One of the challenges with government-driven economic policies is that they often arrive late and create more problems than they solve. Quebec, a province already struggling with weak private sector growth, has introduced Bill 72, legislation that changes how credit and debt are managed.
On the surface, this is framed as a “consumer protection” law. In reality, it risks driving up operational costs for banks, limiting lending flexibility, and ultimately leaving borrowers in a worse financial position.
The Core Change: Higher Minimum Payments
As of August 1, 2025, Quebec requires that all credit card minimum payments be set at 5% of the outstanding balance. This was the final step in a phased increase that began in 2019 under Bill 134. The stated goal is to help consumers pay off debt faster and reduce reliance on revolving credit.
In theory, this sounds reasonable. In practice, it forces households—already burdened by a rising cost of living—to pay more each month, reducing flexibility in how they manage their budgets. While banks are prohibited from charging more than 5% without consumer consent, the reality is that this “protection” creates new risks of default, especially for lower and middle-income families.
Why Banks Are Adjusting – and Why Consumers Should Care
For banks, higher mandatory payments reduce the ability to earn interest from long-term revolving debt. Institutions like BMO are responding by tightening consumer lending, scaling back credit products, and in some cases, canceling retail credit cards and lines of credit altogether.
This is not surprising. Banks operate by packaging and selling debt, often separating borrowers who consistently pay from those more likely to default. The new Quebec rules accelerate that process. By removing flexibility in repayment, the government is essentially forcing banks to identify “good” versus “bad” borrowers sooner. Some observers believe AI-driven models are already helping banks make these decisions at scale.
The result? A higher risk of debt being sold to collection agencies at steep discounts. For example, a $10,000 debt might be sold for $500. If that happens, consumers may be able to negotiate significant settlements—but only after suffering damage to their credit history.
Bill 72’s Broader Consumer Protection Rules
Beyond minimum payments, Bill 72 includes new restrictions on how banks and lenders operate:
How It Helps Consumers
- No more surprise credit limit increases without consent.
- Written, plain-language contracts for every loan or credit agreement.
- Any changes require a new signed contract.
- Ability to cancel linked products (like insurance) tied to a loan.
- Leases now treated like loans, giving renters more protection.
How Banks Lose
- Reduced interest income from “silent” credit increases.
- Higher administrative costs, as every change needs paperwork.
- Fewer bundled sales opportunities.
- Greater competition as clearer contracts make it easier for borrowers to shop around.
- Higher legal risk if rules are not followed precisely.
On paper, this looks like a win for consumers. In reality, the costs will likely be passed back to the very same consumers through tighter lending and higher interest rates elsewhere.
The Bigger Picture: Quebec’s Structural Problem
The deeper issue is not just credit card policy—it’s Quebec’s economic structure. The province has some of the highest household debt levels in Canada, combined with stagnant private sector job growth. By layering on more regulation, the government is making it harder for banks to operate profitably in consumer markets.
This mirrors past mistakes in Canadian policy. For example, when the federal government repurposed the Canada Mortgage and Housing Corporation (CMHC) in the 1990s, it fueled a condo boom driven by investors, not everyday buyers. Eventually, inflated housing costs made life harder for regular Canadians. Bill 72 risks creating a similar cycle in consumer credit—intervention that looks good politically but weakens the system in the long run.
What Happens Next?
At this stage, it is too early to know the full impact. BMO and other banks appear to be shifting focus away from consumer retail lending and toward commercial markets where regulation is lighter. For everyday Quebecers, this could mean:
- Reduced access to personal credit.
- Higher rejection rates for loans and credit cards.
- More debt being sold off to collections.
Consumers should prepare for tougher lending conditions and consider negotiating if their debt is sold to third parties.
Conclusion
Quebec’s Bill 72 may be marketed as a pro-consumer reform, but the reality is more complex. By increasing minimum payments and layering on compliance costs, the law risks pushing more consumers into default and forcing banks to withdraw from retail lending in Quebec.
The province’s structural economic weaknesses make these policies especially dangerous. Instead of addressing the root issues—high taxation, slow job growth, and overregulation—Quebec’s government has chosen to place even greater pressure on lenders. History suggests this approach will backfire.
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