Having fallen into the low-mininimum payment cycle, a lot of Americans and Canadians are in trouble financially.

Tens of millions, in fact.

Yet, in reading comments on blogs and on-line articles, understanding for the plight of the those who have entrapped themselves seems in short supply.

Those who comment seem to think that just because they resisted the traps set for consumers, or they have enough money for a standard of living that does not need credit, that those who fell in the credit trap are deserving of shame because they “should have known better.”

In fact, it is consumers who are being accused of “taking advantage” of the system, both in regard to the subprime mortgage meltdown and the credit card meltdown, even though it is they who are now losing everything they worked for.

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In my last post I discussed the flaws in just one of Canadian Finance Minister Jim Flaherty’s credit card reform proposals, yet there are others.

Like the U.S. reform bill, at least half of what has been proposed isn’t going to be of much practical help to consumers in helping them get out of debt.

For instance, when you’re getting over your head in debt because your credit card interest rate has just been doubled, getting a 21-day notice or a 45-day notice that your rates are going to double is not likely to be of much long-term value in planning your exit strategy.

What you really need is for your rates to be capped so you can pay off your debt.

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Following the lead of President Barack Obama who signed the Credit Card Accountability, Responsibility, and Disclosure (CARD) Act of 2009 on Friday, Canadian Finance Minister Jim Flaherty has proposed changes to Canadian credit card legislation in order to provide more transparency for Canadian credit cardholders.

One of Flaherty’s stated goals is to help credit cardholders understand how much the credit they are getting will cost them in the long run.  

How will he do it?

His proposal is to make credit card companies provide a calculation for each customer that shows the total cost of paying off his credit card balance when only a minimum monthly payment is made. 

While the idea may sound good at first blush, it is deeply flawed.  [Read more →]