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Nearly half of all Canadians are living paycheque to paycheque, according to a recent poll by Leger. In this scenario, one bad financial month could leave little in the pot to cover all bill payments. If you find yourself in this situation, you may find it difficult to pay your credit card bills on time, among other debts. 

Fortunately, there are ways to deal with this and ensure that you don’t wind up in default, including deferring your credit card payments. 

Let’s find out more about credit card payment deferral plans and how they can help provide you with temporary financial relief.

What Is A Credit Card Payment Deferral?

A credit card deferral refers to pausing payments that otherwise would have been due for payment. Depending on your situation, your creditor may agree to a delayed or reduced payment schedule for a specific time frame, or a reduced interest rate on your outstanding balance. Either of these options will alleviate your financial obligations, albeit temporarily, until your financial situation improves. 

It’s important to note that deferring your credit card payments does not mean they are forgiven. You’ll still have to make up for these delayed payments when the deferral period ends. Further, the interest portion of your credit card debt will continue to accrue during the deferral period. 

Do All Banks Offer Credit Card Payment Deferrals?

Many banks and creditors offer some type of deferral program, particularly following the recent pandemic that had a dire impact on millions of Canadians. That said, each bank’s deferral program will vary to some degree. 

Here are a few banks and the details of their individual credit card payment deferral programs: 

Minimum PurchaseTermsInterest RateFees
Scotia SelectPay™$1003, 6, or12-monthsNo interest No fees
TD Payment Plan$1006-, 12-, or 18-monthsNo interest No fees
BMO PaySmart™$1003, 6, or 12 monthsNo interestmonthly fee of up to 0.9%
CIBC Pace It™$1006, 12, and 24 months– 6.99%: for 6-month plans
– 7.99%: for – 12-month plans
– 8.99%: for 24-month plans
One-time installment fee of 2%

Defer A Credit Card Payment With Scotia SelectPay™  

Scotiabank offers a program that allows you to pay for a product or service in full at the point of sale on credit. Then you’ll repay the balance over installment payments over a specific term. 

At checkout or after your purchase, you can choose Scotia SelectPay to cover the cost of eligible purchases over $100 into a zero-interest installment plan. Choose from 3-, 6-, or 12-month payment terms. Depending on the card, you can continue to earn rewards or cash back.

Defer A Credit Card Payment With TD Payment Plan 

With a TD payment plan, you can turn your credit card purchases into installment payments with no interest and low fees. You can convert purchases of at least $100 into 6-, 12-, or 18-month payment plans. 

Your current account balance, including pending transactions and payment plan fees, must be less than 90% of your credit limit to be eligible. 

Defer A Credit Card Payment With BMO PaySmart™ Installment Plans 

The BMO PaySmart lets you convert your credit card purchases into more manageable, zero-interest monthly payments with a low fee (up to 0.9%). You can buy an eligible product or service today, and pay it off over a period of 3, 6, or 12 months, depending on your needs and preferences. 

There’s no credit check or application required, and you can easily set up your PaySmart plan through mobile or online banking. 

Defer A Credit Card Payment With CIBC Pace It™

As the name suggests, the CIBC Pace It plan lets you pay off large credit card purchases at a pace that you’re comfortable with and can afford. Installment terms include 6, 12, and 24 months, with rates ranging from 6.99% to 8.99%, depending on the term length. No application approvals or credit checks are required, and you can continue to earn credit card rewards on eligible purchases.

Learn More About The Big Bank Credit Options

CIBCLearn More
TD BankLearn More
ScotiabankLearn More
National BankLearn More
DesjardinsLearn More

Costs To Defer A Credit Card Payment

When determining whether or not to arrange for a payment deferral, it is crucial to understand the true cost of doing so. There may be fees associated with payment deferral plans and understanding what those fees are will go a long way in your decision to either make the minimum payment or to request a payment deferral.

In addition, experts caution that using payment deferral offers may enable discretionary purchases or spending. Doing so will only add to the existing balance, which is accruing interest, and inflate your financial burden. In short, deferring your credit card payments should only be used as a last resort.

How Do I Apply For A Deferral?

To arrange a deferral for your credit card payments, you will need to contact your bank. While deferral terms and processes vary for each bank, they all have a few common requirements:

  • Account is in good standing and not currently past due
  • No bankruptcies 
  • No delinquencies 
  • Account must be at least 4 months old

The five largest retail banks in Canada are encouraging those facing financial hardship to contact them directly to discuss the different options available for assistance.

Pros Of Deferring Your Credit Card Payments

  • Temporary Relief. During periods of crisis or when faced with one-off expenses that leave you short for cash, arranging a payment deferral with your credit card issuer may be a much better alternative than to miss a payment
  • Protect Your Credit Score – Missing a payment will likely result in a late fee that exceeds any payment deferral processing fees and will directly impact your credit rating.With a deferral, your payments won’t be reported as late, which can protect your credit. 

Cons Of Deferring Your Credit Card Payments

  • Interest. The balance will still be accruing interest during your payment deferral period. Depending on the length of the deferral period, the existing balance and the interest rate, the added interest may significantly prolong the time it takes to pay off your credit card. Be sure to review any payment deferral offers from your credit card issuer with a fine-tooth comb, as surprise processing fees and terms regarding continuous interest accrual are often hidden in the fine print.
  • Credit Scores. While most experts claim that credit card payment deferrals will not affect your credit score, it is crucial to keep a paper trail of any arrangements made with your credit card issuer. A detailed record of this arrangement will help prove that these were arranged payment deferrals and not defaults thereby safeguarding against any errors in your lender’s credit reporting.

Other Types Of Credit Card Debt Relief

In addition to deferring your payments, most lenders have different programs available to assist those running into financial difficulties. The most common credit card assistance options are listed below. 

  • Due Date Extensions. If a sudden cash-flow problem has made it extremely difficult for you to make your minimum payment on time, a due date extension may be possible. Typically, this option is most suitable for scenarios where a short-term hindrance such as an unexpected expense, arises just prior to your monthly payment falling due.
  • Waived Interest. Some credit card issuers may be willing to waive the interest on existing balances for a specific amount of time. For example, some creditors will allow cardholders to defer a monthly payment without incurring interest or penalty fees.
  • Hardship Plan. For those facing financial difficulties as a result of hardships such as illness or loss of income, you may qualify for a credit card hardship plan. These programs are typically negotiated with your card’s issuing bank and feature changes to your repayment terms such as waived and/or lowered interest rates. Terms will vary on a case-by-case basis depending on your circumstances.
  • Forbearance. Credit card forbearance programs are created by lenders to provide temporary relief to cardholders in the form of postponed payments for a certain period of time. The caveat is that a forbearance may not stop interest from accruing and you will still eventually have to pay off the existing balance.

Alternatives To Credit Card Payment Deferrals

For those carrying a large balance on their credit card, a payment deferral may not be ideal as you would be increasing the time it takes to pay off the amount while incurring increased interest charges. Below are some alternatives to deferring your card payments.

0% Balance Transfer

 By transferring your existing credit card balance to a credit card with a lower interest rate, you could enjoy substantial savings on interest costs and be able to pay off the amount a lot faster. This is because a higher portion of your payments would be applied toward the principal balance rather than going toward high-interest fees. Certain credit cards even offer 0% introductory interest rates on balance transfers for periods of up to one year.

Personal Loan

A personal loan is a great alternative to credit card deferrals as it allows you to spread out your debt and save on interest costs. Personal loans typically feature much lower interest rates than credit cards, which could be an opportunity for you to consolidate your credit card and other unsecured debt.

Bottom Line: Should You Defer Your Credit Card Payment? 

The decision to defer credit card payments depends on your personal finances. In general, it’s best if you can keep up with your bill payments and other financial obligations because they will still be owed regardless of whether or not you defer them. Deferring any kind of payment will simply put off the financial obligation and make it bigger in the future. 

That being said, it all depends on your unique financial position. Make sure to assess your finances before making a final decision. 

How To Defer A Credit Card Payment FAQs

Does deferring a credit card payment hurt credit?

No, deferring your credit card payments should not have any effect on your credit score, as long as you keep up with your payments as agreed. Just make sure that your creditor does not report your deferred payment as a late payment to the credit bureaus.

Does deferring my credit card payment increase my interest?

While you may be allowed to push out your payment to a later date, the interest portion of the outstanding balance will continue to accrue. This could result in an increase in your outstanding balance during the deferral period. 

How long is a credit card payment deferral?

Deferral periods depend on the creditor. That said, they typically range from 3 to 12 months, though some may be as long as 24 months.
Lisa Rennie avatar on Loans Canada
Lisa Rennie

Lisa has been working as a personal finance writer for more than a decade, creating unique content that helps to educate Canadian consumers in the realms of real estate, mortgages, investing and financial health. For years, she held her real estate license in Toronto, Ontario before giving it up to pursue writing within this realm and related niches. Lisa is very serious about smart money management and helping others do the same.

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