OTTAWA — The feds are set to ban expiry dates and surprise fees on prepaid credit cards, and are asking for Canadians' input on further regulations.
The changes are to take effect in May.
Canadians have complained of fees to activate cards and keep them active in the first year that eat into the balance.
Prepaid cards are often given as gifts and, unlike traditional credit cards, allow consumers to retop funds for reuse, but the balance can never dip below zero.
Kevin Sorenson, the minister of state for finance, said new rules will make sure fees and rules are clear to consumers.
"Canadians will be better protected, informed and positioned to make responsible financial decisions for their families," Sorenson said Tuesday.
Canadians can comment on the new consumer code until Feb. 28.
John Lawford, of the Public Interest Advocacy Centre, called the move a "step in the right direction" but added that fees attached to these cards should be eliminated altogether.
NDP consumer protection critic Glenn Thibeault says he "applauds" the legislation but doesn't understand why the announcement is happening now.
"This legislation has been around a year and a half now," he said. "It was introduced three budgets ago and now they're bringing it forward to re-announce it right before Christmas but it doesn't matter, because the changes aren't going to take effect until May 2014."
Prepaid cards have been rising in popularity in recent years and are reportedly now a $850-million industry.