COVID-19: Managing financial health in challenging times
Getting through a financial emergency
Financial emergencies can happen to anyone and come at any time. They can be the result of family illness, job loss, urgent home repairs, or a natural disaster to name a few. Some events could even shut down your community for an extended period.
You may be worried about the impact of the current COVID-19 pandemic on your finances. Whatever the source, financial emergencies can be stressful and cause considerable hardships for you and your family.
Emotional situations can lead to poor financial decisions. Be sure to get the help you need with financial decisions during an emergency. Take the time to get advice and information on what you would like to do.
The Financial Consumer Agency of Canada (FCAC) has many educational resources on budgeting, credit, savings, debt management and more. Interactive tools and calculators can also help you maintain good financial health during these challenging times.
What is the Government of Canada doing to help
Federal emergency benefits amounts are taxable. Any amounts received must be reported on your tax return.
Receiving money from the Government
The fastest way to receive benefits from the Government is to create an account with CRA and sign up for direct deposit. Some financial institutions allow you to set up direct deposit through their online banking services and mobile application. Direct deposit is fast, convenient, secure and allows consumers to immediately access the full amount deposited.
Cashing a Government of Canada cheque
If you’re receiving benefits by Government of Canada cheque, you may cash your cheque for free. You can cash a cheque that is $1,500 or less, at any bank even if you’re not a customer. However, the Government has temporarily increased the limit to $2,000 for emergency benefits-related cheques to individuals. You must simply show acceptable identification to the teller such as a passport or driver’s licence.
Depositing a cheque with your mobile device
You can also deposit your cheque in person at any bank branch, using an ATM or by mobile device. However, the bank will put a hold on the money. Depending on the amount, you may have to wait between 5 and 8 business days before accessing the money.
What to do if you’re facing financial hardship
If the continued pandemic puts you in financial hardship, here are some steps you can take.
You may have trouble paying for your ongoing expenses or foresee challenges in keeping up with your regular payments. In that case, visit your financial institution’s website. Be proactive and look at the options that your financial institution is proposing.
Banks in Canada are closely monitoring developments related to COVID-19. If you’re facing short-term financial issues, your bank might be able to help. Contact your financial advisor or a representative at your financial institution to determine if measures are available to you. They look at situations on a case-by-case basis.
During the COVID-19 pandemic, many financial institutions allow payment deferral on credit products, including mortgages and credit cards. If you have problems making your mortgage payments due to COVID-19, you might be eligible for a mortgage deferral. Financial institutions approve payment deferrals on a case-by-case basis.
Mortgage relief options
If you expect to continue to experience financial hardship once your mortgage deferral period ends, consider your options now.
Read your mortgage contract and speak to your financial institution about the options available to you. You may be eligible for one, or a combination of the options offered by your financial institution. Keep in mind that if you make changes to your mortgage contract, you may have to pay fees.
Impact of payment deferrals on your credit report and score
Deferring payments on a mortgage, credit card or any other credit product should not negatively affect your credit. Canada’s 2 credit bureaus, Equifax and TransUnion confirmed that payment deferrals won’t affect your credit rating.
Review your credit reports. Make sure the deferrals approved by your financial institution have been properly reported to the credit bureaus. It could take up to one month for information to appear on your credit reports.
You can order your credit report with Equifax and TransUnion, free of charge at any time.
When you review your Equifax credit report, look for one of the following indicators next to your deferred payments:
- deferred payment plan
- affected by a natural or declared disaster
The payment status should be "Paid as agreed and up to date". You should see the amount of $0 or "n/a" in the "Payment Amount and Delay" field.
For TransUnion, look for the letter "D" in the "Terms" field related to the deferred payment.
For more information, visit the credit bureaus’ COVID-19-related web pages:
Getting money from your home equity line of credit (HELOC)
A HELOC may be another way to access emergency savings, under certain circumstances.
Lowering your credit card interest rates
If you are experiencing financial hardship as a result of COVID-19, your bank may be able to temporarily reduce the interest rate of your credit card.
Terms and interest rates may vary depending on the financial institution. Contact your financial institution by using its online portal, telephone banking service or by booking an appointment to determine if you are eligible. Otherwise, your monthly payments and interest rates will remain the same.
Bank charges, debit and credit transactions and monthly fees
New electronic alerts from your bank
Some banks have started sending new electronic alerts to help you manage your day-to-day finances and avoid unnecessary fees.
While Canadians still use cash for purchases, its use has decreased significantly due to COVID-19. If you’re using your debit card more frequently to avoid cash transactions, review your monthly transaction plan. If you go over the number of transactions in your monthly plan, you may have to pay fees.
Several payment card network operators have increased their per-transaction limits for contactless credit transactions during the pandemic. Contact your credit card issuer to find out if your limit has changed.
Debit and credit card transactions can be done using the:
- magnetic swipe and your pin
- chip and your pin
- secured TAP payment
If the pandemic affected you and you need assistance, you may get a refund on certain bank charges.
These can include fees for:
- insufficient funds (NSF)
- stop payments
- Interac e-transfers
- monthly transaction plans
Contact your financial institution for more details.
During this uncertain period, consider all your options before borrowing additional money. Research shows those who often use credit to pay for daily expenses have lower levels of financial well-being.
If you must borrow money, make sure you understand the cost of credit products before you make a decision. You should also only borrow the amount you need.
Certain credit products are more expensive than others due to their high interest rates and fees. For example, a payday loan should be your absolute last resort, as they often carry very high fees.
Make sure you compare all borrowing options and their fees, interest rates and repayment terms before choosing a credit product. Otherwise, contracting new expensive credit now could create more financial problems for you in the future.
If you have trouble making ends meet, seek advice from reputable sources to explore your financial options. Contact a financial professional, such as a licensed financial advisor or an accredited credit counsellor to discuss a plan. If you choose a financial advisor, make sure they are licensed.
Be cautious when searching for the right professional who can help you. Some companies offering to help to pay off debt or repair credit are misleading consumers.
Budgeting in times of uncertainty
Having a budget is key, especially when an emergency occurs. To manage your budget, you must identify your income and expenses. It’s also important to identify your needs versus your wants during a specific period.
The Budget Planner is an interactive tool that helps you determine if you have the funds to meet your ongoing financial commitments. It provides tips, suggestions, guidelines and alerts. It can also help you find out where you could cut expenses.
Having and maintaining an emergency fund
An emergency fund is money you set aside to pay for unexpected expenses. In general, it’s recommended that you save the equivalent of 3 to 6 months of your regular expenses.
If you don’t have an emergency fund, try putting some money aside right now if you can afford it. Depending on how the situation evolves, you may need to rely on an emergency fund sooner than expected.
If you’re facing financial hardship and can’t afford an emergency fund, contact your financial institution. They could recommend specific products or services to help you get through these difficult times. These can include a HELOC, a debt management plan or accessing funds in your registered retirement savings plan (RRSP).
Where to ask questions or voice concerns
You may have questions or concerns about the impact of these difficult times on your financial products. Whether it’s about your accounts, savings or credit products, contact your financial institution to discuss.
FCAC welcomes your inquiries. You can contact us by email, mail or telephone. You can also contact us if you have a complaint about a federally regulated financial institution.
What to do if your branch closes
Your financial institution might have to close branches temporarily. Online, mobile, ATM or telephone banking may become necessary for making financial transactions. Make sure you have your login information and passwords or your financial institution's phone number handy.
If you usually go in branch to pay your bills, consider setting up pre-authorized debits instead. Pre-authorized debits are automatic and convenient when you want to make payments from your account on a regular basis.
Protect yourself from financial fraud
You should always protect yourself from financial fraud, especially during a period of uncertainty. Unfortunately, fraudsters will prey on consumers' fears and misinformation over the COVID-19 pandemic. You may get phone calls, emails and texts regarding the COVID-19. Be very cautious when receiving them.
Tips to protect yourself from financial fraud
- never click on links or attachments in unsolicited or suspicious emails
- never give out your personal or financial information by email or text
- note that financial institutions will never ask you to provide personal, login or account information by text or email
- when banking online, enter your financial institution’s website address in your browser yourself
- beware of questionable offers related to cures, if it seems too good to be true, it probably is
- if you have concerns about your insurance coverage, contact your insurance company directly
- if you need information on COVID-19, refer to a trusted source such as the Government of Canada’s COVID-19 page
Find more information about COVID-19 fraud and scams
If you didn’t initiate contact with a person or a business, you don’t know who you are dealing with.
The Canadian Anti-Fraud Centre has more information on scams and tips to help protect yourself from fraud.
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