Canadians Get No Respect On Credit Interest Rates!
InvestorGeeks recently ran an analysis on the spread between credit card interest rates and the American prime lending rate. I feel dirty and used after reading the article. That’s not because of whatever Chris wrote, but because those numbers brought up deep-seated resentment about the Canadian financial services industry.
I’ve blogged critically about high Canadian brokerage commission fees. I can also look past our high tax rates for the reciprocated services. But when I hear complaints about how gas and oil companies are making record profits hand-over-fist, I wonder why Canadians are letting banks get away with the same thing. We are so eager and willing to hand over our money, yet nobody ever questions the sanity of the status quo.
I’ve searched the credit card interest rates offered by the “Big 5″ Canadian banks so that you don’t have to!
Even President’s Choice Financial, an online bank popular for its low cost of doing business charges 18.97% for its PC Mastercard. This has always been the rates that Canadians have been used to as there’s no correlation with the fluctuating prime rate. While everybody talks about interest rates being at their historical lows, credit card companies did not adjust to reflect interest rate conditions; further padding their bottom lines.
If you still don’t understand why I’m upset, maybe you are one of those Canadians that have gotten used to why things work. Perhaps it’s time to wake up from the matrix? Let’s compare current conditions (as of this writing) between the USA and Canada.
| USA | Canada | |
|---|---|---|
| Federal Rate | 6.25%1 | 4.25% |
| Prime Lending Rate | 8.25%1 | 6.00% |
| Typical Credit Card Interest Rate | 14.16%2 | 18.90% |
| Notes: 1. source: BankRate.com 2. source: IndexCreditCards.com |
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If anything is saving Canadians, it’s the fact that our savings rate are better than those south of the border (though not by much!). But that’s little comfort when we see 5 giant goliaths monopolizing the industry; doing whatever they want with impunity and disregard for the consumer. And they want to allow the Big 5 to pursue mergers and acqusitions among each other?
What do you think about this? I’d love to hear viewpoints from both Canadians and non-Canadians. And don’t get me started on how book publishers have not reflected the current exchange rates in their American / Canadian pricing either! When will Canadian consumers get some respect?
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