Desjardins Launches Program to Encourage Responsible Credit Card Use

Venerable banking giant Desjardins is launching a program meant to encourage responsible credit card use. The idea is to educate Canadians about the dangers of credit card use -- and encourage them to save more. Reviews of credit card and debit card programs are under way, and could result in changes to the way that Desjardins does things.

With Canadians increasingly using credit cards -- more than 72 million are issued in the country -- it is clear that something needs to be done to help them use credit cards more responsibly so that debt doesn't become the same epidemic that it has become in the U.S.

Increasing the Minimum Payment: Reducing What Canadians Pay

One of the biggest changes that Desjardins will be making involves boosting the minimum payment from 3% of the balance to 5% of the balance. This means that Canadians would pay $5 for every $100 of balance, instead of $3. On a balance of $2,000, that means a payment of $100 instead of $60.

At first, this may seem like a difficult thing for credit card users. After all, it means larger minimum payments. However, in the long run, this move is actually better for credit cards users.

With most Canadian credit cards only requiring 2% to 3% of the balance for a minimum, consumers find themselves in debt for longer. Boosting the minimum payment requirement would make it possible for Canadians to pay off their credit cards faster -- and pay less in interest overall. Still, 5% isn't much, and credit card users should still think twice about paying only the minimum. But it's a step in the right direction.

Education and Notification

Desjardins also believes that consumers can benefit from increased education, as well as notifications about their credit card accounts. As a result, the bank is improving its alert system, adding special alerts that can be used with its mobile banking services. A consumer might receive a mobile alert when his or her credit card balance heads closer to the limit.

Other efforts are underway to improve financial education as well. A release on Canadian News Wire states:

Desjardins will be revamping both the school and student caisse programs and the teaching tools used to support them. Desjardins will also soon launch a savings by instalments program for youth that will include a special bonus paid out to youth who reach their savings goals.

It is clear that Desjardins is working to reach out to consumers and position itself as a credit card issuer that cares about its image. The idea of paying out a bonus to youth for reaching savings goals should help encourage saving, and education about responsible credit habits can help improve matters when it comes to using credit responsibly, and growing up with a more realistic view of money.

Will these measures really help? And how long with Desjardins stick to its ambitious program? It will be interesting to see how long this lasts, and how effective the educational measures will turn out to be.

This post was included in the Carnival of Banking and Money Management.