New regulations on prepaid credit cards will put an end to expiry dates and curb excessive fees for their use.
On December 3, Kevin Sorenson, minister of state for finance, and Maxime Bernier, minister of state for small business introduced the regulations to address consumer complaints that terms for using the prepaid cards were unclear and card issuers were getting away with charging unfair fees.
Prepaid credit cards, as you know, are often given as gifts and can be used generally wherever credit cards are accepted. Spending is limited to the amount of money you load on the card and the purchase amount is automatically deducted each time you use it. Some users choose to top up the funds when the balance gets low.
Credit card issuers often charge consumers activation, transaction and maintenance fees for using the cards, which reduces the buying power.
The new regulations will stop issuers from charging maintenance fees for the first year. Additionally, all fees and conditions of use for prepaid cards will have to be clearly displayed on the exterior packaging.
Holiday shoppers will not benefit from the new rules this season, as they are not expected to take full effect until May 2014.