Financial Consumer Agency of Canada

Financial Consumer Agency of Canada

October 19, 2006 11:38 ET

FCAC Launches Pre-Paid Payment Card Guide

Consumers should balance benefits with costs

OTTAWA, ONTARIO--(CCNMatthews - Oct. 19, 2006) - Financial Consumer Agency of Canada (FCAC) Commissioner Bill Knight today said that the new pre-paid payment cards on the market offer credit card type convenience, at a price.

Knight made the comment as FCAC released a new booklet for consumers, called Pre-paid Cards, which describes the "pre-paid" type of Visa and MasterCard branded payment cards, explaining what they are, how they work, and the various fees that can be charged for their use.

"Pre-paid cards look like credit cards and can be used in similar ways, but they aren't credit cards. The money you're spending is your money, which you 'load' onto the card before using it," Commissioner Knight said. "The fee structure of a pre-paid card is also quite different from a credit card. In many cases you will pay a variety of fees in order to take advantage of the benefits these cards offer. That's why pre-paid cards can be an expensive way to spend your own money."

FCAC's pre-paid card booklet contains a detailed table that enables consumers to compare the features and fees of 16 pre-paid cards now available in Canada. For many of these cards, fees are charged for various types of transactions - such as for making purchases, re-loading money onto the card and making inquiries about card balances. Some cards also have monthly maintenance fees, and several have time limits on how long they can be used before the remaining balance becomes subject to a fee or, in some cases, is forfeited outright.

"To determine the benefits of any financial product, consumers also need to be aware of the costs," said Commissioner Knight. "FCAC's new Pre-paid Cards booklet, as well as our other consumer tools can help consumers shop around and find the best financial products for their needs and budget. While some consumers may decide that a pre-paid card is right for them, others might find that another product, or combination of products, suits them better. For some, a low-rate credit card, or a low-cost bank account with a debit card, may be a more attractive option."

Pre-paid Cards is the newest addition to FCAC's growing family of easy-to-use financial consumer information products. The booklet is an addition to the Agency's comprehensive credit card information kit - Credit Cards and You - whose electronic and print versions were recently updated with the latest data on nearly 200 credit cards available in Canada.

Consumers can use the interactive on-line version of Credit Cards and You, or download Pre-paid Cards and other publications, by visiting Agency's Web site at www.fcac.gc.ca. Print copies are also available free of charge by calling FCAC's toll-free at: 1-866-461-3222.

FCAC ensures compliance with the consumer protection laws, codes of conduct and public commitments that apply to banks and federally incorporated trust, loan and insurance companies. FCAC also provides consumers with accurate and objective information about financial products and services, and informs Canadians of their rights and responsibilities when dealing with federally regulated financial institutions.

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