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Those stats are from the end of 2019. Since the COVID-19 pandemic took effect, Statistics Canada reports that more than one million Canadians lost their job in March, taking the unemployment rate from historic lows to 7.8%. The job loss is a decline not seen since the 1980s.
What does that mean to our day-to-day financial lives? One in three (34%) Canadians are worried that they may miss rent or a mortgage payment or have to borrow money, according to an Angus Reid survey, released March 25. In addition, the survey found that 37% of households who have experienced job loss say that they aren’t equipped to handle an extra $100 expense in the next 30 days.
With all this in mind and no set date for the country to reopen, we’re all looking to pare our expenses down. That means cutting back on unnecessary expenses, as well as reducing food waste by cooking everything in the pantry. If, after doing that, you’re still short on cash to cover necessities, you might want to consider deferring payments where you can, including on credit cards.
What does credit card deferral mean?
Before you make that decision, it’s important to understand what deferring payment means. It’s not a wiping out of debt, as when Chase Canada exited the market and forgave all credit card debt for its customers. While you won’t have to make any payments now, you will have to pay your balance eventually. Plus, while you’re deferring payments, interest is still accruing on your balances.
Canada’s Big Five banks, and other financial institutions, are offering credit card payment deferral upon approval. That means even if you think you need the financial breathing room that temporarily not having to pay your credit card bill would provide, your credit card issuer may not agree. The amount of time you can defer payment varies from issuer to issuer, generally one to six months.
Will deferring payments affect my credit score?
Once you officially contact your financial institution and get approved for deferral, a skipped payment will not affect your credit score.
What deferral options are available from major credit card issuers?
Let’s look at the deferral options some of the major credit card issuers are offering for personal credit cards, and what that means for you if you are approved.
What is the offer?
Vancity is offering 0% for clients, on credit card deferments – in these times when so many of us have more time on our hands, more people could be moving their accounts to the not-for-profit credit unions, who advocate for their clients, for the disenfranchised, and who give back to their communities, rather than making billions of dollars every year…….
Please. Let’s make it clear. All the banks are offering is increased indebtedness. Interest will increase your balance owing and increase the bank’s overall profits in the long run. It’s a trap they’ve laid for you. Before these ‘offers’ I could always accomplish the exact same thing by paying my minimum Line of Credit monthly amount and re-transferring the same amount back into my account. All this would do is increase my interest owing next month. Don’t tout this as a ‘contribution’ by the banks to this crisis. These measures profit the banks.
I think that the unfortunate COVID-19 situation has made the need for financial education more important than ever so that more people learn to live within their means, plan for inevitable emergencies, and save for lifestyle goals in the short and long term.
Thanks for sharing well education