Payment Deferral Programs for mortgages and credit cards are being offered by many banks and lenders, but they are only meant for customers in urgent need

There have been several stories circulating in the news over the last few days about credit cards offering reduced interest rates and/or deferring payments to help people who have been financially impacted by the COVID-19 pandemic.  It is great to see companies making these moves, as they will be urgently needed for many who were already living paycheque to paycheque before the pandemic and have no savings or family support to fall back on.

That said, it is important to read the full announcements and share accurate information – most notably that these accommodations are not being rolled out to everyone. Credit card companies are making these accommodations on a case-by-case basis and will likely want to confirm (justifiably) that each customer needs the deferral and interest rate reduction before approving the request.

When the federal government announced that all the major lenders would be ‘offering mortgage payment deferrals for up to 6 months’ it made headlines across the country.  Unfortunately, the headlines left out the very important caveat that qualification and approval would be based on “urgent need” and most lenders require a detailed accounting of your assets, liabilities and income details to assess whether you need to defer your mortgage payment.  Customers who have some personal savings to fall back on or enough family income to still meet their basic necessities are not being approved for mortgage payment deferral.

The unfortunate side effect of people coming to believe mortgage payment deferrals were available to everyone is that lenders are being absolutely flooded with requests, most of which are a waste of time for both the client and the customer service rep because the client does not end up meeting the qualification criteria of ‘urgent need’.  Moreso, it means that the people who do have urgent need and a mortgage payment due are left struggling to get through to plead their case and receive help.

These programs are meant for people who are financially struggling to simply cover their basic needs, who have no savings to fall back on while waiting for the Canada Emergency Response Benefit to kick in or to supplement their EI for the next few months.  For people in these circumstances, it is vital that they be able to get through to customer service representatives and receive help.

But if you have some savings in the bank that will tide you over for the next few weeks until the Canada Emergency Response Benefit payments start to flow, or that will top up you EI benefits and allow you to get by, please sit tight, make your debt payments as usual, and allow those with urgent need to get through and be helped.