Bell, Canada’s largest telecommunications company, quietly increased the interest rate for late payments to a whopping 42.58 per annum, sparking complaints from company critics that accuse Bell of racing towards the nation’s 60 percent usury limit.

Michael Girard, writing for lapresseaffaires.cyberpresse.ca, says the company is way out of line demanding interest 42 times higher than the interest rate charged to the Bank of Canada on past due balances .

To “appreciate” Bell’s 42.58% rate, let’s compare it with other rates charged by lenders in Canada:

• It’s 42 times the Bank of Canada rate;
• 14 times the 3% prime rate charged to banks;
• Eight times the mortgage rate for five years (5.0%);
• More than twice the interest (19%) charged by credit card issuers;
• Approaching double the interest rate charged by the worst department store credit cards (28%)

The increase in interest charges took effect this past June.

Why has Bell increased its late fee interest rate into the stratosphere?  Because it can.  In July 2009 the Canadian Radio-television and Telecommunications Commission (CRTC), the agency that oversees the country’s telecommunications industry, deregulated late fees.  This policy change lets providers charge whatever they want for late payments, so long as they don’t exceed Canada’s 60 percent legal limit for interest charges.

Girard says the outrageous fees bludgeon customers who are least equipped to afford them.  He also suggests they are completely out of whack with what other telecommunications companies across Canada charge.

Girard

“Previously, Bell late fees amounted to 26.82%, the same rate as that charged by Rogers and Telus,” Girard writes. “Why did Bell require a rate so high? Bell Canada’s response: ‘The increase in the [interest] rate reflects our increased collection costs, which are now covered.'”

Somehow, Bell’s competitors eke out a barren, profit-scarce existence charging far less:

• Videotron appears the least greedy with annual interest of 19.56% (1.5% annualized per month) on outstanding balances;
• Cogeco ranks second by charging 24% (2.0% per month) on unpaid balances;
• Not far behind, we find Rogers and Telus, with their late payment fees of 26.82% (2.0% annualized per month).