TORONTO – Several of Canada’s largest banks are offering reduced interest rates on personal credit cards for Canadians in financial hardship due to the COVID-19 pandemic.
CIBC credit card clients who request to skip a payment and are experiencing financial difficulties will receive a temporary lower annual interest rate of 10.99 per cent, the bank announced in a statement.
For the 80,000 Canadians that have already received CIBC credit card relief, the temporary lower rate will be retroactively applied to March 15, the company said.
“We know Canadians need help now to manage day to day expenses,” Laura Dottori-Attanasio, senior executive vice-president, personal and business banking, said Friday.
“By lowering rates, we want to help reduce stress that Canadians are feeling as a result of COVID-19 and provide them with additional flexibility for every day purchases.”
Royal Bank said it was cutting credit card interest charges by 50 per cent for personal and small business clients receiving minimum payment deferrals for up to two months.
A 50 per cent credit of their interest charges will be applicable upon completion of a financial review with a bank adviser.
Clients already receiving minimum payment deferrals will also have interest charges cut in half with the difference in interest credited to their account.
“Clients are managing their spending as they adjust to new circumstances and, to help them, we have introduced several relief measures to support them in this very difficult time,” said Neil McLaughlin, head of personal and commercial banking.
He said about 80 per cent of clients don’t pay credit card interest or have access to lower interest rate options like lines of credit.
“By reducing interest charges for clients who receive credit card minimum payment deferrals, we are now offering additional support during these challenging times.”
National Bank said it is reducing the impact of interest charges on credit cards for clients who requested a deferral and who are most affected by this crisis.
It will defer minimum monthly payments on National Bank Mastercards by up to 90 days and temporarily reduce the annual interest rate on credit cards to 10.9 per cent for all credit card holders granted a payment deferral.
It is also helping with interest charges for those who defer mortgage payments and prioritizing calls starting next week to call centres for seniors 75 plus.
“In the past few weeks, we’ve helped tens of thousands of clients by offering them relief measures, payment deferrals and valuable advice and support,” said Lucie Blanchet, executive vice-president, personal banking and client experience.
Scotiabank said it is also offering a range of relief measures, including minimum credit card payment deferral for up to three months.
However, interest will continue to accrue on outstanding balances and will be payable once the deferral period is over, says a notice on its website.
TD announced it would reduce credit card interest rates by 50 per cent for customers facing financial hardship.
“Most Canadians pay their credit card on time, but we know that right now some families are facing financial hardship and are in need of some additional relief,” said Teri Currie, group head, personal banking.
TD said customers directly affected by COVID-19 who need payment deferrals can apply online regarding mortgage payments, credit card payments, auto loan payments and business banking principal payments.
The moves come as the big banks faced calls to lower interest rates on things like credit cards, which generally carry high interest rates compared with other types of borrowing, to help reduce the bills faced by Canadians.
The banks announced more than two weeks ago that they would offer mortgage payment deferrals for Canadians who may be struggling due to COVID-19.
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They have also lowered their prime rates, which are used to set the amount charged for variable-rate mortgages and other variable-interest loans, as the Bank of Canada cut its key interest rate target.
This report by The Canadian Press was first published April 3, 2020.
Companies in this story: (TSX:CM, TSX:RY, TSX:NA, TSX:BNS, TSX:TD)