Planned interest and fee increases on a number of major Canadian credit cards are now on pause amid the coronavirus pandemic.
TD, PC Financial and Scotiabank told Global News they will not move forward with previously-announced plans to raise the interest rate, charge compound interest or hike fees on select personal credit cards.
The changes come as financial institutions are under pressure to provide a modicum of relief as scores of Canadians struggle to keep up with bills and payments due to the economic disruptions brought on by COVID-19.
On its website, TD says it will not proceed with changes in how it calculates interest on all personal credit cards. A company spokesperson confirmed to Global News this means the bank will not start charging compound interest.
In late January, Global News reported TD would start adding unpaid interest charges to cardholders’ balances at the end of each statement period beginning in March.
“We know how challenging the current environment has been for our customers, colleagues and communities. In consideration, we have chosen to focus our efforts on providing guidance and support to those experiencing financial difficulties, and as a result, we will not be moving forward with planned changes to our credit card terms at this time,” the bank said in an emailed statement.
TD is also postponing the introduction of over-limit fees — a charge that applies when a customer’s balance exceeds their credit limit — on its TD First Class Travel Visa Infinite card, TD Cash Back Visa Infinite card, TD Aeroplan Visa Infinite credit card.
The bank is also temporarily shelving plans to start increasing the annual interest rate for customers who don’t pay their minimum payment by the due date twice within any 12-month period for all personal credit cards.
PC Financial told Global News it is not proceeding with plans to increase the purchase interest rate on its PC Financial Mastercard from 19.97 per cent to 20.97 per cent as of May 2020.
“Last month, PC Financial announced some changes to the annual percentage rate on our cards – a decision that was made several months ago. We’ve been closely monitoring as this situation evolves, and have decided to defer this change until further notice. We’ve also been working with customers case-by-case who may be experiencing financial hardships during this time. We hope this can offer some relief for customers and their families,” the company said in an emailed statement.
Similarly, Scotiabank said it is pausing a scheduled interest rate increase on its Scotia Momentum Mastercard. The bank was planning to increase the annual interest rate on purchases from 19.99 per cent to 20.99 per cent effective April 1, 2020. The bank was also planning to hike certain fees from $3.50 or $4 to $5.
All interest rate and fee increases, however, are now on hold, the bank told Global News.
“We recognize that this is an uncertain time for everyone. As such, Scotiabank is postponing any rate or fee increases previously communicated on our day-to-day banking, credit cards, including reward redemption requirements for debit and credit cards, and creditor insurance and account related business banking products until further notice,” the bank told Global News.
While financial institutions have confirmed to Global News they are pausing the planned increases, this isn’t necessarily reflected in the information Canadians can find online.
As of March 24, the webpage for the PC Mastercard, for example, still reported the scheduled rate increase. Customers visiting the Scotia Momentum Mastercard can also see a notice about upcoming interest and fee hikes.
Scotiabank said it is “working diligently” to update all information on their websites.
All the big banks have said borrowers struggling to keep up with credit card payments because of the pandemic may be able to access financial relief.
RBC says on its website that cardholders may be able to skip a monthly payment, although some restrictions apply.
BMO says immediate relief includes the option of postponing payments for up to six months on mortgages and credit products including cards. The bank, however, warns that interest continues to accrue on outstanding balances.
Scotiabank says cardholders can defer their minimum payments for up to three months, although interest continues to accumulate.
TD and CIBC say relief on credit products is available on a case-by-case basis. And National Banks also says financial support is available for customers in need.