Update: Since publication of this story, some of Canada’s banks agreed to lower their interest rates on credit card payments. Read more about this development here.

The federal government is facing increasing pressure to act on credit card debt. Despite the Bank of Canada bringing its overnight lending rate down to 0.25%, banks have left credit card interest unchanged.

Credit cards carry a much higher interest rate than other forms of debt, with some banks charging interest as high as 29%. During the difficult weeks and months ahead, maintaining these sky high rates could spell trouble for Canadian households struggling to get by.

When pressed about decreasing credit card interest, banks have deferred to their existing credit relief programs. The federal government is in talks with banks to alleviate the burden of credit card debt, however, interest rate changes are reportedly not being discussed.

The Canadian Bankers Association told the CBC that “many banks have programs to help their customers make their debt more manageable and structure the right solution, including rolling in credit card debt into term products with lower interest rates. Banks will work with Canadians to help them manage credit effectively during this difficult time.”

Canada’s six largest banks – BMO, CIBC, National Bank, RBC, Scotiabank and TD — made more than $46.5 billion in profit in 2019. These banks are well-positioned to weather the coming economic storm but have not shown a willingness to forego profitability for relief to Canadians. 

While the Big Six have introduced a mortgage deferral program, they have faced increasing scrutiny for misrepresenting the program as relief. In reality, the banks will still be making a profit on these deferred mortgages. 

Peter Gorham, an actuarial expert, estimates that the “relief” banks are offering, is not even costing them a single penny.

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