Banks Stepping Up With Support for Canada During the Corona Crisis
The coronavirus crisis has had a crippling effect on Canada’s economy over the past few weeks. Business closures, rising unemployment rates, and a crashing stock market have left few Canadians unscathed and concern about personal finances is at an all-time high.
In an effort to stabilize the economy and diminish the negative impact of COVID-19 on customers, many of Canada’s banks are taking unprecedented steps to make it easier to manage mortgages and credit card debt. On March 17, 2020, six of Canada’s largest banks announced plans to offer financial relief to Canadians who were impacted by the economic consequences of COVID-19.
The press release states that “Effective immediately, Bank of Montreal, CIBC, National Bank of Canada, RBC Royal Bank, and Scotiabank, and TD Bank have made a commitment to work with personal and small business banking customers on a case-by-case basis to provide flexible solutions to help them manage through challenges… This support will include up to a six-month payment deferral for mortgages and the opportunity for relief on other credit products. Individual Canadians or business owners facing hardship are encouraged to contact their bank directly to discuss options that could be available to them.”
Since that announcement, banks have provided more concrete details about what help they will make available to their customers in terms of mortgages, credit cards and more. Here are the essential facts you need to know about what some Canadian banks are doing to offset the financial hardship of COVID-19.
In This Article:
Canadian Bank Relief Overview
|Mortgage Payment Deferral||Credit Card Payment Deferral||Decrease in Credit Card Interest Rate||Other Relief Offerings|
|BMO||Up to 6 months||Up to 6 months||Reduced to 10.99% during payment relief period||some payment relief on other kinds of loans|
|Scotiabank||Up to 6 months||Up to 3 months||Credit card interest rate reduced to 10.99% during deferral period||Auto loan or Scotia Plan Loan payment deferrals|
|RBC||Up to 6 months||Up to 6 months||Interest rates reduced by 50% for those receiving credit card minimum payment deferrals||Waiving some fees, like stop payment fees and ATM statement fees; auto and installment loans are eligible for payment relief; special relief available for business banking customers|
|TD Bank||Up to 6 months||Up to 3 months||50% interest rate reduction for up to three months||TD Home Equity FlexLine payment deferral; possible payment relief on personal and auto loans and lines of credit; special relief programs for business clients|
|CIBC||Up to 6 months||Yes, duration unknown||Decrease to 10.99% during relief period||Defer payment on loans and lines of credit for up to 2 months|
|NBC||Up to 6-month deferral available; bank may reimburse additional interest payments||Yes for max of 90 days||Clients may get a reduced interest rate of 10.99%||Temporarily waiving some banking fees|
The bank has introduced a series of flexible financial relief programs for both individuals and businesses. Relief includes:
- Deferral of mortgage payments for up to six months. COVID-19 related mortgage deferral is available for applications received before June 30, 2020. Mortgages must be in good standing. Note that while payments are not collected, the interest on your mortgage will continue to accumulate and will then be added to your outstanding mortgage balance
- This delay in mortgage payments won’t impact credit scores
- Be aware that since your payments in the current term will remain the same as before the deferral period, you’ll end up paying more interest over the life of your mortgage
- Deferral of payments on loans, lines of credit and credit cards for up to six months (it’s crucial to be aware that though your payment will be deferred, interest still continues to accrue so it’s wise to pay off whatever amount you can afford)
- Interest rate decrease to 10.99% for personal and small business customers who are receiving a credit card payment deferral
- Special accommodations for business banking clients
- An increase to daily debit card limits
For specific details about BMO’s debt relief program, you can check out the website. The call centers are experiencing very high volumes so the bank is asking customers to sign in to BMO Online Banking and send a request for payment relief through the secure Message Centre.
Scotiabank’s relief programs feature:
- Mortgage payment deferrals available for up to 6 months. Interest will continue to accrue and will be added to your balance when the deferral period ends
- Auto loan or Scotia Plan Loan payment as well as Line of Credit deferral of up to 3 months
- Credit card payment deferral for up to three months. If your account is approved for a credit card payment deferral, the bank will temporarily reduce the interest rate on new purchases and cash advances to 10.99%. Interest will continue to accrue on your outstanding balance.
- As of April 7, customers impacted by COVID-19 are offered the option to submit an online request for minimum payment deferrals on their accounts and a reduced rate of 10.99% during that period of time.
Call volumes are very high so customers should fill out the necessary forms for relief online.
Canada’s largest bank, RBC has created a Client Relief Program to help customers tackle the financial fallout from COVID-19. The plan features:
- Deferring payments on mortgages, credit cards, installment, and auto loans for up to six months. Credit card interest rates may be reduced by up to 50% for clients receiving credit card minimum payment deferrals
- Waiving certain fees, like stop payment fees and ATM statement fees
- Clients experiencing extreme financial hardship are advised to book a call with an advisor through the online appointment booking service
- For commercial and small business clients, RBC is enabling payment deferral and temporary limit increases if needed. The bank is also temporarily waiving setup fees for enrollment in electronic cash management and remote cheque processing
You can learn more about RBC’s Relief Program on their website.
TD Bank emphasizes that eligibility for relief measures will be on a case-by-case basis. The bank is offering the following programs:
- Possible six-month mortgage deferral. Mortgages must be in good standing and deferrals will be available until at least June 30, 2020. The website succinctly states that “the mortgage deferral offer is a pause on mortgage payments themselves, not a forgiveness of the overall mortgage obligation, which means that interest will continue to accumulate and be added to your debt.” Remember, this statement is true for all mortgage deferrals with any bank.
- TD Home Equity FlexLine payment deferral
- Eligible clients will receive credit card payment deferral for three months and a 50% interest rate decrease for up to three months. Interest will continue to accrue
- Auto loans (with TD Auto Finance) may be eligible for deferral of up to two monthly payments
- Business banking clients can request a deferral of four months principal payments on a business loan and a deferral of up to six months on a real estate secured business term loan
You can fill out the necessary relief request forms on the TD website.
CIBC’s relief packages include:
- A mortgage payment deferral of up to six months for eligible clients. Interest will continue to accrue.
- Unfortunately, CIBC is not clear on how long credit card payment deferrals may be available. The website simply states that “you can defer your upcoming credit card payments.” CIBC will reduce interest rates to 10.99% for clients who request payment relief.
- Defer payment on loans and lines of credit for up to 2 months
Customers can get more information and fill out the appropriate relief forms online.
NBC relief package for customers features:
- Mortgage deferrals up to 6 months. Extensions may be possible. Interest accrues during the deferral period but the bank may reimburse the additional interest (National Bank of Canada is the only bank I am aware of offering to reimburse additional interest).
- Possibility to defer minimum monthly payments on a National Bank Mastercard credit card balance for a max of 90 days; clients who request a deferral may get a reduced interest rate of 10.99%
- The option to request a personal loan payment deferral to be reviewed by an advisor And a solution is provided on a case-by-case basis).
- Certain banking fees for items like Interac-Transfers and stop payments are temporarily waived
You can read more about NBC’s support measures and apply online for relief on the website.
Other Financial Institutions Offering Relief
Canada’s big banks aren’t the only ones offering clients assistance in dealing with the financial repercussions of COVID-19.
HSBC states on their website that they will assist eligible personal and small business customers experiencing financial hardship. They are offering up to 6 months of mortgage payment deferral, as well as relief on credit card debt.
Tangerine Bank is offering its clients experiencing financial hardship may be able to defer mortgage payments for up to 6 months.
The online bank is also offering Tangerine Money-Back credit card payment deferrals for up to 3 months with a temporarily reduced interest rate at 10.99% during the deferral period.
The coronavirus has created an unprecedented financial crisis for many Canadians, and it’s essential that we all avail ourselves of whatever help we can to mitigate any potential monetary difficulties. It’s equally true, however, that none of these programs are a free pass.
All the above banks’ deferral programs only mean that your payment will be delayed; the interest accruing on the debt will continue to grow so it’s crucial to pay off as much as possible. Furthermore, even when credit card interest rates are lowered, it’s financially smart to stay vigilant with your spending and not let the lower rate tempt you to spend unnecessarily, which could lead to more debt and financial hardship overall.
If you’re worried about your ability to pay back your debt even with these deferral programs, you may want to consider a few ways to save or make a little extra money. The best chequing accounts, for example, often have no or low monthly fees, which can save you anywhere from $10 to $30 each month. On the other hand, the best savings accounts offer desirable interest rates that can make you a little money each month on your existing balance.
Finally, keep in mind that the coronavirus situation is constantly in flux so banks may increase or decrease relief programs as the pandemic evolves.
If you do reach out to your bank for relief, protect yourself by ensuring that you do the following:
- Call volumes are incredibly high at all banks so try to fill out the required forms online. This is a good time to familiarize yourself with online banking, which banks are asking clients to use when possible instead of calling in.
- Get a copy of your mortgage relief agreement in writing if possible.
- Get clear confirmation on whether or not your credit score will take a hit. Many banks are clear that your score will not be affected negatively for mortgage payment relief but are less clear about the possible negative effect on your score for credit card payment deferrals.
- Make sure you understand how much extra interest you may end up paying overall by postponing mortgage and credit card payments.
- Some credit card companies and banks are encouraging clients to ask for credit limit increases. Avoid this route if at all possible as it may possibly lead to more debt, making your personal financial situation worse in the long run
- Remember, banks are not promising that every client will be eligible for relief. Banks state that these programs are available on a case-by-case basis and some institutions may ask you to prove that you are undergoing financial hardship to be eligible for relief.