Photo by _f1guy68_ via Flickr
It’s hard to imagine we’re half way through 2015 already. Credit cards have made news headlines quite a few times, but the year started off with a surprise cut in interest rates by the Bank of Canada. Lower interchange fees and the code of conduct came into effect in April. Services like Plastiq and Rentmoola have also risen in popularity with the younger crowd. Without further ado, let’s take a closer look at the top financial news headlines of 2015.
The Bank of Canada Lowers Interest Rates
In January the Bank of Canada shocked markets when it lowered the overnight lending rate 25 basis points to 0.75 percent. Previous to the move, the overnight lending rate had been frozen at 1 percent dating all the way back to September 2010.
Borrowers with debt tied to prime rate were excited that their cost of borrowing would be low. Initially, the big banks didn’t lower prime rate, much to the ire of consumers. Finally, the banks caved under media pressure, lowering prime rate by 15 basis points to 2.85 percent from 3 percent. Of note, this marks the first time in Canadian history prime rate hasn’t been cut by at least 25 basis points.
Credit Card Interchange Fees
Credit card interchange fees were a regular occurrence in news headline in the latter half of 2014. After much back and forth, MasterCard and Visa agreed to cap interchange fees at average of 1.5 percent in November 2014. The interchange fee cap came into effect April 1, 2015. This is good news for small businesses, who felt squeezed by premium credit cards with extra high interchange fees. While there haven’t been any major changes to credit card reward programs so far, it will be interesting to see if credit card issuers reduce rewards later in the year to compensate for lower interchange fees.
Credit Card Code of Conduct
Also coming into effect in April was an updated credit card code of conduct. To keep up with the changing times, the code of conduct has been extended to include mobile payments. That means smartphone users have similar rights as those who pay with credit and debit.
The code of conduct gives more rights to merchants. Merchants can now exit their contracts with credit card processors without facing hefty penalties. That’s not all – credit card issuers must now provide greater disclosure to consumers about the fees on premium credit cards. Not only do annual fees have to be disclosed in a more straightforward manner, consumers will also find out how much it costs retailers to process transactions.
Plastiq and Rentmoola
Have you ever considered paying for your income taxes or rent with your credit card? With third-party credit card payment processing services like Plastiq and Rentmoola, now you can. Although these services aren’t new, they’ve become a hit with millennials.
Plastiq lets you pay everything from your income taxes, tuition and utilities with your credit card. Renmoola lets you pay the rent to your landlord with your credit card. A word of caution: both charge service charges. It’s important to make sure the rewards you’ll earn offset the fees you’ll pay.
