What are Credit Card Services?
Wikipedia defines a credit card as a plastic card with a metallic strip containing data of the card holder's account that allows him to buy goods and services on credit. Credit cards allow people to buy goods immediately and settle the bill at a later date. Most of the local banks and credit unions have credit card services. They have emerged to be one of the most popular, secure and convenient way of payment.
What are the Benefits of Using Credit Cards in Canada?
Credit cards are convenient and adaptable payment tools both for consumers and retailers. Majority of credit card companies offer interest-free credit from the time purchases are made until the end of the billing period. The interest rate for most credit card holders is virtually zero since Canadians pay their balance on a full monthly basis.
There are numerous benefits that credit card customers enjoy such as access to unsecured credit (the amounts charged are not typically secured with collateral), interest-free payments, fraud protection, instant payment for goods and services allowing for immediate receipt of the purchased item, and a 24/7 access to funding. Further benefits include bonus travel points, extended warranty and various insurance packages (Damage and Loss Insurance, Travel Accident Insurance). On the other hand, retailers who accept credit cards enjoy fast and guaranteed payments, together with reduced cash handling costs and time. By giving clients a wider selection of payment options, retailers increase their total volume of sales and profits.
What is the Bank Act?
Holders of credit cards are protected under the Bank Act. Wikipedia explains that the Bank Act is an Act of the Government of Canada respecting banks and banking. The Act groups banks in three schedules. Schedule I banks are banks allowed to accept deposits that are not a subsidiary of a foreign bank, Schedule II banks are banks allowed to accept deposits that are a subsidiary of a foreign bank with branches in Canada, and Schedule III banks are foreign banks with certain restrictions that can do banking business in Canada. The Bank Act was originally passed in 1871. The terms of the Act provide that it is renewed decennially to ensure that legislators will periodically update the Act in order to keep pace with developments in the financial system. The Canadian banking industry includes 20 domestic banks, 24 foreign bank subsidiaries and 22 foreign bank branches operating in Canada.
It is further clarified in http://www.creditcardreview.ca/blog/benefits-of-using-a-credit-card-in-canada that consumers who use credit cards issued by banking institutions are protected by the Bank Act. Under this piece of legislation, banks are required to disclose interest rates at the time of application or solicitation and on all monthly statements sent to customers. Second, statements should include information about the amount payable on or before the date due, together with itemized transactions. The disclosure of current monthly purchases, last month’s payments, non-interest and interest charges, and credit advances is also required. As an additional protection to customers, limits are set on the consumer liability in the event of fraudulent and unauthorized use of one’s account.
How does the Credit Card System Work?
When a purchase is made on a credit card, the card holder agrees to pay the issuer at a later date by signing a receipt with details of the purchase made or by entering a PIN. A card holder can make purchases within a prescribed limit. The validity of the card is verified electronically. Credit card statements are received regularly indicating the purchases made over a fixed period of time and the total money the card holder owes the card issuers. The card holder can either pay the entire amount or pay a minimum prescribed amount to the issuer. In the latter case, an interest is charged on the outstanding amount till the balance is paid. For instance, if a card holder owes the issuers $5000, and repays the entire sum within the grace period, he would not be charged any interest.
Credit Card Services in Canada
Almost all leading banks in Canada offer credit card services. The advantages are varied, starting from low interest to frequent flier miles. The services are based on the profile of users, such as businessmen, students, retailers etc. More than 200 credit card services exist in Canada, varying from store cards, reward cards, Master Card, low interest rate cards to airline cards. Being one of the world's most developed financial and banking services worldwide, Canada has a comprehensive and well established range of credit card service providers, which are well suited for any type of customer.
References
wikipedia.org
creditcardreview.ca
wikipedia.org
