The Hidden Credit Card

A deeply concerning story was published on CBC News’ “Go Public” consumer affairs section yesterday, detailing the experience of a woman in a Loblaw’s grocery store who was unwittingly signed up for a credit card under the auspices of a third party sales organization connected to President’s Choice Financial, whose representatives posed to look as if they were promoting in-store points cards.

fraud

Interactions like these are more common than you might think, even if they don’t take place in grocery stores. If you have an RBC credit card, for instance, you’ve probably had to fend off calls from third party marketers licensed to promote life insurance products. The list goes on, including pre-approved credit cards arriving in the mail, students on university campuses pressured to sign up for cards promoting their school pride, and so forth.

Signing consumers up for more credit cards than they need can be a significant danger to personal financial health. The hard checks performed on your credit history when applying for a new card can add up to have a negative effect on your overall credit score. And even if you are paying off your existing credit cards each month, increasing the ceiling between how much credit you actually use and how much is available to you may cause ratings agencies like Transunion to take a second look at your profile. Hidden fees may also take a bite out of your finances once you’ve started using a “free” credit card offered to you in a promotional package.

Canadians’ appetite for credit is one of the highest in the developed world –  we hold 165% debt relative to our income. The availability of seemingly no-strings-attached credit cards or even cards hidden in other promotional materials is certainly not helping stem this appetite. We need to establish a stronger ethical framework around the responsible and measured provision of credit to consumers who can safely integrate it into their financial plans.