The COVID-19 pandemic has swept many Canadians into unanticipated financial uncertainty. Mass temporary layoffs and job losses have left hundreds of thousands of people wondering how they are going to pay their rent and credit card bills in the coming months.
While the federal government is taking steps to ensure that its citizens have financial resources, the financial services industry is also stepping up to do their part for Canadians in their time of need. From emergency loans and mortgage deferrals to more recent measures such as pausing planned credit card interest changes and cutting interest rates, the major Canadian banks are proving that they care about their customers.
How Credit Card Issuers Are Offering Support
So far, Canada’s top banks have announced the following changes to support their customers during these times of financial stress.
Canada’s five big banks have announced payment deferral plans for those struggling to keep up with their credit card bills. RBC is offering customers the chance to skip a monthly payment. BMO will postpone payments on both mortgages and credit cards by six months, but interest will still accrue on your unpaid balance. Scotiabank is allowing customers to defer payments by three months, although interest will also accumulate on these balances.
TD and CIBC have both stated that credit card debt relief is available on a case-by-case basis, but it’s not clear what criteria they are using to determine who qualifies.
While these institutions are offering the chance to defer credit card payments for several months, if you can afford to make your minimum monthly payment, you should. It is recommended you pay at least your minimum monthly payment as interest is still accumulating on your debt, and missing a payment will negatively affect your credit score.
Interest Rate Cuts
Canada’s leading banks have announced cuts to credit card interest rates for customers directly impacted by COVID-19, and are receiving payment deferrals or are requesting to skip a payment.
With these temporary measures, customers can expect to see their rates cut by nearly half of their usual rate. For many, interest rates will be roughly 10.99% instead of the standard 19.99% or 20.99%.
|Financial Institution||Payment Deferral Offered||Potential Interest Rate Changes|
|Bank of Montreal (BMO)||Up to six months||10.99%|
|Canadian Imperial Bank of Commerce (CIBC)||Determined by individual circumstances||10.99% (applied as a rebate)|
|National Bank||Up to three months||10.90%|
|Royal Bank of Canada (RBC)||One month with additional options for longer-term relief||50% interest rate reimbursement|
|Scotiabank||Up to three months||10.99%|
|TD Canada Trust||Up to three months||50% interest rate reimbursement|
The reduced interest rates are not automatically applied unless customers have been approved and are already receiving payment deferrals. For all other customers, reduced rates would come into effect once you reach an agreement with the bank.
Additional Updates by Financial Institution
The pandemic has also spurred further changes from credit card issuers, including pausing planned fee and interest increases indefinitely.
- President’s Choice Financial
- TD Canada Trust
- Other Financial Resources for Credit Card Customers
President’s Choice Financial
PC Financial has put off plans to increase the purchase interest rate on their PC Financial from 19.97% to 20.97%. This change was supposed to take effect in May but has been shelved until further notice.
Scotiabank also has deferred interest rate increases for the Scotia Momentum Mastercard. This credit card’s interest rate was slated to rise from 19.99% to 20.99%, but Scotiabank has indicated that all interest rate hikes are on hold indefinitely.
TD Canada Trust
TD Bank has postponed several changes to popular personal credit cards.
Planned Interest Changes on Hold
TD Bank was planning to change how they charge interest on personal credit cards. The financial institution announced in January that they would start adding unpaid interest charges to the credit cardholder’s balance at the end of the month, effectively charging compound interest. This change was supposed to come into effect in March, but TD Bank announced that they would not be moving forward with this strategy at this time.
Postponing Over-Limit Fees
TD Bank was also set to begin charging fees to customers who spent over and above their credit limit. This change was going to affect their travel rewards credit cards, including the TD First Class Travel Visa Infinite Card, the TD Aeroplan Visa Infinite, and the TD Cash Back Visa Infinite. TD Bank stated they would postpone these changes.
No Interest Rate Hikes for Late Payers
TD Bank has also announced additional measures of postponing its plan to raise interest rates for customers who can’t make their minimum credit card payment twice within 12 months. This change would have affected all TD credit cards and has been deferred until further notice.
Other Financial Resources for Credit Card Customers
Speaking with your bank or credit card issuer may ease some of the financial pressure you are feeling. However, some Canadians won’t qualify or will require further aid. The federal government has launched the Canadian Emergency Response Benefit (CERB), which provides Canadians who have stopped working due to COVID-19 with $500 per week for up to 16 weeks.
On top of that, many provinces are offering one-time benefits for residents to help bridge the gap between the time that their employment income ended, and their CERB payments begin. For example, Ontario is offering one-time payments to parents of children who are affected by schools and daycare closures. Parents will receive $200 per child. On the west coast, British Columbia is offering a one-time $1,000 payment to any resident whose ability to work has been impacted by the pandemic.
Many other provinces are offering similar programs to help Canadians get through this troubling time.