Credit Card Payment Deferrals can benefit Canadians struggling to keep up with debt. Though benefits like rewards points make credit cards convenient, the list of advantages is quite short today.
The coronavirus is making paying credit card bills difficult. Many Canadians are reeling from layoffs. Many businesses have also had to shut their doors. That means lost income for millions of people.
With incomes slashed, Canadians are going through financial hardship. They don’t have the money in their bank accounts to pay off their credit card bills.
People don’t even have the money to make their mortgage payments or other loan payments. They need financial assistance.
Credit cards usually need to be paid off by their due date every month. They also have minimum monthly payment amount requirements. Credit cards also charge a high interest rate for outstanding balances.
Luckily, credit card issuers are offering some help. They are doing this by allowing credit cardholders to defer their credit card payments.
Here are some credit card companies that are offering credit card payment deferral due to the coronavirus.
Will Deferral Affect Credit Scores?
There is a concern that credit card payment deferral will lower credit scores. This is a possibility. It all depends on how the credit card issuer reports it to the credit bureaus.
Usually, missed credit card payments would result in a lower credit score. That’s because the creditor would report missed payments to the credit bureaus. In turn, credit reports would reflect missed payments.
But if a client qualifies for credit card deferral, lenders must report this activity accurately. This will help make sure that credit scores are not affected. There is always a risk that credit scores could be temporarily affected by credit card payment deferral.
You must speak with your credit card issuer about this.
TD Bank Credit Cards
TD Bank is offering credit card deferrals. This is similar to payment deferrals for other loans, like personal loans or auto loans. TD Bank is giving a Minimum Payment Deferral available for clients.
This deferral option will allow people to defer minimum credit card payments for up to 3 months.
Customers will have to qualify for this option. They will need to meet the following:
- Be a primary account holder for the credit card
- Have a credit card that has been open for at least four months
- Not have received a payment deferral for COVID-19 on the credit card
Also, the credit card must be a personal one. It cannot be a business credit card.
Clients should find out first if they have insurance coverage. This type of insurance pays a monthly benefit toward a TD credit card. The amount paid depends on the eligible outstanding balance.
Please note that clients who want to defer their credit card payments will still have to pay interest. The interest may stall, but it will still accumulate.
If clients cannot make their credit card payments after month 4, please contact TD Credit Cards. Hopefully, there is another solution.
CIBC Credit Cards
CIBC is also allowing clients to defer their credit card payments. To take advantage of this option, clients will have to call CIBC. Or, they complete a financial assistance form.
Clients can defer their credit card payments for up to 3 months. They may also get a rebate for a part of the interest charges accumulated during the deferral period. That means interest relief on credit cards is also available.
CIBC credit cards offer an interest rate of 10.99% during the deferral period. This is helpful for people who have interest rates that are higher than those on their credit cards. People with an interest rate of 10.99% or lower won’t be affected.
The interest rebate will apply to upcoming statements. When the deferral period is over, the regular minimum payment will start on the next statement. There will be no other rebates for interest charges after that.
Clients who already requested to defer their credit card payments will get a rebate for part of the deferral period. This will give an interest rate of 10.99%. No further action is needed.
Clients must first get approval for deferred credit card payments.
Clients will still be able to earn rewards on their CIBC credit card account.
Business credit cards also qualify for payment deferrals. They are also eligible for interest rate relief. This is to help support business clients who are experiencing financial hardship.
Royal Bank Credit Cards
RBC is also allowing clients to defer their credit card payments. The bank is offering clients a reimbursement of credit card charges by 50%. This is for eligible clients who are dealing with financial hardship because of COVID-19.
Clients can get 50% of the interest charged on their accounts. This will be during the period that they are getting minimum payment deferrals. People getting minimum payment deferrals will be reimbursed for 50% of the interest charged.
The credit will reflect on the client’s credit card statements.
Clients who need more time to make a minimum payment on their credit card can request to have their payments deferred. They call this the relief period. Eligible clients can defer their minimum payment for one month.
During the relief period, they waive the minimum payment requirement. When the relief period ends, the minimum payment will be due.
If there are no payments made during the relief period, the minimum amount could be higher. Interest will also continue to accrue during the relief period. These charges will add to the outstanding balance.
This accrued interest could increase the outstanding balance. However, interest is not charged on the accrued interest.
BMO Credit Cards
Clients can defer their credit card payments from BMO. They can also get interest relief on their credit card. Clients will have to get in touch with customer support to fill out a financial assistance form before being approved for deferred payments.
Clients may also be able to get a rebate for a part of the interest charges accrued. That means clients can take advantage of lower rates. Interest rates can be lowered to 10.99% for purchases during the deferral period.
The rebate goes toward upcoming credit card statements. When the deferral period is over, the regular minimum payment will begin on the next statement. At this point, a rebate will no longer go toward interest charges.
Clients who already requested to defer credit card payments will still receive a rebate for part of the interest charges accrued. Take no further action.
Business credit cards also qualify for payment deferrals and interest rate relief. The purpose is to support business clients who are going through financial hardship.
Scotiabank Credit Cards
Scotiabank is also offering credit card payment deferrals. You can defer your payments for up to 3 months.
During this time, clients do not have to make the minimum payment required on their credit card account. Any interest will still apply to the outstanding balance. This interest will be added to the balance every month.
Clients who qualify for a credit card payment deferral will have their interest rate reduced to 10.99%. This is temporary during the deferral period. This reduction in interest will show as an interest credit on the credit card statement.
No credit application is needed. Instead, clients with a credit card who are impacted by COVID-19 can get relief from Scotiabank. All that clients need to do is fill out an application and be registered for Scotia OnLine to request credit card payment deferral.
National Bank of Canada Credit Cards
Clients of National Bank of Canada can request to defer their minimum credit card payments due. They can do this for 90 days. This can help clients experiencing financial difficulties from COVID-19.
The bank is also allowing clients to increase their credit card limit temporarily. They can apply for this through the bank’s mobile apps or website.
Credit cardholders can also get a temporarily reduced interest rate of 10.9%. This will depend on their file. The interest rate will only apply to the balance, and not on the interest.
The bank will look at clients on a case-by-case basis.
The COVID-19 pandemic is affecting jobs all across the country. This is causing a decrease in income. And in turn, it’s making it hard for people to pay their credit card bills.
Luckily, credit card issuers are allowing payment deferrals to help out. They are also allowing a reduction in interest rates to those who qualify.
If you are having trouble paying your credit card bills, please visit your credit card provider’s website or call them to request a deferral. If your money troubles go beyond needing credit card payment deferrals, speak to one of our trained staff about a free credit counselling session today.