Mr. Dave Nickerson (Western Arctic):
Mr. Speaker, I would like to congratulate the Hon. Member for Scarborough West (Mr. Stackhouse) for bringing forward Bill C-266. The subject matter certainly requires debate. It also requires the attention of the public and this House to be focused on a most important matter. During the course of the entire thirty-third Parliament this subject has been kept before us by the Hon. Member for Scarborough West. During that time he has struck the fear of God into the hearts of credit card users throughout Canada.
Most of us have a credit card because they are so useful and convenient. Most of us have at least one in our pockets, especially those people who, like ourselves, travel around quite a bit and do not want to carry a lot of cash. They are extremely convenient and one of the things of the modern age with which we are familiar. Apart from being an advantage to the user of the card, they can also be extremely profitable to the issuer thereof. Certain examples of exactly how profitable have been given this afternoon. For example, some retail stores make more money out of the credit card side of the business than out of actual sales. Credit card issuers make money in a variety of ways. Merchants who take those cards are obliged to pay 2 per cent, 5 per cent, and I have even heard as much as 10 per cent as a commission given by the merchant to the issuer of the credit card. In that case, it would not be an inhouse credit card. There are also various user fees attached, whether it be a start-up fee, or 15 cents per item that is charged. The big money maker is the interest rates charged which range all the way from the high to the extortionate.
I have one complaint against credit card companies when it comes to the calculation of the interest payable. I am one of those people who like to make a little profit out of the credit card companies, if I can. I like to pay all my bills on time within a few days of the end of the period. That way perhaps I can have some free money for a couple of weeks. Occasionally, if I have been travelling around and do not manage to make that payment on the due date, then interest is charged not from the due date until the time that the bill is paid, but going back to the date of the initial purchase. I guess it serves me right because sometimes I make money out of the credit card company, but it does not seem entirely fair.
September 30, 1988
Occasionally there are pretty high pressure sales tactics used, particularly by in-house issuers or certain retail stores. Some pretty high powered tactics are used to get people to accept their credit cards and use them. Often those retail stores have the highest rates of interest attached to the use of their cards. This afternoon we have heard examples of rates as high as 28.8 per cent.
I would like to say a few words about the Bill presented to us in response to this real problem. We have a proposed legislative solution. We are going to legislate ceilings that credit card companies can charge. It will be done on a sliding scale which gets away from some of the difficulties that happen when a maximum interest rate is imposed, and for that reason it is good. If a legislated solution of this nature can be avoided, I think that that would be the preferable way to go.
Topic: GOVERNMENT ORDERS
Subtopic: PRIVATE MEMBERS' BUSINESS-BILLS CREDIT CARD INTEREST RATE ACT MEASURE TO ENACT