The economic impact of COVID-19 has left Canadians grappling with new anxieties and questions. At Ratehub, we’ve sought to address some of the most pressing personal finance topics in our newly-launched COVID-19 Guide. And, thanks to questions submitted by our readers and posed by friends and family of Ratehubbers over weekly Zoom catch-ups, we continue to receive new topics to dive into.
Below are some of the questions we’ve been asked.
Do I need to clean or sanitize my credit card?
Epidemiologists, microbiologists, and health care professionals all agree that social distancing and thoroughly washing your hands with soap for at least 20 seconds is your best defence against the spread of COVID-19. But, many also do recommend regularly disinfecting high-touch surfaces like doorknobs and cell phones. And yes, credit cards can be considered a high-touch surface.
Angela Rasmussen, a virologist at the Center for Infection and Immunity at Columbia University, suggests sanitizing your hands and credit card after a transaction. A recent study from the New England Journal of Medicine also found signs of COVID-19 can linger on plastics and metal surfaces, though the Centre for Disease Control and Prevention has stated the transmission of the virus from surfaces to people hasn’t been documented.
At Ratehub, we’re personal finance experts not health care experts, but sanitizing your credit card is an extra measure you can consider – though washing your hands is what’s most important. Credit cards do feature some level of water resistance, and disinfecting can be as simple as carefully wiping down the card with a disinfectant wipe or applying a liquid cleaner or sanitizer on a cloth then wiping down your card. Make sure to wipe gently – avoiding your card’s chip, magnetic strip, and signature – and don’t scrub your card with anything abrasive.
A great strategy is also to stick with using Tap or Mobile Wallets like Apple Pay instead of swiping or inserting your card. Mastercard, Visa, and American Express have all increased Contactless Pay Limits on a single transaction to $250 from $100 so you can tap and go on more purchases.
Will a credit card payment deferral impact my credit score?
As we’ve covered before on Ratehub, most banks are offering to defer minimum credit card payments for people who are facing financial hardship, as well as a temporary reduction in interest rates.
Banks have stated that once you’ve been approved for a deferral, you can rest assured they won’t report it as a late or missed payment to credit reporting agencies. That’s good news since payment history accounts for roughly 35% of your credit score, making it the single largest factor. For their part, credit reporting agencies, like Equifax, have also said they’re working closely with lenders and creditors during these unprecedented times.
That said, multiple factors go into calculating your credit score – not just your payment history.
One way a deferral could potentially impact your credit rating in the short-to-medium term ties into your credit utilization ratio. Credit utilization measures how much credit card debt you owe relative to your total credit limit, and generally, it’s better for your score to have a lower utilization ratio and to carry a smaller balance. If you request for a deferral, odds are, you temporarily won’t be paying down your debt and will carry a larger balance for longer, potentially increasing your utilization ratio.
If you’re facing financial hardship due to COVID-19, the ability to defer minimum payments and receive interest rate cuts will likely take precedent over a potential short-term fluctuation in your credit rating, but it’s also important to take your score into account.
Speak to your bank when requesting a deferral to clarify the potential impact it could have on your credit score and monitor your credit report. If you do see a credit score drop after a deferral, you might want to consider adding a brief 400-word consumer statement to your credit report to inform lenders that you received deferrals from your bank due to COVID-19. Equifax recently provided the following as an example of a consumer statement: “Be advised that the negative accounts on my credit report are related to the Coronavirus. I intend to make these up as soon as I can.”
Finally, once the payment deferral period ends, you’ll need to be on top of your minimum payments as usual.
If I booked travel on points, will I get my points back when I cancel my flight?
There isn’t a one-size-fits-all answer. It all depends on your travel dates and rewards program. To add to the complexity, cancellations are often evaluated on a case-by-case basis.
The best course of action is to reach out to your rewards program provider and check their COVID-19 refund policy. In many cases, you’ll need to send an email with your flight information, name, contact information, and loyalty number, and wait for a response.
Here are some useful links for some major programs:
- Aeroplan: Until April 30, cancel any flights free of charge and receive a full points refund. Read more
- BMO Rewards: Send an email to [email protected] including your BMO Rewards number, name, flight dates, and destination. Read more
- TD Rewards: With ExpediaForTD, you can cancel flights departing before April 30 to receive a full credit to fly with the same airline at another date. For flights after April 30, you’re encouraged to wait for updates or you have the option to cancel (though the latter can result in cancellation fees). With flights booked using the Book Any Way option, you’ll need to contact TD Rewards and the airline provider directly. – Read more
- Scotia Rewards: Call 1-800-665-2582. If you used the “Apply Points to Travel” option, you’ll need to contact the travel provider directly to cancel your flight (points can still be applied as a statement credit before you cancel). – Read more
- RBC: Read more
- American Express Membership Rewards: You’ll need to contact the travel provider directly. – Read more
- Air Miles: You’ll be refunded change fees to reschedule flights until May 31. – Read more
Will my credit card’s travel insurance cover my flight cancellation fees?
If you do have a credit card with comprehensive travel insurance (including trip cancellation coverage), you might be eligible to receive a refund on your airline or hotel cancellation fees due to COVID-19, but only if you booked your trip before March 13, which is when the Government of Canada issued a global advisory to avoid all non-essential travel. That said, you’re not guaranteed to receive a refund as claims will be evaluated on a case-by-case basis and policies vary by bank. You’ll also typically need to have paid for the entire cost of the trip on your credit card and provide proof of your travel purchase as well as the dollar amount of the cancellation fees charged to your card.
Your card’s insurance likely won’t apply on travel you booked on or later than March 13, since that’s after the government issued its worldwide travel advisory and marks a key point in time when most insurance providers categorized COVID-19 as a “known issue.”
Will my travel points expire? Can I extend them? And, should I switch to a cash back credit card?
Most of the major credit card rewards programs offered by banks – including TD Rewards, BMO Rewards, Scotia Rewards etc. – don’t have explicit expiration dates. As long as your credit card account is open and in good standing, your points should remain available.
For some co-branded loyalty programs, points can expire if there are absolutely no signs of activity on your account for 12 consecutive months (i.e. Aeroplan) or 24 consecutive months (i.e. Air Miles). Avoiding expiry is usually easy though; all you have to do is use your credit card and earn miles at least once before the 12 or 24 month milestone. You’re not required to redeem miles to avoid expiry, but your account needs to remain active. For their part, Aeroplan has said that any miles that were set to expire by May 14 will remain active, though their normal policy will kick back in on May 15.
It’s important to note your credit card usually needs to be in good standing for your points to remain available, which means you must make at least the minimum payments every month and can’t miss consecutive payments (unless you’ve been approved for a payment deferral). If you do choose to cancel your credit card, you may lose your points instantly or have a 2 month window before they expire, so have a plan in place to redeem as soon as possible. Several rewards programs’ terms and conditions do include a statement that points or miles can be changed or terminated with some notice (i.e. 2 months) to cardholders. Be sure to read up on the terms of your particular rewards program.
Before you consider switching to a cash back credit card, first look into how your points can help you save on non-travel rewards like gift cards or cash credits. You’ll also want to take into account that several of the best cash back credit cards only redeem rewards once a calendar year, though cards like the Tangerine Money-Back offer cash back every month while the TD Cash Back Visa Infinite lets you redeem your rewards at any time in increments of at least $25.
What are banks doing for people with fair credit who are still working but don’t qualify for any government programs or new loans?
There isn’t a clear cut answer here. If you’re in a cash crunch, you may want to consider checking with your bank if a payment deferral and temporary interest rate cut are possible, even if you haven’t faced a reduction in income or aren’t receiving government benefits. If that’s not an option, you can also check with your bank if there are other credit relief solutions. TD, for instance, says that if you don’t qualify for a payment deferral you can contact the “ TD Helps Team” to discuss other options or that “you should consider contacting TD Credit Cards” to find a solution. Speaking with a customer service representative can be worth your time, especially since banks do stress that credit relief options can vary on a case-by-case basis.
If your main goal is to increase your access to new credit, you may want to reach out to the financial provider you currently bank with to see if it’s possible to arrange an increase in your current credit limit or get a new line of credit – though you’ll likely have to undergo a credit check. It’s worth mentioning some banks may be more hesitant to extend new lines of credit during the pandemic, especially if an applicant’s future employment status is uncertain. There are other loan options available, however, it’s important to acknowledge that loans or lines of credit with no or limited eligibility criteria usually include extremely unfavourable and often predatory terms and high annual percentage rates. Make sure to consider your options, read the terms and conditions closely, and understand the repercussions of any new loans or lines of credit you open.
I ordered groceries online but only got 0.5% cash back on my credit card instead of the usual 2% on groceries. How can I fix that?
Visa, Mastercard, and American Express categorize retailers based on multi-digit merchant codes. If you bought groceries online using your credit card but the retailer or delivery service you ordered from isn’t registered under the grocery merchant code, you won’t earn bonus rewards. Each credit card company has its own merchant codes system and your bank won’t be able to adjust your rewards.
Unfortunately, there isn’t an easy fix here.
Costco, for example, notably isn’t considered a grocery according to Mastercard. You can consider reaching out to the actual retailer and bringing up how they may want to adjust their merchant code. Changes to major retailer merchant codes can also happen over time. In fact, as recently as last month, some points collectors noted that Instacart is now being identified as a grocery by their American Express Cobalt Card, earning 5 times the points per dollar as opposed just the standard one point per dollar it did in the past.
To ask your COVID-19 personal finance questions, send us an email at [email protected] with the subject line “Ask Ratehub”.
Some questions may have been abbreviated. Answeres are intended to provide general information and not legal advice. Check with your credit card provider for details.