Banks offer relief measures for credit card holders amid a pandemic
Canadian banks have cut credit card interest rates to ease the financial toll that Covid-19 is taking on people and businesses.
The Royal Bank of Canada’s (RBC) Client Relief Program is giving clients the option to request minimum payment deferrals for up to six months, and the credit card interest rebate of 50% applies during the deferral period.
“While these programs were set to expire on June 30, we are continuously evaluating them to ensure we provide clients with the support they need,” said AJ Goodman, RBC’s director of external communications for personal and commercial banking.
The bank also offers solutions that can be tailored to their clients’ circumstances. These solutions include refinancing, switching to lower-rate products, fee waivers, debt consolidation and changes to loan amortization or a full-credit restructuring.
“These options are being made available as widely as possible to help clients with temporary cash flow and debt payment relief during these times,” Goodman added.
Canadian Imperial Bank of Commerce (CIBC) is also offering a temporary lower annual rate of 10.99% to personal credit card clients who have requested to skip a payment due to financial difficulty. As of April 6, credit card purchases exceeding $100 made through CIBC Pace It are eligible for installment plans with lower annual interest rates for a limited time. There is also a rebate on the one-time installment fee when setting up CIBC Pace It.
For Montreal-headquartered National Bank of Canada (NBC), credit card holders can defer minimum monthly payments on their Mastercard by up to 90 days. The bank has also temporarily reduced the annual interest rate to 10.9% for credit cardholders who have been granted a payment deferral. Clients with deferred mortgage loan payments will also get a refund on the additional interest incurred during the deferral period.
Since the lockdown, NBC has processed some 9,000 files of deferred payments on credit card bills, said Stéphanie Rousseau, NBC’s senior advisor of public affairs and corporate social responsibility.
Both the Bank of Montreal (BMO) and the Bank of Nova Scotia have reduced interest rates to 10.99% for personal and small business credit cardholders who have received or are seeking minimum payment deferral. BMO is also deferring mortgage payments for up to six months.
The economic shutdown continues to have a significant impact on employment, which fell by nearly two million in April, according to Statistic Canada’s Labour Force Survey. The number of people who were employed but worked less than half of their usual hours due to COVID-19 increased by 2.5 million from February to April.
For those who are financially affected by the shutdown, NBC offers the following tips on managing personal finance:
- Compile a list of monthly expenses, both fixed (rental or mortgage, electricity and phone bills) and variable expenses (groceries, maintenance and car repairs). Compare the sum of your payments with the money coming in to determine if you will be in the red.
- Limit loans and credit by using the debit card if you are unsure if you can pay the bills. Do not take on additional loans if you are already in debt. Contact your financial institution, or seek support from the government or your employer to find out the options available to you. Be mindful of personal loan companies that offer easy sign-up processes without requiring a credit report.
- If your financial situation calls for dipping into your savings, withdrawing money from your savings account should be the first recourse. While there is no financial consequence for withdrawing from a tax-free savings account, you will have to wait a certain period before you can replace what you withdrew. Drawing on your registered retirement savings plan should be the last resort as it can trigger major tax consequences.