The Globe and Mail reports in its Tuesday edition that reward points are a big portion of the cost of running a credit card business today. The Globe's Rob Carrick writes that load is expected to rise this year because of increased competition between card issuers -- a result of Air Canada's rebooted Aeroplan loyalty program, of which TD Bank is a lead partner. TD has targeted its financially weakest customers to boost profits. TD will start charging compound interest on all its credit cards starting in March, which means customers could end up paying interest on unpaid interest. Mr Carrick says that there is more than a heartless banker narrative here. Anyone who collects reward points is implicated in this as well. The wonderfulness of collecting credit card reward points has a cost that is in part paid by those carrying unpaid balances on their card and thus getting hammered by high interest rates. TD is charging as much as 20.99-per-cent interest on its credit cards while the Bank of Canada's trendsetting overnight rate is 1.75 per cent. The new practice will take effect in March and start appearing on April statements. Unpaid interest will be added to a client's balance at the end of each statement period.
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