Over the past dozen days or so, the Federal Government announced sweeping new benefits for people out of work, the Bank of Canada lowered its prime rate (for the third time in March), and Canada’s big banks have rallied together to offer mortgage payment deferrals for people facing financial hardship. It’s all in response to COVID-19 and the unprecedented impact it’s having on the economy and our wallets.
But what about credit cards, the type of credit most Canadians rely on everyday? Here’s how some of Canada’s banks are helping those in a cash cruch.
What they’re doing: Bank of Montreal is offering what it calls “flexible financial relief options” for its customers who’ve been directly affected by the COVID-19 pandemic. Specifically, they’re offering payment deferrals of up to six months on mortgages, loans, and credit cards.
If you don’t think you can make your next credit bill or need the cash to cover more crucial daily purchases – like groceries – then a payment deferral can help to tie you over in the short-term.
BMO does have a COVID-19 support page, but it doesn’t offer specific details like who’s eligible for payment deferrals. You’ll need to use the “Message Centre” on your BMO app or contact customer service over the phone for more details.
On April 4, BMO announced in a press release it will temporarily reduce the effective interest rate on its credit cards to 10.99% for people who require financial relief and are receiving payment deferrals.
What they’re doing: Similar to BMO, Scotiabank is offering payment deferrals – but they explicitly mention credit card deferrals can last up to three months while mortgage deferrals last up to six. You’ll also need to qualify by the deadline of September 13, 2020 to receive support (though, it’s unclear if dates will change in the future). Similarly, interest will still accrue during the deferral period and owed once it ends.
Scotiabank customers who receive deferrals are also eligible for a temporary reduction in their credit card interest rate to 10.99%.
Scotiabank is also halting a planned interest rate increase to its Scotia Momentum Mastercard – which was set to increase to 20.99% from 19.99% on April 1st.
As of April 7, you can request for a credit card deferral from Scotiabank straight from your online banking account.
What they’re doing: Earlier this year, TD made headlines for announcing it would start charging compound interest on its credit cards. In the wake of COVID-19, those changes are now on hold. TD is also temporarily holding off on plans to introduce an over limit fee on its three Visa Infinite cards (the TD First Class Visa Infinite, TD CashBack Visa Infinite, and TD Aeroplan Visa Infinite).
TD’s COVID-19 support page also says clients can receive support in the form of credit card payment deferrals for up to three months. Plus, TD announced on April 3 eligible cardholders who receive deferrals will see a temporary 50% cut in their card’s interest rate.
What they’re doing: CIBC is offering financial support on a case-by-case basis, and is encouraging clients who need support to fill out a financial assistance form and wait to be contacted or call customer support if an upcoming payment is due within the next two days. Credit card deferral isn’t explicitly mentioned on their COVID-19 support page, but it doesn’t mean it’s off the table as support will vary depending on each person’s situation. In a letter penned by CIBC President and CEO, Victor Dodig, the bank is said to have helped “thousands of personal, small business and commercial clients by deferring their upcoming mortgage, loan and credit card payments. Or by helping to improve their cash flow by providing new loans or credit limit increases.”
In a major move announced on April 3, CIBC said it will temporarily drop credit card interest rates to 10.99% for people who require financial relief due to COVID-19 and have qualified for credit card payment deferrals. Reports also confirm CIBC Pace It – a program offered by the bank that lets cardholders pay off larger purchases in instalments at a lower interest rate – will be modified so it can be taken advantage of by more people. Previously, CIBC Pace It would only apply to purchases of $250 or more and would include a 1.5% convenience fee. Until June 30, the 1.5% fee will be refunded and eligible purchases as little as $100 can qualify.
What they’re doing: The bank’s online COVID19 support page says it’s allowing clients to submit a request to defer the minimum payment of their next credit card bill for one month – with the potential to ask for additional deferrals at a later time. RBC is encouraging clients to book an appointment in advance or call to speak with an advisor to discuss details.
On April 3, RBC also announced it will temporarily reduce credit card interest by 50% for cardholders who are facing financial hardships due to COVID-19 and have been approved for a credit card deferral.
Other banks and card issuers
Like many of the banks mentioned above, both Tangerine and National Bank have announced they’ll grant credit card payment deferrals up to 3 months and cut interest rates down to 10.99% for people facing financial hardship due to COVID-19. National Bank has even stated it would only take 5 business days to process a payment deferral request.
On March 26th, during a daily COVID-19 press update, Prime Minister Justin Trudeau announced the Government of Canada is speaking directly with banks and asking to lower credit card interest for people who’ve been hit hard financially.
The Prime Minister said “I can assure you that the finance minister has had conversations directly with the banks about credit card interest rates” and “we recognize that they are a significant challenge for many Canadians at this point.” Interestingly, the Prime Minister also announced “we are looking at our end at making credit more available and less expensive for Canadians to be able to make it through the next few months.”
As of April 4, all of Canada’s biggest banks announced they will reduce credit card interest by either 50% or down to 10.99% (depending on the bank) for people who’ve been approved for credit card deferrals.
Canada Emergency Response Benefit
If you’re struggling to keep up with credit card bills because your hours were reduced or you lost your job due to financial stress caused by COVID-19, you’ll want to read up on the Canada Emergency Response Benefit (CERB). CERB is a form of unemployment insurance that can offer you up to $2,000 per month for four months if you’re self-employed, under contract, or a full-time employee who’s temporarily out of work due to COVID-19.
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