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GUIDE: COVID-19 financial relief and support in Canada

by Mark Cluett
10 min read

The COVID-19 pandemic has far-reaching effects on all aspects of our lives, including personal finances.

According to a survey of 2000 Canadians conducted by the MNP Consulting in January 2020, over half are on the verge of insolvency. With a wave of layoffs and furloughs, this figure has most likely increased in recent weeks. In fact, almost 1 million Canadians applied for Employment Insurance as of the beginning of April 2020.

In times like these, Canadians are increasingly anxious about their financial future. This is a normal feeling. Many of us will need to take new and unfamiliar steps to manage our financial situations.

But there is positive news – the Canadian government announced several different relief measures for individuals, families and businesses affected by COVID-19. Keep these services and programs top of mind as you work out your financial plans in the coming months and prepare as you best you can for an uncertain year ahead.

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Government Relief Initiatives

We have compiled a summary of relief measures the Canadian and Ontario governments are offering to individuals. Details of various measures are given here.

Please note that this information is not static: As the plans are fleshed out and more measures are announced, we will keep updating this list. For the most up-to-date information, you need to visit Canada’s COVID-19 Economic Response Plan website.

Individuals

Families

Those sick, quarantined, or in directed self-isolation

Those facing unemployment

  • The Canada Emergency Response Benefit: a taxable benefit of $2,000 a month for up to 4 months to workers who have lost their income (see below)

Shelters

Indigenous Communities

Seniors

Students and Recent Graduates

  • Student loans: To support those with student loans during COVID-19, payments will be suspended without interest accruing to borrowers until September 30th, 2020 (read more)

Youth

credit cards canada coronavirus

Canada Emergency Response Benefits – CERB

If you have had to stop working or lost your job because of COVID-19, you should apply for the Canada Emergency Response Benefit (CERB), whether or not you are eligible for Employment Insurance (EI). 

The benefit is available from March 15 to October 3, 2020. If you became eligible for EI on or after March 15, you need to apply for CERB and it will not affect your EI benefits eligibility when the benefit ends in October.

The benefit is processed in 4-week periods. Depending on your situation, you can re-apply every 4 weeks, for a maximum of 16 weeks (4 periods).

You can apply through one of two methods:

  • Online, through the Canadian Revenue Agency’s (CRA) My Account portal
  • Offline, through an automated phone service (1-800-959-2019 or 1-800-959-2041)

Your payments will be credited through direct deposit to your bank account (most Canadian banks have updated their web portals to make this easier to set up) or by cheque.

For more details, including specific eligibility criteria, please visit the CRA’s website.

Who to contact?

  • Benefits and financial help for children and families are handled by the Ministry of Children, Community and Social Services. They can be contacted at 1-888-789-4199. (Ontario specific – other provinces may vary)
  • To apply for CERB, you need to login to your CRA account or create one if you have not accessed it online before. You can do that here. The CRA also maintains a helpline where you can speak to an agent: 1-800-959-8281
  • EI: Depending on your eligibility, you can apply for EI benefits such as maternity, parental and caregiving benefits. For EI, you need to apply online here

Personal Finance

Credit cards

Most of Canada’s major banks announced they are temporarily reducing credit card interest rates to provide relief to customers during the COVID-19 pandemic.

Bank of Montreal (BMO) and Scotiabank
  • Temporarily reducing rates to 10.99% for personal and small business customer receiving payment deferrals (BMO site, Scotiabank site)
TD Canada Trust
National Bank
  • Reducing annual interest rates to 10.99% for clients receiving three-month payment deferrals and temporary increases in credit limits on a case-by-case basis
CIBC
RBC
Desjardins

While some of these changes are automatic, in many cases you are required to call your financial institution or credit card company and request they apply these measures to your account.

Banks generally charge interest fees between 15-22% on credit cards, so this is a significant decrease. The caveat is that these deferrals do not provide debt relief and interest will continue to accrue during the deferral period.

The federal government is also exploring providing low-interest credit options to Canadians, though nothing concrete has been announced thus far.

Student Loans

The National Student Loans Service Centre (NSLSC) announced payments will be suspended without interest accruing to borrowers until September 30th, 2020 to support those with student loans during COVID-19. This is an automatic process; you do not have to apply for a deferral. You may optionally continue to make payments through your NSLSC account.

However, this is applicable to only loans issued by federal and provincial government institutions. If your student line of credit was issued by a private institution, such as one of Canada’s major banks, you will need to contact them to find out what relief measures they may offer.

Support for Renters

This varies from province to province. On March 17, the Ontario government announced that no new eviction notices will be issued until “further notice” and the enforcement of scheduled evictions will be postponed. While renters are still required to pay rent during this period, they should inform their landlord and work with them to come up with a practical arrangement if they cannot make payments at this time.

Under Ontario’s Residential Tenancies Act, landlords cannot charge fees or penalties for late rent payments.

Mortgage Support

The federal government, through the Canada Mortgage and Housing Corporation (CHMC), is permitting lenders to allow immediate payment deferral on mortgages covered by CMHC’s mortgage loan insurance.

All homeowners currently in good financial standing with their mortgage lender can apply for mortgage relief from their lender if they have been impacted by COVID-19. This will be processed on a case-by-case basis. Mortgage deferral is not equivalent to mortgage forgiveness. Interest will accrue on any mortgage payments that are deferred, and payments will need to resume once the deferral period is complete. Even if a mortgage isn’t insured through CHMC, homeowners should contact their lender to find out their options.

The following announcements have been made by some of Canada’s largest mortgage lenders:

BMO
  • Up to a 6-month payment deferral on a case-by-case basis. Source
Scotiabank
  • Mortgage payment deferrals are available for customers experiencing hardship. Source
TD Canada Trust
  • The program is being administered on a case-by-case basis to individuals whose mortgages are in good standing, and will be available until at least June 30, 2020. Source
National Bank
  • Deferral of mortgage payment without accruing additional interest for 2 months. You will need to continue paying administrative charges and mortgage insurance premiums. Source
CIBC
  • Up to a 6-month payment deferral for mortgages on a case-by-case basis. Source
RBC
  • You may skip up to two monthly payments. For longer term relief, applications will be evaluated by financial advisors. Source

Other Loans (Personal, Line of Credit, Auto Loan)

Most banks have announced they are offering “opportunities for relief” for these products.

Some banks, such as RBC, offer the option to immediately defer payments of principal and income for a period of up to six months depending on their needs. Depending on whether it is a fixed or variable interest product, deferred interest will be added to the outstanding loan balance, but interest may or may not be charged on the deferred portion. Contact your individual lender for up-to-date info, as the measures vary greatly across institutions.  

The effects of these measures on credit scores, if any, is still not known.

General Tips

Other General Tips for getting through this difficult time:

  • Offers via email and text require extra scrutiny. Calls and messages offering free relief from the CRA, creditors, or any other agency may be fraudulent or part of a phishing scheme aimed at acquiring your personal information. Contact the CRA, your bank, telephone service provider or any other utility directly to verify any offers or check on your account status.
  • Proceed with caution when exploring unsecured personal loans, payday loans, and other high interest sources of credit. These lenders offer huge amounts of credit with immediate availability. However, these should be considered only as a last resort when one has exhausted all other options for loans or credit; these products have multiple hidden charges, escalating late payment fees, and extremely high, cumulative interest rates.
  • The Ontario Works Program can help you with the cost of food and housing if you are in temporary financial need. This includes Emergency Assistance for those facing financial crisis due to COVID-19 or other emergency situations (such as floods, fire, etc).

COVID-19 and Financial Protection

Getting life insurance quotes and other living benefits during this time can still be straight-forward with a digital broker. We’ve created some resources to help you navigate the insurance world during this current situation.

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