $1,000 and pay off $800 of that might think they will pay interest on the remaining $200. That is not the case. They pay the interest on the entire $1,000. I cannot believe our country allows this kind of ripoff? It is not a person's current balance; it is what the person owed last month.
Rip-off three is this. Recently Canadian Tire Corporation notified many of its cardholders that the annual interest rate on late payment fees would rise to 19.5%. Some cardholders know about this, but others do not. It does not even tell people what its interest rate is. It just jacks it up.
Rip-off four is the credit card companies send people a contract to sign. In the contract, in really small, fine print, probably 5 point, 6 point print, is language that is very difficult to understand. Sometimes they do not even tell people, so the customers really do not understand the implications.
Rip-off five is credit card company representatives go to universities and entice young people by showing them big ads and getting them to pick these credit cards. Then they are living off debt. The reason why a lot of young students end up having many credit cards is because they have huge student debts, on average about $30,000 per student. Then they get hooked on these credit cards by aggressive marketing targeted toward them.
Rip-off six is credit card companies also go after the seniors. They send them cards for which they never asked. Recent pollings show that one in five Canadians receive cards without asking for them. First, the credit card companies offer short-term lower rates to hook them in. Then they change the rates without telling them. They apply it to different accounts. It looks like there is a saving in the beginning, but then the longer term, or in the fine print in the signed contract, which seniors cannot read, when the first purchase is made, they find that the rates are applied differently within their accounts.
Rip-off seven is even cardholders who pay on time are subjected to penalties, rising interest rates, annual monthly service charges. Even if they do everything they are asked to do, the companies still go after them.
Rip-off eight is the overseas transactions. People might not know that when they go across the border to buy something in Buffalo, for example, a 2.5% charge on top of the 19% or the 28% charged is applied.
Rip-off nine is the interchange fees to merchants. Many small businesses are saying this is grossly unfair. Credit companies charge up to 4% on the total price of the sales rather than a flat transaction fee. Again, that is completely unfair.
Rip-off 10 is the increased annual fees while the service decreases. When the service goes down, the annual fees go up.
Rip-off 11 is the penalties for exceeding the credit limit. There is a charge on that also.
It is no wonder that last year eight out of ten Canadians, or 84%, reported having some kind of debt. They say they are worried that they are unable to deal with unexpected events. Household debt is at an all-time high, reaching one trillion dollars two years ago. Last year there was a record debt load averaging $80,000 per household, including mortgage debt. Canadians, especially middle-income, have racked up a huge amount of debt. It has doubled since about 1990. What are the consequences? Bankruptcies are now rising 14.9% year over year.
The motion of the New Democrats says that we want to protect consumers from interest rate increases and account changes. We want to prohibit unfair application of card payments. We want to protect cardholders who pay on time. We want to limit abusive fees and penalties. We want to prohibit issuers from using a consumer's card history with another creditor to raise interest rates. We want to prohibit issuers from charging interest on debt that has already been repaid. We want to ensure that cardholders are informed of the terms of the account. We want to protect young consumers from aggressive credit card solicitations.
This is the kind of common sense approach that the New Democrats call on the government to introduce within six months, comprehensive legislation, no more talk, no more studies. Let us ensure that we implement a credit card accountability, responsibility and disclosure act, similar to what the Obama administration is doing.
The Liberals have talked and talked and studied. There is another study in the Senate. What do the Conservatives do? They just talk to the banks and do nothing. It is time to take action to protect consumers and limit credit card interest rates.