Canada’s Big Banks Cut Credit Card Interest Rates Amidst COVID-19 Pandemic

The COVID-19 pandemic has affected a multitude of people worldwide. Aside from the apparent health and mortality concerns, the pandemic has taken a toll on the financial and economic capacity of people and businesses.

Amidst the COVID-19 pandemic, several of the largest banks in Canada offer to cut credit card interest rates temporarily. This feat will provide relief to its customers dealing with financial problems during the pandemic.

The Big Banks

Among these banks include the National Bank of Canada, Bank of Nova Scotia, Royal Bank of Canda, Toronto-Dominion Bank, Canadian Imperial Bank of Commerce, and Desjardins Group. All six banks announced measures to cut credit card rates, for specific accounts, for the duration of the pandemic.

Effective April 1, 2020, the Bank of Nova Scotia will reduce the credit card interest rates to 10.99% for clients, both personal and small business accounts, facing COVID-19-related financial crisis. Customers are experiencing minimum payment deferrals.

Toronto-Dominion Bank announced to cutting interest rates for the bank’s credit cards by 50% for customers experiencing difficulties. Royal Bank of Canada similarly announced to reduce its credit card rates and charges. The amount will apply after the financial review of your account with the bank’s adviser. As per the bank’s press release, the customers of the Royal Bank of Canada will be eligible for the reduced rate during the time of delay. There can be an extension for the minimum payment deferrals by up to two months.

Canadian Imperial Bank of Commerce (CIBC) will offer credit card interest rate reduction for its pandemic-affected clients. A temporary annual rate of 10.99% will apply to those who request to skip the installment during the lockdown period. On the other hand, the National Bank of Canada, headquartered in Montreal, will compensate its clients for the additional interest charged for the delay of mortgage payments. Additionally, it will apply reduced rates and waived specific banking fees.

Lastly, the Desjardins Group, Quebec-based, and considered the biggest financial cooperative in Canada will give a 10.99% interest rate to all its accounts and clients who will defer their payments.

Effect of These Measures

Since the announcement of these rate reductions, Canadian banks are receiving more than half a million requests. And in this more than half are complete, while the rest are under process. Take note that most banks’ credit cards have interest rates ranging from 19.99% to 20.99% on regular purchases. These may not seem a big deal during ordinary days. However, during a pandemic and global crisis. These additional measures and considerations by these banks are helpful to its customers. For instance, those who are experiencing difficulties amidst the pandemic will benefit from this.

The financial relief provided by these big banks will aid its customers during the crisis. This will ensure their clients that their financial stability is one less thing to worry about in this pandemic.

The Takeaway

While the banks will defer the payments during the pandemic period, it does not take into account the pending payments. This means if you have any unpaid due, it will remain in your account as the banks will not remove that. Instead, they will credit it to the next billing cycle. Therefore, the reduced interest rates will be a huge help for the clients. More so, while managing day to day expenses and regaining financial sources after the pandemic.

Through the efforts of Canada’s Prime Minister Justin Trudeau, Canadian banks can provide support to alleviate the financial burden upon Canadians. This is one of many relief measures that the Canadian government implements to ensure the financial and economic stability of its people amidst the pandemic. Lowering interest rates will reduce the financial stress from the COVID-19 crisis.

Banks are also facing certain compromises because of the COVID-19 crisis. The reduced credit card interest rates and delay of payment schedules will leave a massive blow in the bank’s overall profit. However, doing so will also help banks to prevent their clients from applying for loans. Additionally, banks will also be able to keep their loyal clients by showing the bank’s dependability during the crisis.

The help and support that banks offer are mainly unparalleled in Canada. Some banks across the globe have followed suit to provide financial support in this time of need. In line with this assistance from banks, the government of Canada launches its $250 billion COVID-19 support plans to provide further support.