Banks asked to cut back rates on credit cards

OTTAWA— The federal government is leaning on banks to give Canadians a break on the interest rates on their credit-card debt to help the ease the financial hardship caused by the fallout of COVID-19.

Prime Minister Justin Trudeau said Thursday that Finance Minister Bill Morneau has been talking to banks about those rates.

“We recognize that they are a significant challenge for many Canadians at this point. That is why we are encouraging them to take action to alleviate the burden,” Trudeau said during his daily briefing on the COVID-19 crisis.

The prime minister added that the government is looking at other ways to help Canadians who need loans.

“We are looking on our end at making credit more available and less expensive for Canadians to be able to make it through the next few months,” he said.

Last week, the big Canadian banks began offering debtors help through deferred mortgage payments and what’s been referred to as “flexibility” on credit cards and lines of credit, through “deferrals and low minimum payments.” However, such adjustments often have to be arranged on a case-bycase basis with the bank. There’s been no promise of across-the-board reductions to credit-card interest rates, which can run upwards of 20 per cent.

Morneau’s office declined to provide further details on the discussions, pointing only to the measures the banks have promised to take so far.

Discussions between the federal government and the banks they regulate have been ongoing throughout the crisis. As Ottawa dramatically ramped up its measures to support the inner workings of the financial system, the Finance Department also negotiated with the commercial banks to encourage more flexibility in how they would deal with the mortgages and loans of their regular clients. The banks eventually agreed, although there is no public accounting of how flexible they are being.