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What If I can't pay my credit card bill?

Ruth Mercer , Senior Manager, Credit Restructure, TD
Tannis Dawson , High Net Worth Planner, TD Wealth

Trying to get by has become much harder for millions of Canadians because of the COVID-19 pandemic. In particular, many people are facing financial challenges because of employment disruptions. Some of us simply can't pay our credit card bills.

The Government of Canada and Canada's leading banks are working together to provide concrete relief to Canadians. Ruth Mercer, Senior Manager, Credit Restructure, at TD, and Tannis Dawson, a High Net Worth Planner with TD Wealth, discuss.

Depending on the situation, an individual may be eligible for a temporary deferral of payments on a TD Credit Card.

The program is offered on a case-by-case basis and can provide much-needed relief if finances are temporarily squeezed. If you choose to defer your payments, interest will continue to accrue on your outstanding balance as set out in your Cardholder Agreement and Disclosure Statement and will be payable once the deferral period is over. It should be noted however that a pause in payments will not eliminate the debt itself.

Find out more information on the COVID-19 financial relief options available for TD customers.

Debt consolidation and prioritization

For those who may not be in an emergency situation, Tannis Dawson suggests one way to control credit-card debt is by prioritizing debts that have the highest interest rates and consolidating them under a lower-interest loan. For instance, a Home Equity Line of Credit (HELOC) could be used to pay off your credit card. The interest rate on a secured line of credit is typically much lower than the interest rate on a credit card and may help to lower the amount of your payments. For those who don't own a home, other lending solutions may be available.

Other debt relief options to consider

Getting into debt may happen when we are faced with unexpected bills or when we live beyond our means, says Dawson. Getting out of debt may mean looking hard at cash coming in and out of the household, and planning and budgeting so that you can keep ahead of bills. If you don't have access to low-interest credit but you do have some funds left over after paying the bills, you may be able to use that to make your payments. For example, if you have funds set aside in a Tax-Free Savings Account (TFSA), one way to deal with debt could be to sell an investment within the TFSA and withdraw the funds. This can be an efficient way to pay down outstanding debt because there are no tax implications on withdrawals from a TFSA and contribution room remains the same and can never be lost.

More answers to your questions

To get started, visit our FAQs for details on eligibility and what credit card payment deferral and interest rate relief may mean for you.

DISCLAIMER: This content discusses current topics of interest in a general and informational manner only and may not be appropriate in all circumstances. Please ensure that you seek advice personalized for your situation from the appropriate professional, consultant or subject matter expert on the topic of interest to you.

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