The coronavirus pandemic has seriously hit the Canadian economy, especially in provinces such as Alberta, Ontario, and British Columbia where hundreds of thousands of jobs were lost. Rising unemployment is mainly the result of many industries being severely affected, from travel and transportation and recreation and entertainment to food and beverage services and accommodation. Rising unemployment has also resulted in a significant drop in car, retail, and home sales, and recent reports show that home prices are expected to drop by up to 5 percent due to the pandemic. Restaurants, gyms, sports facilities, and movie theatres are closed, with people being ordered to stay home. The drop in crude oil prices hit a blow on Newfoundland and Labrador and Alberta as they mainly rely on oil exports. This is largely due to travel restrictions, lockdowns, and stay-at-home orders which resulted in reduced oil demand across the world. Alberta’s major oil exporter Western Canadian Select hit a record low of less than $4, and experts warn that this usually happens during depression. University of Saskatchewan Professor Greg Poelzer explained, however, that for oil producers it is cheaper to reduce oil prices than to shut down and restart operations.Many Canadians who lost their jobs struggle with debt, whether mortgage, personal, or car loans, lines of credit, or credit card debt. Some complain that big banks refuse to defer payments on mortgages that are new. And while in most cases big banks are willing to work with customers and defer payments for 6 months, some finance companies and other non-bank lenders offer payment deferrals of up to 3 months. And while the pandemic has a devastating effect on Canada’s economy and many struggle to keep their finances afloat, there are some things to do even during turbulent times. To deal with unmanageable debt during the COVID-19 crisis, a consolidation loan can help save on interest payments. In the coronavirus aftermath, it is important to rebuild credit to get access to a range of borrowing solutions with flexible repayment terms and attractive rates.
Dealing with Unmanageable Debt – Apply for a Consolidation Loan
Applying for a debt consolidation loan is one option for Canadians paying high interest rates on personal loans and credit cards. Many financial institutions in Canada offer consolidation loans to help borrowers repay multiple debts provided that they are eligible. These include utilities, lines of credit, credit cards, and personal loans. Mortgages are one exception. The main benefits for customers include lower monthly payments and interest rate and a single payment. What is more, the borrower’s credit score is not affected. RBC, for example, offers consolidation loans and lines of credit to help customers repay outstanding balances faster. Those who choose to leverage their home equity are offered a lower interest rate. Customers who opt for a line of credit are free to access cash at any time, and they pay no annual fee. Borrowers who apply for a personal loan can choose a term of up to 5 years to lock in their rate.
Another option to avoid high payday loan fees and credit card rates is to apply for a consolidation loan offered by Consolidated Credit. Customers can consolidate their existing card balances by moving them to a balance transfer account. One of the main benefits for borrowers is that they are offered a customized debt management plan that comes with reduced interest charges. Being a non-for-profit charity, Consolidated Credit Counseling Services of Canada works with customers to help them solve their financial problems and deal with debt. The goal is to help Canadians pay off their debts faster through debt management and credit counseling. The charity offers education, counseling, and consolidation. Customers benefit from a variety of educational resources with a focus on credit rating and the factors that affect it, household budgeting, and money management. Their debt management program allows borrowers to get rid of debt while credit counseling helps pay off outstanding card balances and take control of personal finances. Financial advisors examine customers’ budgets to offer advice on how to get more organized and manage money.
How to Rebuild Credit in the COVID-19 Aftermath
If your credit score suffered during the pandemic, there are different ways to rebuild it to access a pool of attractive borrowing solutions. One option is to apply for a secured credit card and another is to get a credit builder loan.
Applying for a Secured Credit Card
Secured cards offer many benefits, one being that financial institutions report to the main credit bureaus. The fact that account history is reflected in the report means that timely payments help rebuild credit. Some issuers offer additional benefits such as cash back, no annual fee, and no limit on rewards that can be earned. The Refresh Secured Card is one option to rebuild credit and benefit from a low annual fee. Customers’ account history is reported to Equifax and TransUnion on a monthly basis, thus allowing them to improve their score. Approval is guaranteed, and customers are only asked to provide a valid government ID. Refresh takes into account factors such as budget, expenses, income, financial goals, score, and location but they do not run a credit check. Customers are offered a low annual fee of $48.95, and the interest rate is just 17.99 percent.
Applying for a Credit Builder Loan
This is also a good option for persons who are rebuilding credit or are looking to establish one. Credit builder loans are offered by unions, financial companies, and smaller loan providers. Upon approval, the borrowed amount is deposited in a savings account over a specified period and is returned after the loan amount has been repaid in full. Payments are reported to the credit bureaus.
There are many options to choose from, but if you are looking for a loan that helps you to rebuild credit and make approval for low-rate solutions more likely, check the credit builder loan offered by Refresh Financial. This is also a good solution for Canadians who have filed a consumer proposal or declared bankruptcy. It comes with an interest rate of 19.99 percent and there are no admin fees – you start building your equity, and credit score from day one. Customers also have access to a paid referral program and education. It is easy to make payments as they are scheduled on the borrower’s account. However, it is important to make timely payments to ensure that the account is in good standing. There is also an option to change the payment date as to avoid missed or late payments. Early repayment is an added benefit meaning that the outstanding balance can be repaid at any time. Refresh Financial also offers perks such as credit simulator, score updates, and discounts on wellness, entertainment, travel, and shopping. The Refresh Academy features templates, quizzes, and video courses that help customers to improve their financial literacy.
I am self-employed and my income has all but disappeared. I’m not sure how long can I hold on if this continues a while longer. My work has dried up and I’m in a very bad place mentally :(.
I’m sorry to hear that you are having trouble with your income :(. These are trying times for everybody, and I hope things will turn around soon! Stay strong!
I’m currently unemployed due to COVID-19. I work as a hairdresser and my salon is closing doors. Can I apply for secured credit card if I have no income?
I still believe (hope) that we will see a V-shaped recovery. Most of the job losses are temporary and should be reversed quickly once we start easing things in Canada. All provinces except Quebec are doing quite well, and if anything I thing Doug Ford is too cautious. Let’s see how it goes after gradually reopening stores and businesses…