Life on Credit

The art of borrowing money

Doing a Reno? What Are the Best Ways to Finance It?

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There are different ways to finance a reno, whether you want to upgrade your kitchen or dining room or have another home improvement project in mind. You can use cash or apply for a secured or unsecured loan, home equity line of credit, or another financial solution depending on your project requirements, amount of cash, scope, etc. Large products require more cash and fortunately, banks have plenty on offer. Solutions to look into include reverse mortgages, home equity loans, and more.

Use Cash

If you need a small amount of money and have an emergency fund, then you can use cash for your project. If you are short of money, then you may want to go through your assets and belongings and sell items that you no longer need.

Use Low or Zero Interest Card for a Small Reno Project

If you want to reinvent a room or remodel the kitchen, one idea is to use a low or zero interest card with a large limit. The same goes for things like repainting the interior, replacing the plumbing, routine maintenance, and other basic, less expensive updates. If this is the case, a low interest card can be a good choice to benefit from the low promotional rate. Keep in mind that the promotional period is usually over in 6 – 12 months, and a standard rate applies afterwards. The main benefit is the low cost. However, there are no tax benefits and the payback period is much shorter than conventional credit.

Apply for a Personal or Unsecured Loan for a Medium-Sized Project

Examples of medium-sized projects include roof repairs, adding energy-efficient insulation, deck or bathroom addition, etc. You may want to apply for a personal or unsecured loan to finance your home improvement project if you need between $15,000 and $50,000. Credit unions, banks, peer to peer lenders, and other providers offer unsecured financing. The main advantage for borrowers is that this is a low-risk solution compared to secured loans, which require collateral. Unsecured loans usually go with higher rates because of the added risk for financial institutions. At the same time, you benefit from quicker approval compared to secured options. The reason is that with secured financing banks require a validation of the security or collateral, which takes time.

When it comes to interest rates, customers with spotless credit and steady, high income are offered better terms and rates of about 7 – 9 percent. Those with tarnished credit may actually see their application rejected.

The main benefits include a longer repayment period, lower rates compared to credit cards, and no processing fees and closing costs. On the downside, there are no tax benefits that you normally get with a home loan.

Apply for a Secured Loan for a Large Home Renovation Project

A secured loan is a good choice if you need $50,000 or more. If you have a major home renovation project in mind, then you may want to apply for a secured loan. This is especially true for properties that are not habitable, homes in need of conversion, and derelict properties. In this case, you will need money for things like design and survey fees, purchase costs (materials), and the renovation work itself. A large home renovation project can cost a lot of money. Many banks offer large loans but require collateral to ensure repayment. Depending on the amount requested, your credit score, and other factors, the collateral can be in the form of real estate, vehicle, home, vacation home, etc. While you risk losing the asset in case of default, you benefit from more affordable payments and a lower interest rate of 3 – 4 percent.

Cash-Out Refinance

This is a type of mortgage refinancing and another way to pay for your renovation project. Borrowers refinance to obtain more money, and equity is extracted as a result of this. People usually resort to cash-out refinance to buy assets of value or pay down personal loans, cards, and other types of consumer debt. How does it work? Suppose you owe $60,000 on a property worth $320,000. If you need $40,000, then you are free to refinance for $100,000. You will get $40,000 in cash while $60,000 is the outstanding balance. To prove that you qualify, you will be asked to provide information about your debts, assets, income, and so on.

While this is one way to free up cash, there are downsides to consider such as higher than average interest rates.

Home Equity Line of Credit

This is a type of adjustable mortgage whereby the interest rate moves up and down with rate fluctuations. If the rate suddenly skyrockets, you will end up paying a lot of money. The main benefit is the fact that there are no closing costs, and you are free to draw on the line as many times as you need to. Still, there is risk involved if you opt for a HELOC.

Reverse Mortgage

A reverse mortgage is an alternative to consider if you are 62 years old or older. In this case, borrowers are free to draw cash to finance projects, make purchases, go on vacation, or anything else. There are no monthly payments to worry about, but owners are still required to pay homeowner’s insurance and property taxes.

The Small Business Tax Reform in Canada

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The proposed reform aims to introduce changes and eliminate tax loopholes that allow self-employed people to pass income to spouses and other family members. This is a hot topic in Canada as a recent Ipsos poll shows that 55 percent of respondents support the reform while 44 percent oppose the changes, especially small businesses. Making changes to the tax law to deal with vague and obscure language sounds like a good idea, but is it so in reality?

Justifications to Implement New Measures

The reform targets self-employed Canadians and the loopholes they use to reduce their tax burden. The focus is on investment portfolios and capital gains. Proponents claim that the new tax reform can help reduce income sprinkling. Income sprinkling enables self-employed persons to divert income to children and other family members by way of paying dividends, wages, and salaries. According to a report by the Department of Finance, this is a common practice, and about 50,000 small businesses in Canada use sprinkling to pay less in taxes. This is also a way to benefit from passive investments, a practice that the proposed measures aim to limit. This can be done by means of a reasonable test to find out whether children, spouses, and other family members participate and actually contribute to the family business. The pay, whether in the form of wage or salary, is reasonable only if it is comparable to the pay another person would get for the work done. When it comes to capital gains, profits generated through the sale of real estate, stocks, and securities fall in this category. In the view of liberals, diverting income in the form of capital gains gives unfair tax advantage to CCPCs. At present, businesses are free to sell shares to another company and thus avoid taxation. Passive investment is also an issue for Liberals. Income generated through an investment portfolio falls in this category. It is different from active income generated through business operations. The problem with passive investments is that businesses benefit from a significantly lower corporate tax compared to active income.


In addition to small business owners, certain professions take advantage of this to reduce their tax burden. These include physicians, lawyers, farmers, and others. The planned reform is targeted at farming families that distribute profits and work responsibilities to pay less in taxes. Physicians also oppose the new measures, and this can be explained by the fact that most of them are incorporated. A report by the Canadian Medical Association proves this. Again, this is a way to pay less. Some physicians support the tax reform but believe that the best way to implement it is through a transition plan.

Proponents note that the goal of the new measures is to establish a fair tax system for everyone. This can be done by closing gaps that offer tax advantages to those incorporated as a Canadian controlled private corporation. At present, the tax system encourages well-paid Canadians in the high-income bracket to use CCPC to reduce their tax rate and increase their net income. The new measures are also expected to increase government revenue to help vulnerable members and communities and citizens marginalized at the fringes of society. And while Prime Minster Justin Trudeau and Finance Minister Bill Morneau noted that this is not the main goal, a tax reform is one way to increase government revenue.

What Opponents Say

Opponents, on the other hand, point to the fact that the proposed changes place an undue burden on small businesses, especially those planning to expand or invest in new products, services, or operations. And many businesses would be affected as figures by Statistics Canada show. Out of 1.17 million employers operating in the country, small businesses account for 98 percent of employers or 1.14 million. More than 50 percent operate in Quebec and Ontario. Opponents also point to the fact that the new tax reform targets small businesses such as corner stores, garages, bakeries, and florist shops, and not just lawyers, doctors, and other professionals in the high-income bracket. Small businesses such as coffee shops, landscapers, family restaurants, roofing businesses, electricians, and plumbers would be affected. And while the proposed reform is not expected to destroy small businesses, the new measures might discourage many from starting a business. At the same time, small businesses are the backbone and driving force of the Canadian economy.


Opponents also warn that cutting tax benefits means less revenue for small businesses. This often goes hand in hand with fewer benefits, basic or reduced health insurance, longer working hours for employees, and layoffs. The government counters this argument by pointing out that businesses with an annual income of $150,000 CAD would be impacted the most. The same goes for self-employed individuals with extra income after making the maximum contribution to their tax-free savings account or registered retirement savings plan.

Salaried Employees vs. Small Business Owners

Proponents believe that the way things are, small businesses get unfair tax advantage over persons working regular salaried jobs. Opponents to the reform, on the other hand, argue that running a business is a costly endeavor. A lack of paid leave is also an argument in favor of more lenient taxation for small businesses. They suffer further disadvantages such as no guaranteed salary, no guaranteed vacation and pension income, etc. To sum it up, the main downsides of running a small business are fewer free benefits, less security, and lack of regular income stream. Proponents to the tax reform counter this argument by explaining that entitlement to state benefits is not a justification to offer tax advantages. Self-employment also offers advantages in the form of financial rewards, especially when it comes to independent contractors. Many large businesses choose to work with independent contractors instead of hiring employees, which is, by itself, a long-term commitment. Basically, it is less expensive to hire a contractor than an employee. To this, contractors are required to supply their own equipment, tools of trade, mobile devices, computers, laptops, software, etc. Independent contractors are also allowed to deduct business-related expenses for taxation purposes. This is yet another way to increase financial rewards.

Finally, whether the new measures are fair or not is a difficult question to answer. Tax experts draw attention to the fact that there are too many exemptions and exceptions in the current tax code. Even if the new measures come into effect, there is plenty of room for improvement.

Will Millennials Ever Be Able to Buy a House in Toronto?

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Some millennials definitely want to buy a home but the reality is that housing affordability is a source of concern for both, homebuyers and policy makers.

Why Millennials Are Reluctant to Buy a House?

Today demand exceeds supply and this is the reason why housing prices keep going up. In light of this fact, more than 50 percent of millennials believe that they will never be able to buy a home, whether a detached or semi-detached house. Many of them simply can’t afford it, especially in Toronto and other big cities. What is more, according to a recent survey, about 63 percent of owners plan on selling their homes because they find it increasingly difficult to carry a mortgage.  Some 57 percent of respondents believe that rising interest rates add to the cost of owning a home, and they find it difficult to keep up with payments. This makes renting a property a more attractive option for many residents. Figures prove this – today some 42 percent of millennials rent while 38 percent own a house. Some Canadians plan on selling their home to downgrade as well.

Тhe Angus Reid survey shed light on perceptions and beliefs about price movements. Only 40 percent of respondents were positive about home prices within a 5-year period. This explains why millennials are reluctant to buy a home. And those who plan on buying a house or a condo have important decisions to make. Home prices are high in neighborhoods that are attractive and safe to live. It is difficult to find an affordable home in a good neighborhood, however, which means that many millennials either choose to rent or find it hard to live within their budget.

Contributing Factors: College Loans and Low-Paid Jobs

There are factors that magnify the problem. Many college students borrow heavily to pay for tuition and cover school-related expenses such as rent or board, textbooks, supplies, and so on. This means that many students are forced to borrow heavily, whether in the form of a student loan, personal loan, credit card, etc. College graduates often have one or more loans or cards to repay and to make things worse, some young people land low-paid jobs. The problem is that a low-paid job makes it more difficult to qualify for a low-cost mortgage loan. Many banks are actually reluctant to offer mortgage financing to graduates who are knee-deep in debt and have a low income. To add to the problem, the wages in some industries and sectors have been stagnant over the last couple of years, and many young Canadians worry that they may end up in a dead-end, low-paid job. With interest rates on the rise, this means that they would find it increasingly difficult to make mortgage payments in a timely manner.

Is Home Ownership an Attractive Option for Millennials?

Some share the opinion that home ownership is not an attractive option for young people who are more flexible and mobile than the old generation. Home ownership security is not a priority for many millennials. Young people travel more than the old generation and often change jobs. This means that many of them relocate every couple of years and the purchase of a high-priced property is not an attractive option. On the other hand, there are housing markets in Canada that are millennial-friendly, and some young people choose to relocate and buy an affordable home. The average price for a house in Atlantic Canada is around $254,000, and the average down payment stands at around $34,000. This means that borrowers have a monthly payment of about $995. In Quebec, the average home price stands at around $235,000, and the monthly mortgage payment is $927. Home prices for condos, bungalows, and two-story homes are affordable in places like Montreal Southshore, Montreal Northshore, Laval, Gatineau, and elsewhere. Thinking small and buying a small condo or a tiny house is also a good way to find an affordable alternative for those who prefer to live in Toronto. Some people choose to rent a small house first to see whether they feel comfortable and then buy a small-size condo or house.

More and more young people in Canada have begun to share former hotels and mansions, making community homes increasingly popular. This is one alternative to high-priced homes in Toronto and the GTA. On one side, these millennials are mortgage debt-free, and it is easier for them to relocate to a region where wages are higher and unemployment rates lower. On the other side, people who choose to rent won’t build home equity, which is definitely an asset.

What Can Be Done?

It is true that local authorities and territorial governments have few tools to control the housing market. At the same time, there are some possible solutions so that more millennials and Canadians in general have the chance to buy affordable housing. To this end, it is important to build a good transport and transit infrastructure to encourage building and increase the housing supply. Target infrastructure is also an important component and requires local planning approvals. They allow builders to secure water supply, sewers, and other facilities. Improving and speeding up the approval process is one way to secure affordable housing. An important step to help millennials find low-cost homes is to change existing zoning laws. This is one way to deal with the current shortage of land and build more homes to increase supply so that property prices go down. A good way to encourage more homeowners to list their properties is to reduce the land transfer tax in Toronto. A high land transfer tax discourages people from listing and many of them prefer to make home improvements and renovations.

5 Ways to Improve Your Credit Score

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There are plenty of ways to improve your credit score and become a trustworthy borrower who uses credit responsibly. Eliminate outstanding balances, pay your bills on time, and never go over your limit to boost your score.

1. Eliminate Card Balances

This is the first step to make, and there are different ways to go about this. If you have high-interest cards, you may want to shop around for balance transfer cards with low promotional rates. In fact, some banks offer zero interest over a period of 6 to 12 months. Another way to eliminate outstanding balances is to focus on one of your cards first and pay as much as you can. Financial experts advice to start with the lowest balance, i.e. set a short-term goal that brings quick results. Meanwhile you can pay the minimum toward your other balances. The next step is to lower your utilization rate because this is what brings your score down. Simply divide the balance by the credit limit for each card to find the utilization rate. Then pick the card with the highest utilization rate and pay as much as you can to reduce the outstanding balance.

2. Pay Bills on Time – Try to Pay Your Bills in Full by the Due Date

Paying your bills on time is yet another way to boost your score because delinquent bills usually show on your report. In fact, if you are behind with your payments, including phone, electricity, gas, or other bills, it is likely that your provider contacts a collection agency. Your credit score will suffer because information about late payments and delinquent bills is forwarded to the credit bureaus.

3. Reduce the Number of Credit Applications You Make

A large number of credit applications can affect your credit score because lenders usually pull your report to see whether you are able to manage debt responsibly. They will do this regardless of whether you apply for a personal loan, car loan, credit card, or anything else. The problem here is that the number of new applications is one factor that affects your score. In fact, applications make 10 percent of your score. A major mistake to avoid is to apply with multiple providers over a short period of time. This will cost you more score points than applying for credit with one lender. Wait for some time before you apply with another provider unless you are desperate for credit. If this is the case, yes, your score may suffer, but there are other factors that lenders take into account (like whether you make regular payments and if you have a good or tarnished score). Plus your score is based on other factors such as the length of your history, your utilization rate and credit mix (vehicle and personal loans, mortgages, lines of credit and credit cards, etc.)

And even if you credit score does not suffer due to multiple applications, providers may turn your application down. This is because you applied for multiple cards at the same time.

4. Make Sure You Have a Credit history

If you don’t have credit history, it is difficult for lenders to determine whether you are a trustworthy customer. There are several ways to start building a credit history, and one is to apply for a card with a small limit. You can also use a department store card to this end, but remember that department stores usually offer higher than average rates. Another option is to apply for a small loan with your local union or bank, especially if you are a regular customer. If you have a savings or checking account with a local bank, it is a good idea to visit them first. Regardless of whether you apply for a credit card or a personal loan, make sure that you make payments on time. Late payments are one of the reasons to have a fair or poor credit score.

5. Don’t Go over the Credit Limit on Your Credit Card

This is a no-no if you have a tarnished credit score. Your score will be affected even more if you go over your limit and do this regularly. The limit on a credit card is the amount you are allowed to charge when making payments. You are free to opt out so that you don’t go over the limit by mistake. In this case, your card will be declined when you try to make a transaction. While this can be embarrassing, your credit score is unlikely to suffer. What is more, you will save on over the limit fees that some providers charge. Over the limit fees are often equal to the amount by which you exceeded the limit. If you go over by $20, for instance, the fee will be $20.

What Else You Can Do

There are other ways to boost your credit score and surprisingly, one thing to do is to leave debt on your report. Bad debt will be removed in several years anyway. Good debt, however, shows that you are capable of managing credit in a responsible manner. And the longer your credit history, the better – leave good accounts on your credit report for as long as possible. If you have credit cards with a solid record of payment, it is a bad idea to close them. Another way to boost your credit score is to contact your financial institution and ask them to erase debt. If you have a good reason, say you were unemployed over the last couple of months, your bank may be willing to do this for you. Finally, it pays to request a free copy of your report and check for any errors and omissions that affect your credit score.

Budget March Break Ideas for a Romantic Beach Getaway or Winter Vacation

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There are myriads of unique and exciting travel destinations for an unforgettable March break vacation away from home. Even if you are a budget traveler, inexpensive holiday and travel spots abound. Just pick a destination and pack your suitcase!

Caribbean All-Inclusive Vacations

If you are looking for a budget-friendly destination and a beach holiday at the same time, how about a sunny vacation on a Caribbean island? There are plenty of great resorts for a March break vacation to enjoy delicious food, warm weather, and superb service. Caribbean resorts are luxurious and inexpensive and offer a variety of activities for your leisure time, including golf, scuba diving, land sports, and watersports. Adventure tours are also offered. From off-road excursions and mountain biking to canopy tours and catamaran sails, you are sure to have a memorable vacation. Entertainment venues also abound, offering unlimited spirits, theme nights, limbo dancers and fire eaters, acrobats, and a lot more. The islands in the Caribbean are also the perfect choice for a romantic getaway and candlelight dinners now that weather is nice, with daily highs of 30°C. Whether you choose to travel to Grenada, Antigua, Barbados, the Cayman Islands, Cuba, or Jamaica, you will love it. All-inclusive resorts offer concierge and butler service, free wifi and land sports, and plenty of entertainment for free – beach parties, costume and theme parties, bonfire parties, live shows, and a lot more.

Mexico

Mexico is also a good deal for your spring vacation as weather warms up in March, with average daily averages of about 25°C. You will find great deals away from the traditional tourist zones. All-inclusive resorts offer plenty of entertainment for your entire family, from theatre shows and water parks to teen’s and kids’ clubs, mini-Olympics, and handicrafts. Tourists also enjoy dance instruction, mariachi music, golden beaches, and superb food. In some resorts, kids stay for free. The best part is that you can choose from a great variety of package deals, from deep dive packages and luxury vacation packages to flight and hotel and hotel only packages, and more. There is plenty of choice when it comes to holiday destinations – Riviera Maya, Riviera Nayarit, Mazatlan, Los Cabos, Cozumel, Cancun, and many others. You will enjoy gorgeous, palm tree-lined, sunny beaches, underwater activities, nightlife, fishing activities, and a lot more.

Florida

Florida is nice and sunny at that time of the year. And there are all-inclusive resorts, too, offering world-class accommodation, superb food, spa, and family-friendly games and activities. Many resorts offer activities such as paddle boarding, kayaking, and fishing. Some resorts even feature shopping villages. Recreation activities abound, from parasailing, jet skiing, and boating and scuba diving to live entertainment and cruises.

Indonesia

Indonesia is also a great choice for Canadians, especially for budget travelers. There are plenty of ways to stretch your dollar here. If you don’t mind staying in a guest house in Jakarta, for example, you can find accommodation for as little as $8 per night. A double room on Lake Toba or the island of Sumatra costs as little as $3 per night. Food is also inexpensive. A good single plate meal costs between $0.50 and $1.70 if you don’t mind eating streel-style food. You will pay around $2,50 – $5,50 a meal at a restaurant. Entry tickets for museums and other attractions are also inexpensive. A visit to the Indonesia National Museum will cost you just $0.23. When it comes to all-inclusive resorts, there is plenty of choice, whether travelling solo or with kids. Resorts offer cultural and artistic activities, sports, beach and ocean views, windsurfing, sailing and golf schools, and a lot more. Sports such as cardio, tennis, squash, snorkeling, kayaking, and water polo are often included in the price. Some resorts offer golf at extra cost. Gourmet dining is always a plus.

The Philippines

Also a great destination for budget travelers, this is a good choice for your spring vacation, especially if you plan to fly from the West Coast. Plus weather is nice in March (the high season ends in April) as opposed to June – September when typhoons and storms hit. Accommodation is more expensive but you will find plenty of good deals for your holiday. There are all-inclusive resorts that offer spas, private beaches, beauty salons, shopping arcades, swimming lessons and fitness training, billiards tournaments, snorkeling safaris, and a lot more. When it comes to budgeting, the cost of living depends on location and season. At the same time it is 50 percent cheaper to live in Manila than in cities such as Tokyo, London, and Sydney. To give you a basic idea, a combo meal (burger, Big Mac, etc.) will cost you around $3 at a fast food joint. Domestic beer (0.5l) costs around $0.90 in the store. If you prefer Coca-Cola, you will pay around $1.30 for a 2l-bottle. Prices are affordable. Taxi trips are also inexpensive, i.e. around $11 per 5 miles.

Ski Vacation

Whistler

Whistler is a popular spot and ski resort to spend your March break vacation away from home. Ski packages are available, including snow school, equipment rentals, lift tickets, accommodation, and more. Some hotels also offer event lodging deals as well as golf vacation packages and last minute deals. Whistler also features Olympic tracks, snow peaks, diverse wildlife, and glaciers.

Slovenia

If you are up for a vacation away from Canada, why not visit Slovenia? The country takes pride in having nice skiing resorts which are quite affordable. In fact, there are many low-cost hotels and other accommodation options to go skiing or snowboarding. Check ski resorts such as Kranjska Gora, Vogel, and Mariborsko Pohorje, for example. There are pistes for beginners, intermediate, and expert skiers.  Mariborsko Pohorje is one of the largest skiing centers in the country, situated close to downtown Maribor. Visitors enjoy the mountainous landscape and first-class ski slopes and pistes. There are wellness and spa centers, restaurants and cafes, and excursions and guided tours on offer. You can join a wine tour or culinary tour, for example. Hiking and cycling tours are also available to visit the Botanical Garden and Pohorje forests. Another option is to visit the Organic Urban Center which is situated in Maribor and illustrates the importance of healthy food choices.

Mont Tremblant

If traveling to Slovenia looks like too much, how about a ski vacation at Mont Tremblant? There are plenty of good deals and packages for your March break, including Scandinavian spa packages and snow and ski packages. If coming over with children, what they get is lunch boxes, snowboard and ski lessons, and equipment such as helmets, boots, poles, skis, etc.

When it comes to accommodation, prices depend on time of the year but there are package deals to look into. In any case, you can find a decent hotel for about $70 (breakfast included). It is also a good idea to book in advance. Some resorts offer lift tickets as well (included in the package). Many hotels also have game rooms fitted with consoles, foosball, air hockey, table hockey, and a lot more.

HBC Credit Card

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HBC credit card is offered by Hudson’s Bay Financial Group in Canada. It is tied to the loyalty rewards program offered by the company.

Overview

The HBC credit card is marketed as the best way to earn Hudson’s Bay rewards points at approved stores around Canada. It functions as a rewards program as well as a store card. Though people can apply separately to the rewards programs, HBC cardholders can double the points they earn at stores. Each $1 spent using this credit option can earn as much as 4 points. Regular rewards program subscribers only get 2 points per dollar spent.

Cardholders can stack up points without time limits. People who can earn up to 2,000 points receive a $10 gift voucher. Rewards points can be redeemed as Hudson’s Bay gift vouchers to use online on thebay.com and Home Outfitters.

For this credit card, HBC does not charge an annual fee. But the annual interest rate is 29.9% by default. Customers should refer to the Disclosure Statement provided following approval for detailed legal information. Cardholders who pay off their balances by the due date can enjoy an interest-free grace period for 21 days for all new purchases. Customers should note that the grace period does not apply to balance transfers or cash advances.

Cardholders can earn even more points by using this rewards credit at “exclusive events.” These events will be announced online and users can get notification of them by signing up at thebay.com. Cardholders can get the best returns by using the HBC card at Hudson’s Bay Company stores. Using it can get customers free shipping and up to 90-day returns on purchases on the thebay.com

The HBC credit program should not be confused with the Hudson’s Bay MasterCard. The MasterCard can be used anywhere regular MasterCards are accepted, both online and offline. The HBC credit card can only be used at thebay.com, Home Outfitters, and Hudson’s Bay. With the MasterCard, users can earn 2 rewards points per each dollar spent on non-Hudson’s Bay Company stores. Cardholders can earn up to a 25% bonus each year for all such points. With the credit program, each point earned can be doubled at the stores.

Though the two are separate, customers must present a Hudson’s Bay MasterCard when making purchases at Hudson’s Bay Company outlets to get store points for the HBC credit card. When the MasterCard is used at other stores, the reward points will be automatically added to the account associated with the credit card.

Earlier, The Bay allowed cardholders to convert points to Air Miles and Esso Extra points. However, this is no longer possible. The Air Miles and Esso partnerships ended on September 30, 2015. In its place, the company added a third-party service called points.com to allow cardholders to add extra points.

Certain associated transaction fees and service charges, such as for foreign currency conversions, may occur when using the attached HBC account. Customers who subscribe to the special payment plan must pay $99 unless the fee is lowered or waived upon request. Payments and cheques that bounce cost $30 each. Rush cards cost $20. The over limit for this card is $29 if the account balance per billing periods exceeds the preapproved amount. Customers will be charged a fee equal to the existing balance if the accounts are inactive for six consecutive billing periods (usually months).

Customers do not have to be enrolled in The Bay Rewards program to apply for or receive a HBC credit card. Those who are approved will be automatically enrolled in the program. Customers can earn more points with the rewards program by spending more. Customers who spend more than $1,200 using one of these accounts can get VIP benefits, which mainly mean more points per each dollar spent. VIP and Plus customers also have better chances of doubling the points they earn.

The Hudson’s Bay rewards program was quite popular in the Canada in the past. However, participation has dwindled because most Canadians don’t value the program as they used to. The new HBC rewards program that Canadians apply for is a completely revamped version not offered in previous decades. The new program rewards customers more for spending at The Bay and for combining the credit card with the MasterCard.

Pros and Cons

Pros

  • No annual fees associated with the HBC credit card.
  • The more a customer spends, the more points he or she can earn per dollar spent. Customers who spend more can upgrade accounts to VIP or Plus to increase chances of doubling points.
  • Excellent option to save money at thebay.com and Home Outfitters.
  • Rewards program can be extended to third-party stores when used with a Hudson’s Bay MasterCard.
  • Free $10 gift voucher awarded to customers who earn 2,000 points.

Cons

  • HBC credit cards only earn rewards at thebay.com, Home Outfitters and other Hudson’s Bay companies. Customers need a Hudson’s Bay MasterCard to earn points from third-party stores.
  • High annual interest rate close to 30%.
  • Rewards can only be redeemed on an annual basis.
  • The number of outlets available to earn points is limited.
  • Air Miles and Esso Extra points are no longer offered as redeeming option.

Comparison to Canadian Rewards Credit Cards

The most popular Canadian cash back rewards programs, such as Tangerine and American Express Simply Cash, offer wider shopping options in comparison to HBC. This card is designed mainly as a loyalty program. The shopping options of customers are largely limited to Hudson’s Bay Company stores and affiliates.

In addition, rewards programs like Tangerine offer cash back rewards on a monthly basis. With the HBC card, customers can only redeem points once a year. Customers can mostly benefit only by combining the HBC MasterCard with the credit card. On the plus side, there are no annual fees that are charged to associated accounts. But there’s a 29.99% interest rate.

This card is best suited for customers who already frequently shop at places like Home Outfitters and thebay.com.

Money and Motivation: Is Your Consumer Behaviour Driving You into Debt?

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There are a number of strategies you can make use of to find out what your “financial” personality is like, so that you can get out of debt and start learning some responsibility. Statistics show that household debt is skyrocketing, reaching new and new heights year after year. Consumer debt comprises around 30% of the total debt.

Market Principles vs. Individual Principles

We live in an age when supply is almost endless. We can buy practically anything we can imagine, and in wondrous variety at that. When you think of the traditional supply and demand graph, you would expect demand to plummet. Perhaps this can be seen as a challenge to the age-old economic principle. Not only is demand not plummeting, it is rising and rising and the state of debt testifies to this. It seems we want things so much that we no longer care that we can’t afford them. However, we should be careful when we assume that macroeconomic principles transfer to microeconomic ones. In other words, market principles do not always reflect individual ones.

Personality Balance Sheet

Experts advise debt-ridden consumers to create what they call a personality balance sheet. The idea is to make a list of your personality traits as they relate to your behaviour as a consumer and define them as advantageous or disadvantageous. What motivates most of your purchases? Granted, this is a difficult question to answer. There are many factors that motivate purchases apart from personality traits, such as age, sex, even location. Naturally people in sparsely populated areas will have a whole different set of criteria when it comes to purchasing goods or services compared to people from big cities.

How Commercials Influence Behavior

Before you can understand how your personality may be driving you into debt, you have to understand the psychology of advertising. What are producers actually going for when they advertise their products? You may have wondered how they possibly get returns on commercials, what with there being so many. Advertising’s main function is informative, true, but it also serves to educate. By advertising expensive luxury products, they work on your system of values, artificially creating demand for something costly and prestigious that you don’t need. If you are especially vulnerable to that sort of “propaganda”, as would be someone with low self-esteem who wants to be respected and admired, you’ll fall for this. You may take out a loan to get the latest BMW or Mercedes model instead of sticking with your trusted Volvo or Pontiac.

If you tend to be on the impulsive side, make sure you stay far from temptation. Take all your credit cards out of your wallet, do not go into stores if you don’t actually NEED anything, and even curb window-shopping. This is not going too far. Do you want to get out of debt or don’t you?

Main Money Personality Types

According to experts, there are several money personality types – the spender, hoarder, avoider, and amasser.

  • Spenders tend to buy on impulse and buy things they don’t need, whether jewelry, groceries, or anything else. They find it difficult to prioritize and save for a rainy day. Spenders are often knee-deep in debt.
  • Hoarders, on the other hand, usually have a budget and prioritize their purchases and long-term and short-term financial goals. For hoarders spending on travel, dining out, magazine subscriptions, and entertainment is a waste of money (and time). Hoarders usually have an emergency fund and prefer to save for college education, retirement, or just in case.
  • The avoider tends to put off things like paying bills on time or doing taxes. He has a hard time saving, planning, budgeting, and dealing with financial matters. This money personality type has a nonchalant attitude towards financial planning and things like retirement income, investment, or insurance. If you are an avoider, it is a good idea to talk to a professional to get in control of your financial life. Always shop with a list, create a budget, and stick to it.
  • The amasser is a different story – for him money means power and enhanced self-esteem. Lack of money, on the other hand, may result in depression and poor self-esteem and feelings of worthlessness and failure. The money monk is the exact opposite, feeling that money and consumption are the root of all evil. A steady paycheck or inheritance money will actually make him feel insecure.

There are three more personality types – the flyer, security seeker, and risk taker. The risk taker, for example, tends to make risky investments such as real estate investment trusts, options, currency trading, and high yield bonds. Risk takers aren’t too worried about financial matters and details. They actually get excited about potential returns, risk, and possibility. Security seekers, on the other hand, prefer low-risk investments such as bonds, savings accounts, and certificates of deposit. They like to be prepared for anything, be it a natural disaster, depression, or apocalypse and humankind vanishing from the Earth. Security seekers usually have an emergency fund for a rainy day. For them, life is about careful planning, budgeting, and saving for the future. The flyer also has a distinct way of thinking. He feels content and happy with life as it is. The flyer has a nonchalant attitude toward financial matters and as long as he is independent, free, and making his own choices, that’s all that matters.

A Final Word to the Wise

At its core, consumption is a social habit. We buy what others buy or encourage us to buy, even though we may not realize it. It follows that you should surround yourself with positive people who realize that there is more to life than shopping.

Top 5 Canadian Travel Credit Cards

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Credit cards with travel perks are truly the best. You can benefit from these if you enjoy traveling, are a frequent flyer, love getting a bargain on something, bonus hunter, or all of the above. Subscribing to one of the best credit cards in Canada will save you a lot of money on airplane tickets, travel insurance, luggage claims, and many other similar things.

Consumers often evaluate credit cards rewards programs based on value offered per point. A good way to measure is to check how may air miles or associated perks each dollar you spend on the card gets you. While value points are important, it’s also important to consider other factors. For example, the annual fee should not cancel out the rewards you earn per point.

The cost per reward should also match the rewards on offer. Once all the fees have been considered, the credit card should offer a number of perks such as insurance coverage, low foreign transaction fees, travel opportunities, and so on. Travel credit cards that combine the best cost per reward with an increased number of perks are the best to subscribe to.

Here is a list of five of travel credit cards in Canada that offer the best value as described above:

1.     American Express® Gold Rewards Card    amex-goldrewards

Amex Gold is really the gold standard for travel credit cards in Canada. Points earned can be used for any travel-related purchase either online or offline. In some cases, you can convert points to frequent flyer programs. The welcome bonus is 25,000. For purchases made for $1,500 or above during the first three months, members get rewards points that can convert to close to $550. The annual fee for the first year is automatically waived, which will save you $150.

The biggest advantage with this card is that you can double your points easily by spending money at gas stations, grocery stores, and pharmacies. Plus, travel-related expenses incurred for road, air, rail, or water transport also counts. In some cases, lodging and tour operator charges paid with the card can earn you points.

An Amex point is equivalent to one cent. That makes the base rewards rate 1% and the bonus rate 2%. These rates can be increased by transferring points to Aeroplan. You will earn points for booking a flight, renting a hotel room, or hiring a rental car. Then, these earned points can be redeemed at full value to pay off any travel expense that shows up on the statement plus taxes and service charges. No extra charges incur when you transfer points for Aeroplan or British Airways AVIOS program.

2.     TD® Aeroplan® Visa Infinite Card

This is an excellent card to start collecting Air Miles with. You don’t have to pay any annual fees for the first year of use and you will receive a welcome bonus of 30,000 miles. You will earn 15,000 miles with the first purchase you make using the card. If you keep the card active for 90 days following approval, you receive 10,000 miles more. You can receive 5,000 miles per authorized card user you add. For the first year, the primary cardholder can get an annual rebate of $120. This is a lot of incentive just for signing up.

Stack up 25,000 points on the TD card and that will be enough to fly from Canada to any city in the United States or Mexico. Each air mile you receive using this card will amount to roughly 1.28 cents per mile for economy tickets. For business class, it would amount to about 2.2 cents per mile. This is definitely a bargain. Earning mile points is not that difficult. The card offers an extra 1.5 points per dollar spent buying gas, groceries, or pharmaceutical items. At this amount, your earn rate will be at about 3.3%.

There are many other cherries on top of this cake, including coverage for travel insurance, trip cancellations, baggage rental, car rental, and flight interruptions, among others.

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3.     MBNA Rewards World Elite MasterCard®mbna-elite_en

There are many incentives offered for signing up, including a sign in bonus of up to $100 and a waiver for first year annual fee. This card does not have a minimum spending requirement. Everything earns a 2% reward rate. This card allows users to redeem cash credit points for anything, which includes your travel-related expenses.

MBNA offers 2 points per dollar spend on all purchases, which is a solid advantage this card has over the others. There are no cap limits on how many points you can earn either. If you are a frequent flyer, you can redeem points for anything travel related. Keep in mind that points can be redeemed against any purchase regardless of whether it’s travel related. So, if you only fly periodically or once every two or three years, this is the best travel credit card to have.

4.     Rogers™ Platinum MasterCard®rogershome-credit-card

Most travel credit cards have a downside: hefty foreign transaction fees. Rogers is actually one of the few travel credit cards to subsidize transaction fees incurred overseas. You can earn a whopping 4% cash back on any foreign purchase. The rewards rate for all other purchases is 1.75%. Points can be redeemed regardless of the type of expense.

There’s no annual fee during the first year, and you will receive a $25 welcoming bonus. Cash rewards can be redeemed once annually, which will include travel expenses. It’s possible to not pay any annual fee at all by pre-authorizing payments. Also keep in mind that Rogers offers one of the best travel insurance policies in Canada with this card.

5.     Desjardins Visa Odyssey Golddesj-odyssee

The travel credit cards mentioned above on this list require hefty monthly income levels. Desjardins travel credit card is one of the most egalitarian offered in Canada. You can get approval without earning a six-figure salary.

This card comes with a solid travel medical insurance policy that will cover you and your family for 60 days straight when out of your province. This is a significantly longer coverage period than the industry average. Also, the policy covers up to $5 million in claims in comparison to others that offer only one or two million. In addition to insurance, there’s car rental, lost baggage, baggage rental, trip delay, flight cancellation, purchase protection, and accident coverage as well.

So, if you are on the hunt for a really good travel credit card, choose one from the above list for the best perks and consumer options.

Tangerine Cashback Credit Card

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Money-Back Credit Card
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Tangerine cashback credit cards are offered by Scotiabank-owned Tangerine bank. They are available exclusively in Canada. It’s one of the most popular cash back credit cards available in Canada.

Overview

The main draw of the Tangerine cashback credit cards is that there is no annual fee attached to it. Each purchase a user makes using the Tangerine cards earns cash back. The earned rewards can be deposited directly back to the credit card account so that it applies towards the balance.

A user has to select 2% money-back categories to get 2% cash back on these purchases, plus 1% on all other purchases. Tangerine credit cards are usually attached to a Tangerine savings account, so the rewards can easily be deposited. Cashback rewards deposited to the savings accounts are treated just like other savings deposits and will earn interest. Users can choose the redemption option on the savings accounts and choose two 2% cash back categories. The other option is to have the money directly deposited into a credit account, where the rewards will be applied against the other balance.

The advantage of Tangerine is that rewards do not need to be requested in advance. Rewards are also unlimited and are not subject to a throng of restrictions. Lack of annual fee means users can get cashback without rewards being deducted by service charges. Money-back rewards are also awarded on a monthly basis, rather than an annual basis.

It’s important to note that white there is no annual fee, there are several charges for other transactions. Each foreign currency exchange will have a 1.50% charge added to the converted transaction amount. Cash advances are $2.50 in Canada and $5 outside Canada. Balance transfer charge is 1% of the transfer amount or a minimum of $5. Dishonoured payments cost $25. The overcharge limit is $20, and only one overcharge payment is allowed each month. If you want to print a past statement, it will cost you $5. No charges apply to print current monthly statements.

Tangerine cashback cards are for personal use only, and businesses are not issued these cards. A single card can have up to 5 authorized users attached to the account. These authorized users will be able to make purchases and can take cash advances on the individual credit cards issued to them. However, authorized users cannot change the credit limit on the account or request balance transfers to other accounts. The primary cardholder will be responsible for paying the total balance on the account. It’s important to note that the primary cardholder is responsible for any and all transactions authorized users make.

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Users can change the 2% money-back categories after activating the card anytime. Changes will take effect once the first monthly statement arrives. Users have the freedom to request changes throughout. However, existing categories must have been in place for 90 days before the changes can be implemented.

Pros and Cons

Pros

  • No annual fee being charged. Most money-back credit cards have annual fees of close to a $100.
  • Cash back is unlimited.
  • Users receive 4% cash back as a welcome bonus for the first 90 days.
  • After the first three months, users can receive 2% cash back on any two categories of their choosing, and an additional 1% cash back on all other purchases.
  • No earning caps or restrictions imposed on non-category purchases.
  • Cardholders can choose two categories from 10 options, which covers expenses such as gas, clothes, electronics, pharmacy, and certain recurring bill payments.
  • Freedom to change categories any time as wished.
  • Cash back rewards can be deposited to a savings account if desired.
  • Rewards are granted automatically. No requesting process necessary.
  • Add up to 5 authorized users to a single account.
  • Schedule automatic payments online.

Cons

  • No travel perks.
  • While the Tangerine cashback card can be used outside Canada, transactions may be limited or restricted considering international banking regulations and safety of overseas transactions.
  • A 1% balance transfer charge applies.
  • Balance transfers between authorized users is not allowed.
  • Overcharging is limited to only $20, and only one overcharge is allowed per month.

Comparison to Other Canadian Cashback Credit Cards

Currently, Tangerine cashback credit cards are highly favoured by consumers over other Canadian credit cards available on the market such as American Express Simply Cash Card and Rogers Platinum MasterCard.

One of the biggest advantages that Tangerine has is that cash back is unlimited and is deposited automatically without the need for formal requests. Users often have to make requests and sort through complicated bonus rewards programs to get the money-back on other similar cards.

Most cashback rewards programs offer bonuses at the end of each year. Tangerine cards offer cashback rewards on a monthly basis. Redeeming rewards is effortless and convenient. The rewards can be arranged to be deposited to a savings account or towards the balance of the account. This is an option absent from many other similar programs.

While the Tangerine card charges 1.5% foreign transaction fee, this is quite low compared to what many other money-back credit cards charge. Most offer rates closer to 2.5%.

There are other cards offering flat 2% to 4% rewards and bonus points for all purchases. However, these also require cardholders to show a minimum monthly income of $6,000 or more. The Tangerine card’s monthly income requirement is much lower. So, this is a good option for entry-level workers and those firmly in the mid-income category.

As there is no annual fee, the Tangerine credit card stands as a desirable alternative to cash back cards that demand premium yearly service charges.

Other similar programs, like American Express’s Simply Cash, offers 1.25% money back on all purchases. Tangerine offers only 1% money back on all purchases.  But remember, this is in addition to the 2% you get on selected categories. It’s easy to apply the higher rate for transactions you tend to conduct more frequently, like paying for gas, and also earn rewards for non-frequent transactions, like buying clothes, as well.

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Air Miles Reward Miles Guide

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Air Miles is the leading loyalty marketing program in Canada. This article will explain how the program works, its history, how customers can benefit, and possible disadvantages of the program.

Overview

Air Miles is one of the most popular rewards programs in Canada. Very basically speaking, consumers can sign up for the program with participating credit cards and merchants. When the cardholder makes a purchase at a qualifying store, the rewards program adds points to the cardholder’s account. Later, these points can be redeemed as air miles with a participating airline. Clients can receive lucrative discounts and cheaper prices on plane tickets with the rewards program. Cash back options are also available.

The current Air Miles Reward Program operating in Canada is similar to other programs operating in Spain, Netherlands, Middle East, and formerly in the United Kingdom. It is currently overseen and managed by LoyaltyOne, Inc., a private entity owned by Alliance Data Systems Corporation, which is a loyalty marketing specialist in retail, travel, hospitality, and other similar sectors.

LOC53History

The Air Miles Reward Program first launched in Canada in 1992. The program was based on a concept developed by three young Canadian entrepreneurs named Craig Underwood, Sam Duboc, and Rob Gierkink. They came up with the basic idea for Air Miles in a Toronto hotel room.

The founders of the concept designed Air Miles as essentially a marketing venture that would reward opportunities for consumers to travel in return for brand loyalty. Loyalty programs were not a new concept at the time. However, it was unique because it brought together a coalition of sponsors, instead of being tied to just one company. Air Miles is also one of the earliest ventures that sought to gather data with regards to consumer buying habits in order to make advertising more effective.

Upon launch, the program had only 13 sponsors, including Canada Safeway and Bank of Montreal. The program attracted nearly two million customers in the first six months of operation alone. Soon, the original group of sponsors expanded to include giants in retail, pharmacy, grocery and fuel industries. They also partnered with credit cards offered by American Express and Bank of Montreal.

Air Miles enjoyed tremendous growth during the first six years of operation. In 1998, the business was acquired by Texas-based financial services provider Alliance Data. Subsequently, several other companies, such as COLLOQUY and Epsilon, were aligned with Air Miles.

Air Miles is recognized as one of the leading businesses in Canada, and a venture that helped shape loyalty marketing across North America. Today, millions of Canadians have signed up for the rewards program, and it remains as popular as ever.

How It Works

Customers are offered miles on a point-based system depending on how much they spend at a participating store. How many miles a customer can earn will depend on the participating merchant or credit card. For example, a customer can earn a single air mile for $50 spent at ADI, or for $15 spent at Primus. In general, 1 air mile is rewarded per $20 spent at a sponsor.

There are three ways a customer can earn it: shopping with a sponsor either in store or online, using a participating credit card, obtaining an Air Miles bonus card as a gift, or directly purchasing from the official website. Customers can also benefit from various offers and promotions provided by sponsors, especially during special times like Christmas holidays.

Air miles are not offered indefinitely. The miles do expire after some time, usually a year. Therefore, once customers have stacked up a considerable amount of points, these points should be redeemed. The easiest way to redeem points is to go to the official Air Miles website and type in the Collector Number. Customers can also redeem miles by calling the toll-free 1-888-AIR-MILES (1-888-247-6453) number. However, this option is less preferred as it is time consuming and inconvenient.

Customers can also transfer miles from one account to another. For example, a customer can gift air miles to a friend or a family member by transferring points from his or her own account.

LOC52Pros

Customers can earn points for a number of airlines with the Air Miles loyalty program. Traditionally, customers had to sign up for the program with a single airline. With the Air Miles Reward Program however, customers can redeem points they earn with a number of different carriers.

The Reward Program offers access to hundreds of sponsors. Customers can earn miles by using a certain credit card, buying a blender, filling up the gas tank, or subscribing to a service. The options are nearly unlimited. Because the Reward Program spans a number of industries, customers have a higher chance of stacking up points simply by making everyday purchases.

On average, customers can earn an air mile per 20 cents spent with a participating sponsor. The rate of return is higher with bonus points. For example, a customer who purchases a $10 product with 20 Air Mile bonus points can receive close to a 20 percent discount on the product.

Cons

The rate of return can vary because different sponsors offer varying air mile points for products. For example, a customer can earn the same number of points for $20 or $60 spent at different sponsors. In this situation, the customer who spent less gets a bargain, while the customer that spent more is not enjoying a positive rate of return.

Customers could spend more than they should on products in order to earn points. For example, a customer could end up spending $50 at a participating store for a $10 product just to earn Air Miles points.

Is Air Miles Better than Other Similar Rewards Programs?

Air Miles is the largest loyalty rewards program currently operating in Canada. No other program comes close to the number of sponsors and offers they have for its customers.

Most loyalty programs in Canada are still confined to a single company. For example, customers can sign up for a loyalty program with United Airlines and shop at a limited number of retail outlets. With Air Miles, customers are offered a wider range of options, which makes this particular program truly outstanding among its peers.

Official Website and Companies Involved in the Program

The official website of the Air Miles Rewards Program is www.airmiles.ca. The official site has the complete rewards catalogue for the program. Customers can also access a gift guide, payment services, a flight calculator, and the latest offers and promotions.

Here is a list of prominent companies involved with the Air Miles Rewards Program as sponsors:

  • American Express
  • Bank of Montreal
  • Safeway Canada
  • Uber
  • Ace
  • McDonald’s
  • Overstock.com
  • Adidas
  • Alamo
  • United
  • Budget
  • Hilton Inn
  • Amazon.ca
  • Ann Taylor
  • Apple Store Canada
  • Macy’s
  • Mark’s