Canadian Money Advisor 2005

Helping Canadians Understand Their Money & Personal Finance since 2005 BLOG

what is a credit card part 2
- Posted March 21, 2012 by Monty Loree
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What is a Credit Card?

A credit card is considered the most flexible and convenient payment mode for consumers and business persons. Credit cards provide consumers interest-free credit upon the time of purchase until the end of the billing period. Statistics from the Canadian Bankers Association show that approximately 60 percent of Canadians pay their balances completely. Credit cards provide access to unsecured credit which means that there is no collateral needed. Right now, there are more than 70 low interest credit cards in the market. Majority of these cards carry an interest rate of below 12 percent. More than 74 million Visa and MasterCard credit cards are in the Canadian market today.

This article gives credit cardholders information about benefits that they get from credit cards; the Bank Act regulations pertaining to credit cards; and, a summary of the new credit card laws in Canada.

What benefits do Consumers get from Credit Cards?

Credit cardholders have free access to unsecured credit with interest-free payments. As soon as payment for purchases is made, you get hold of these services and commodities. There are numerous benefits and rewards like rebates, points for air travel, comprehensive warranty programs, car insurance as well as damage or loss insurance coverage. There is also protection for fraud and zero liability for cardholders in case of any deception. A lot of banks offer consumers an assortment of products so their clients can opt for regular cards which do not have annual fees. There are also low-interest rate cards. Consumers should be familiar with details about credit cards such as long-term borrowing requirements.

What are Bank Act regulations pertaining to Credit Cards?

Credit cardholders are protected by the Bank Act regulations. Users of credit cards are not held liable in case of fraud.
Fraud protection
Several organizations and institutions have made formal commitments to protect consumers from the unauthorized use of their credit card. These commitments outline consumers' liability in relation to fraudulent transactions on their credit card. These are American Express, MasterCard, Visa and Interac.

There are new credit card regulations in Canada. Bankruptcy Canada published the following
Credit card issuers must offer a minimum 21 day grace period, during which they can’t charge you interest on new credit card purchases, provided you pay off your balance in full by the due date. Under the old regulations grace periods varied, and the card issuer could charge interest on purchases from the date of the purchase if you had not paid last month’s bill in full.
When consumers make a payment on your credit card above the minimum amount, that payment must be applied to the balance with the highest interest rate first, or proportionally to all transactions. Under the previous regulations credit card issuers could apply payments however they wanted, such as applying payments to the lower interest balances, resulting in higher interest payments.
Your monthly credit card statement will be easier to understand, and must include disclosure of how long it will take you to pay off a balance if you only make the minimum payment. They must also give you advance notice if they are increasing your interest rate.

What are the new Credit Card Laws?

The Financial Consumer Agency of Canada states that the new regulations apply to credit card loans offered by financial institutions that are regulated by the federal government. The regulations enhance consumers' access to clear information about key details of these financial products, such as interest rates, fees and penalty charges. Said policies also fortify consumers' rights by limiting certain business practices of financial institutions

Here are some guidelines regarding credit cards:
Credit Cards: Your Rights and Responsibilities
Credit cards can be very convenient, but it's important to keep in mind that when you apply for a credit card, you are entering into a contract. Like any contract, it is legally binding and gives each party certain rights and responsibilities.
There are rules that federally regulated financial institutions have to follow to make it easier for you to understand the terms of your credit card contract. This publication will give you a brief overview of some of those rules.

Choosing the Right Credit Card

Choosing the right credit card for you can be a challenge. There are hundreds of different credit cards to choose from, each offering a different combination of interest rates, fees, benefits and rewards. Taking some time to shop around and weighing your options carefully can help you find a credit card that suits your lifestyle and budget.

New Rules Favour Consumers

The new laws are relatively in favour of credit cardholders and consumers in general. It is now the obligation of consumers to adhere to this new policies and continue to exercise prudence in the use of their credit cards.


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what is mbna part 2
- Posted March 18, 2012 by Monty Loree
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What is MBNA?

MBNA is a division of The Toronto-Dominion Bank. It is currently the largest MasterCard issuer in Canada. It dominates the field of affinity marketing and works to develop a mutually rewarding relationship with its members. MBNA regularly invests in initiatives that help enhance the country’s environment and integrates environmental policy into the company's products and operations at all levels. MBNA has made the commitment to provide top quality customer service.

This article will explain why MBNA stands out in the market; the Identity Theft Protection & Balance Protection Insurance; and, the other credit card products of MBNA.

What makes MBNA Stand out?

MBNA has excellent products and services. The highly reputable financial institution has shown genuine concern for its customers. The MBNA Smart Cash MasterCard is one of the most preferred cash-back credit cards in Canada.
Aside from the $60 rebate, the card also offers the following features:
  • There are no annual fees.

  • There is 5% cash back on qualifying net retail gas and grocery purchases for the first 6 months.

  • There is 3% cash back on qualifying net retail gas and grocery purchases from then on.

  • There is 1% cash back for all other qualifying net retail purchases

MBNA Canada has become the largest issuer of MasterCard’s in Canada by using affinity marketing techniques. This is part of their strategy to obtain the endorsement of more than 5,000 organizations, including sports teams, charities, financial and educational institutions. MBNA Canada markets its Master Card products aggressively through direct selling. It also makes use of telemarketing and point-of-sale techniques.

What is MBNA’s Identity Theft Protection & Balance Protection Insurance?

MBNA Canada boasts of the Credit Alert monitoring service that helps protect against identity theft for a minimum cost of $17.99 every month.
This feature offers:
  • Online access to your credit report and credit score from Equifax Canada

  • Detect early signs of fraudulent activity before it ruins more than your bank account

  • Monitors, manages and protects your valuable credit and identity information.

The MBNA account agreement states that if a fraudulent charge appears on your statement, you will not be held responsible for any unauthorized use of your card, PIN or account number.
MBNA Canada also features the Credit Wise balance protection insurance for $0.99 per $100 of the average daily balance, cycle ending balance or balance subject to finance charges, whichever is higher. There are also the so-called Access Cheques.
These can be used for the following:
  • Visiting friends and family – create some memories that will last a lifetime

  • Holiday shopping – the people you care about deserve the best

  • Planning a winter getaway – You work hard; treat yourself and your family to a holiday

The annual interest rate for access cheque balances is 19.99 per cent, and the transaction fee for access cheques is 1 per cent of each transaction amount, with a minimum fee of $7.50.

What are the other Products of MBNA?

Holders of the luxury World Points card get one point for every dollar charged to it. You earn 1000 rewards points after your first eligible transaction and 1000 on your account anniversary date every year. You can redeem your points for merchandise and travel rewards of a wide variety, and you need as little as 1000 to start getting returns. The annual fee for this card is only $29. Interest rate on purchases charged to the card, balance transfers, check cash advances, and advances of cash equivalents is 19.99 percent. If you make more than one late payment within twelve billing cycles (one year), the interest rate increases by 5 percent. You must make all your payments on time within the next 12 billing cycles for the rates to go down.
You can use the Premier Rewards Credit Card for grocery shopping, gas, and payment of utility bills. The rebate rate on these expenses is 1 percent and this amount is credited back to your account every year. No annual fee in charged and there are no earning or spending limits. However, the maximum credit limit is $100,000, and the product goes with an interest rate of 19.99 percent on balance transfers, purchases, and cash advances. The grace period is 21 days and minimum payment is set at $15 or 1 percent of the account balance, including new interest charges.
The Travel Rewards Card allows you to earn one point per dollar charged to the card. You get 5,000 free points the first time you use the card (for an item that is considered an eligible purchase) and 2,500 points on your account anniversary date every year. You can redeem points for trips on over 75 airlines. The annual fee is $89 and the interest rate stands at 18.99 percent on purchases. The interest rate on balance transfers and cash advances is slightly higher at 19.99 percent. You will enjoy a wide variety of Platinum benefits such as free additional cards, immediate access to cash, 24/7 customer service, no blackout periods, emergency card replacement for stolen and lost credit cards, up to $100,000 credit limit, and worldwide acceptance.

The MBNA Reputation

MBNA certainly puts importance on excellent standards of service. This is one of the reasons why it has built a good reputation in the country. If you take a close look at its products, you will also find out that the features of MBNA credit cards were designed to benefit its clients. MBNA has millions of loyal customers because of its sound business sense and programs focusing on the welfare of this customer base.


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what is capital one
- Posted March 18, 2012 by Monty Loree
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What is Capital One?

Capital One Canada boasts of some of the most competitive credit card offers for consumers. It came out with the first Platinum MasterCard in Canada in 1996. Today, you can depend on Capital One�s relentless campaign to create various types of credit cards to fill in consumer demands and likes.
The Capital One MasterCard unleashed competitive interest rates and rewards, together with uninterrupted customer service and zero fraud liability. The plus sides of Gold and Platinum MasterCard include travel and auto rental insurance, price protection, purchase assurance and extended warranty.

The article lists down the major Capital One credit cards in Canada; explains briefly the new mobile banking concept; and, discusses the non-profit ventures of Capital One Canada.

What are the Principal Credit Cards of Capital One in Canada?

Smart Line Platinum MasterCard is the best low interest card offered by Capital One Canada. The long-term rates are the lowest among their cards. There is no annual fee, and offers an introductory rate of 5.99% on purchases and guaranteed balance transfers for 3 years. To benefit from this guarantee, you must pay your bills promptly every month. It helps you save more money since you pay no balance transfer fee at all when you do a balance transfer. Applicants should have a Canadian credit card for more than 3 years and household income of at least $40,000.

The Capital One Gold MasterCard: 11.9% is a good low interest card for those with good credit and have a minimum household income of $30,000. For a low annual fee of $19, you get a low interest rate of 11.9% on purchases and balance transfers guaranteed for 3 years, as long as your card bills are paid on time each month. This Capital One Gold MasterCard is recommended for those who carry a balance from month to month and want to save money on interest.

Capital One Aspire Travel World MasterCard is a high-end rewards card for those who have positive credit and a minimum personal annual income of $70,000. It gives you a flat 2 reward miles for every $1 spent on all purchases for an annual fee of $120. Miles can be redeemed for travel, cash, gift cards or merchandise through the No Hassle Rewards program. This card will suit those who want to earn miles very quickly, and who don�t carry a balance as the annual interest rate for purchases and balance transfers is prime+16.8%. World MasterCard perks include travel emergency medical insurance, trip cancellation insurance and many others. Promotion for new sign-ups to Capital One Aspire World MasterCard: Receive 35,000 bonus miles after your first purchase with the card, and also 10,000 anniversary bonus miles annually.


What is the Concept of Capital Oneï½s Mobile Banking?

Aside from credit cards, Capital One has formulated the Capital One is a Mobile Banking App that provides client is access to most of the services that they enjoy in Online Banking. It is free to download and offers quick access for managing your credit card and bank accounts. Use your current login information to start banking today.
This can be used in payment of bills, transfer funds between different bank accounts, check balances, locate automated teller machines (ATMs) and different branches, view information about rewards, view recent transactions and contact customer service.

There is also a new product called text banking. Credit card account information is now just a text message away. Text a short command code to Capital One and you can get secured account information that includes the following:
  • Account balances

  • Recent transactions

  • Next due date

To start Text Banking, all you need to do are:
  1. Log in or enroll your credit card account.

  2. Register your mobile phone number.

  3. Receive your short codes.

What are the non-profit undertakings of Capital One Canada?

Capital One Canada has launched an innovative program that seeks to provide Canadian youth and non-profits servicing youth, access to funds in building and sustaining social enterprises. The new Capital One Youth Entrepreneurship Fund was launched in 2011 to build stronger communities by empowering the non-profit sector with resources and coaching. These are used to build sustainable funding models.
The Capital One Youth Entrepreneurship Fund is available in four major Canadian cities (Toronto, Calgary, Vancouver and Montreal) and provides grants to support the development of revenue-generating enterprises, enhance their programs or services, and stabilize and diversify the charity's funding base. This program focuses on enabling youth and organizations that service young people to conduct planning activities and develop a social business venture.
The "social enterprise" refers to business ventures operated by non-profit organizations. These may be societies, charities or co-operatives that sell goods or provide services in the market for the purpose of creating a blended return on financial and social investments. Profits are returned to the business or to a social purpose, rather than maximize profits of shareholders.
Since the development of revenue-generating enterprises are challenging and require a different set of skills, the Capital One Youth Entrepreneurship Fund supports workshops to help non-profit organizations develop a thorough understanding of realities and risks of embarking on an enterprise initiative. Attendance at a workshop is required for prospective grant applicants to ensure that staff and board members have a thorough understanding of the issues involved in enterprise development

Significant Milestones

Capital One Canada has accomplished a lot of milestones both in the areas of financial and income-generating ventures as well as corporate social responsibility. These achievements have made Capital One as one of the primary enterprises in the country today.


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let s borrow 1 trillion to pay off bad mortgages that doesn t make alot of sense
- Posted March 21, 2009 by Monty Loree
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Let's borrow $1 trillion to pay off bad mortgages!
That doesn't make alot of sense

The financial news these days certainly isn't boring. The article below talks about how the U.S. federal govt is going to use $1 trillion in debt to purchase toxic mortgages and get them off of the banks balance sheets.

Why does this seem so wrong.. Isn't there a term for this? Kiting?!! Using debt to pay off debt?

If consumers use debt to pay off debt, that will affect your credit score pretty badly. It tells the creditor that you're illiquid and that you don't have cash savings to pay your debt.

Fundamentally using debt to pay off debt is just wrong. It may ease the pain for the short term, but ultimately it's going to cost everybody alot more. in real estate What they're doing is taking the burden off of the individual mortgage holders, and putting it onto the over all population. That's not right, and it's not fair.

People need to be responsible for their own mortgages. If you can't afford to pay your mortgage, move to a lower cost situation.. The existing credit market is designed to work with these cases. It's not politically correct to let millions of people default on their loans and mortgages.. however there is a system to work this through. The mortgage companies and banks made piles of money at the beginning of this free-for-all mortgage bubble. Now they don't want to take the losses associated with their misdeeds.

Accountability is what it's all about. The banks get bailed out, and the individual has to take it on the chin.

Geithner Relies on Investors for $1 Trillion Plan

By Rebecca Christie and Robert Schmidt

March 23 (Bloomberg) -- The Obama administration unveiled its long-awaited plan to remove toxic assets from the books of the nation�s banks, betting that it can revive the U.S. financial system without resorting to outright nationalization.

The plan is aimed at financing as much as $1 trillion in purchases of illiquid real-estate assets, using $75 billion to $100 billion of the Treasury�s remaining bank-rescue funds. The Public-Private Investment Program will also rely on Federal Reserve financing and Federal Deposit Insurance Corp. debt guarantees, the Treasury said in a statement in Washington.

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bicycling is cheap and full of adventure
- Posted March 21, 2009 by Monty Loree
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Bicycling is cheap - and full of adventure

I did my first 23 km bicycle ride yesterday.

I thought that for the first day of spring I should get out and bicycle some place. My favorite place to go is Southland Mall - which is an 10 KM ride, and then back home which is another 10KM.. (earlier in the day I went shopping on the bike which was 3 km.)

Along the way I stopped at Wascana Lake in Regina and took some pictures of the sites and people and geese on the lake.

bicycling is cheap and full of adventure.

I can't believe how much I missed bicycling over the winter time. It's a time to get out doors, get some fresh air, see the sites and get exercise.

It's also a cheap way to travel. I spent $1.49 at Southland mall to purchase trail mix for the ride. Better than a car loan!!

I was pleased that I was able to ride 23 km in one day, and especially at March 20th.. Last year it took me until June or July to before I could go that far on the bike with out passing out.

This year I plan to travel to Moose Jaw and back, which would be 130 KM in a day. I also plan to do even longer runs, which will take more practice and getting into shape.

    The benefits of bicycling last year - Summer 2008:
  • I lost around 50 lbs
  • My heart was greatly strengthened
  • My leg muscles get strengthened
  • I lowered my cholesterol down to normal
  • I saved a bunch of money on car expenses.
  • I enjoyed the summer probably the most in 25 years.
  • I relieved a ton of stress

The benefits of bicycling have been absolutely tremendous. For such a low cost transportation, the benefits and enjoyment have been wonderful. I would say that I enjoy riding my bicycle even more than driving my Cadillac CTS.

During this economic down turn.. why not take your bike, instead of the car.? It will save you money and you'll really enjoy it. (After you get used to it ! )

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You've got to Live - Spend Your Money
- Posted March 21, 2009 by Monty Loree
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You've got to Live - Spend Your Money???

I was listening to a radio talk show this morning and the fellow was talking about the economy. The radio announcer was complaining about Suze Orman and Suze's style of money coaching.

The comment came up that Suze recommends that people save their money and cut down on expenses. The announcer then indicated that people need to live their lives and spend their money!

spending too much on consumer items

I love that logic.. the announcer said, "well yeah, you need to save and pay down debt, BUT you also need to live your life."

Isn't that what got us into this problem in the first place?

Here's my point:
1) If you don't have sufficient cash reserves - you NEED TO sacrifice and start saving your money

What this yappy announcer failed to mention was this:
Most Canadians and Americans have really low savings rates. We love to spend our money , but hate saving it.

This becomes a huge problem in an economy such as this economic crisis. If all individuals had an abundance of cash reserves they would never be worried about losing their jobs . They wouldn't be worried about paying bills or paying down debt. Quite frankly, I don't think individuals would have too much debt if they had an abundance of cash saved.

For those who have no savings, and are in debt... It's my opinion these people should take a time out from spending, and put their money in the bank. Plain and simple... Just save it.

You have to live, I agree, however you need to have safety measures in place. Why are Americans so worried about this economic down turn? If they had sufficient cash reserves in place, and little debt, there wouldn't be much to worry about.

IE.. If Americans and Canadians were recession proof, they wouldn't have to worry.

What harm would it do to Sacrifice for a few years and save money ?
So you kids have less toys.. you have less vacations.. you have less consumer products.. you eat out a little less.. What would your kids say about that?

Your family might complain for a few years about not having any money to spend. At the same time, you would have less fights because of lack of money, less stress, and less worry about paying bills.

What's more important to you, instant gratification or long term peace of mind?

I wish that the media would get on board and stop asking consumers to borrow more and spend their way out of the economy. Consumers need a financial rest. They need to have their money take a time out and spend some lonely time in the bank account.

Ultimately this will make the consumer feel better, and eventually give them a more confident feeling when they start to live their life!

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AIG Bonuses - Don't eliminate the Trust Factor!
- Posted March 18, 2009 by Monty Loree
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AIG Bonuses - Don't eliminate the Trust Factor!

I must admit that I think giving bonues to execs who've lost $68 billion is completely wrong. But as mentioned on the news, it's in their contract.

The federal goverment should have known about these bonuses prior to purchasing 80% of the company. They should have been away of the income statement and balance sheet prior to purchasing the company.

Where I think it's completely ridiculous to give these execs $165 billion in bonuses, I think it's worse for government to step in and renege on their contracts.

I would be furious if a government of any type stepped in and started dictating what I can and cannot do with contracts in my business.

IMO.... the government shouldn't be getting involved in private business. That's eroded alot of confidence in the market place. Having government involved in private business means that business can't operate on it's own and needs life support.

Having government interfere with private enterprise contracts is the next step to BIG BROTHER and socialism.

It will erode trust even further with businesses. Businesses will be concerned if they should do something lest the government jump in and act.

I know that this is an extreme example, but when contracts are legally binding, they should be allowed to carry out, in a lawful fashion.

According to:

(AIG) Staff Get 'Death Threats' Over Bonuses
The furore over the $165m in bonuses AIG is contractually obliged to pay staff at its Financial Products Group (the unit that basically brought down the firm) reached fever pitch over the last couple of days.

The Times reports that armed guards have now been placed outside the Connecticut offices of AIG Financial Products, after staff there received death threats over the bonus payouts. Several staff are said to have refused to come to work, and others are thought to have quit. And we even had US Senator Chuck Grassley telling a radio audience earlier in the week that AIG executives should 'resign or go commit suicide' (he later clarified that remark, saying he didn't really mean that they should actually kill themselves, instead suggesting that they say 'sorry').

In the meantime, House Speaker Nancy Pelosi hopes to enact legislation in the coming days in order to slap a heavy additional tax charge on the AIG bonuses (will effectively cancel them out), and Representative Barney Frank has suggested that the US government simply step in and assert its ownership of AIG. Frank told a group of reporters Tuesday that the government needs to say, as owner of the firm: 'No, I'm not paying you the bonus. You didn't perform. You didn't live up to this contract'. And Treasury Secretary, 'dim' Tim (Geithner), has said that he is looking into the matter (he may - like all his other schemes - have a plan for a plan, with more details sometime never).

How is anybody supposed to get any work done in this trustless environment. Who would want to work in the company after all of this headline news?

I think for next time, the AIG Bonus contracts should be reconsidered. However, at this time, pay the bonuses and keep to your agreements. Agreements and fulfilling agreements are the glue of the North American economy.

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Using Credit Cards as Income - A definition
- Posted March 17, 2009 by Monty Loree
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Using Credit Cards as Income - A definition

In my previous post, I talked about how you can use credit cards as a beneficial tool in your day to day finances.

In this post, I would like to talk about what using credit cards as income source means.

By allowing people to make minimum payments on their credit card debts, the credit card companies make it tempting to use credit cards as an income source.

The following are ways you could be using credit card as income.
1. Buying expensive items that you can't afford
2. Buying day to day goods on credit
3. Purchasing small items that you don't need and can't afford.

Buying expensive items that you can't afford
You say to yourself, "this item costs $1,000, but I can afford the minimum payments of $30".. I've heard this said so many times, and used as to how people justify their purchase.

What you're doing is giving yourself a $1000 payday bonus that's going to cost you alot in the end interest wise.

A better way to do this is .... Save up $30 per month until you can afford the $1,000 to make the purchase. It requires patience, however, if you really want the item then this is a better way to make the purchase.

Buying day to day goods on credit
You've spent all of your earnings and you still need money to buy day to day goods. You use your credit card to make up for the short fall in income.

This is a really bad trap to get into. What it tells the credit card company is that you do not have the ability to pay your bills, and that you're becoming a bad credit risk.

If you're running into this problem, it's a good idea to cut back expenses to the very bare minimum , and / or get another job to earn more money.

Even though access to cash advances on your credit card is easy to do ... trust me.. Using your credit card as income in this case will certainly cause alot of headaches in the future.

Purchasing small items that you don't need and can't afford.
You go to the mall and make several small purchases that you don't have the cash to repay.

You justify this by saying to yourself.. This necklace only costs $25. I can easily pay that off this month. The problem is you make several of these small purchases that add up. Eventually you start to carry a balance that you can't pay off each month.

Simply stated, you should always have enough cash in the bank to cover your credit card purchases. You should pay your account in full every month.

If you're carrying balances and paying interest, then you're using your credit cards as an income source.

I wrote this post to give people a new light to their credit card habits. In this economic crisis turmoil that's brought on by consumer spending and debt, I'm hoping that we can change the way people think about using their credit cards.

Use credit cards as a tool.. and not a source of income.

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Using Credit Cards as a Financial Tool
- Posted March 17, 2009 by Monty Loree
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Using Credit Cards as a Financial Tool

As I'm watching the economic news, it's hard not to hear headlines of credit card defaults, and other problems people are having.

People have been using credit cards as a source of income, when they should be using them as a financial tool.

The best example of using credit cards as income is when an individual purchases and item or service when you don't have the cash in reserve to pay off the balance in full every month.

This of course leads to individuals carrying balances on their cards, which usually increase over time.

I recommend that people use credit cards as a financial tool.
This means that you take advantage of the credit cards benefits, excluding being a source of income.

Some of these benefits are:
1. Convenience to make purchases online
2. Saving money on ATM withdrawals
3. Receiving rewards for credit card purchases
4. Receiving 30 days of free money

Convenience to make purchases online
This is one thing I use credit cards for all the time. I like to purchase software or training programs online, and of course I can't pay cash or debit card. Online companies only take payments from Paypal, credit cards or other online payment services.

Many of these services I cannot find locally, and in order to stay competitive in my business, I need to have competitive software and training for that software.

Saving money on ATM withdrawals
I learned this lesson the hard way.. I used to use my debit card at ATMs alot . I want to pay cash for things but my service charges were adding up quickly.

I decided to pay for what I normally purchase using credit card, and then promptly pay the credit card bill when I receive it.

The credit card companies don't make you pay service charges for purchases so you can do a bunch of them with out paying.

Receiving rewards for credit card purchases
I use my Canadian Tire Mastercard to buy things. I receive rewards with with I can use to buy things at their store. This is a great way to purchase household items using points.

At one point in my business, I was getting $100 per week in Canadian Tire points, and it was fun to go and spend them, as I knew the purchases weren't costing me anything.

Receiving 30 days of free money
If I make a purchase today, I generally receive 30 days or so before I need to make a credit card payment. That means that the money stays in my account for 30 days, and then when I make the payment it's one payment in stead of many.

In essence, I am using the credit cards money for 30 days while I earn interest on the money that's sitting in my bank account.

These are reasons why credit cards are actually useful. Again, credit cards shouldl never be used as an income. If you're using credit cards as an income source and don't have the cash reserve in place to make full payments each month, then you're probably in trouble financially.

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Mortgage Life Insurance in Canada
- Posted March 16, 2009 by Monty Loree
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Mortgage Life Insurance in Canada

One of the most significant purchases a family makes in the course of its life is the purchase of a home. Many of your monthly expenses are centered around the fact of owning that home: cable, telephone, electricity, water, and gas, not to mention maintenance, take a up a significant part of your monthly income. The bill that in many cases takes the biggest proportion of your income is the mortgage, your monthly house payment. And it is the bill that must get paid above all; the other expenses can be put off or lived without if necessary, but if the mortgage is not paid in a timely manner, there will be no home for the family to live in.

But a family might find itself in the tragic situation where one of the people responsible for making that monthly house payment is incapacitated or even dies, and your family becomes unable to pay the mortgage. In that case, your family might face not only the death of a loved one, but the loss of their home and credit, as well.

Fortunately, there are plans that can help you avoid this unfortunate eventuality. Mortgage life insurance is designed for just such protection. Mortgage life insurance is a low-cost, flexible method to protect one of your family’s most important investments. If you develop a terminal illness, sustain a serious injury, become disabled, your mortgage insurance can offer you several benefits:

  • It can pay your outstanding mortgage amount. This is the chief reason that most people buy this type of insurance. If you die or become incapacitated, the balance of your mortgage will be paid off. You may, however, still be responsible for any over due payments that have not been made.
  • It can pay up to five years’ worth of accrued interest.
  • It can pay any property taxes that you owe when you die so that your heirs are not left struggling with taxes.
  • If you are diagnosed with a terminal illness, it can give you an option to pay out early, so that you can be assured before your death that the house is paid off for your family.

Most people sign up for mortgage insurance at the same time they apply for their mortgage. This ensures that your family is protected even before you close on your mortgage, so that if something happens to you, they will still be able to move in to the new home you have planned.

Applying for mortgage insurance

The cost of mortgage insurance is based on how old you are when you apply for the policy and the amount of your mortgage. Your premiums will not increase as you get older, as long as the terms of your mortgage remain the same. They are also conveniently rolled into your mortgage payment, so you are not paying two separate bills each month. You are eligible to apply if you are a resident of Canada, between 18 and 69 years old, and have been approved for a Canadian residential mortgage.

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How are credit card companies treating you? - Economic Crisis
- Posted March 07, 2009 by Monty Loree
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How are credit card companies treating you? - Economic Crisis

I got a call from Kate Rutherford from CBC radio in Sudbury Ontario.

Kate was inquiring about how the credit card companies were dealing with the economic crisis situation. She was concerned about credit card companies increasing interest rates, service charges and even decreasing people's lines of credit.

Credit card companies make their money from interest and service charges. They base their interest rates and service charges on the level of risk that the individual is at.

This means that if your credit score all of a sudden decreases for any reason, they may charge you a higher interest rate.

American Express is charging me higher interest rates, even though I've got excellent credit
As a result of Kate's call, I contacted American Express. I have a Business Gold card with them.. The customer service rep indicated that my interest rate had increased from 14.99 % to 16.99 % even though my credit score hadn't declined. She indicated that this was because of the economy and the write offs that they're incurring.

Check your credit score with Equifax and Transunion.
If you want to understand why you've received a interest rate hike, or why you may receive one in the's best to in vest $20-$30 to purchase your credit reports. This will tell you exactly where you stand with the credit bureaus. And you'll know what the credit bureaus are reporting to your credit card companies (and other lenders)

This is especially the case for workers who have been laid off in this economic down turn.. If you've used up your cash reserves, and are now using credit cards as income, this could adversely affect your credit score, thus driving up your interest rates.

I always tell people... if you're in doubt as to where you stand with the credit card's worth it to take 15 minutes and call them up. After all , they are suppliers of credit, and should be there to give you the service you need.

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General Motors isn't a going concern - Deloitte & Touche
- Posted March 07, 2009 by Monty Loree
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General Motors isn't a going concern - Deloitte & Touche

In the last few days, Deloitte & Touche, a third party consulting firm, gave a report on the viability of General Motors. The consulting firm indicated that they have substantial doubt about General Motors future and their capability to generate a profit in the near future.

I give General Motors all the credit in the world for their fighting spirit, however, what does it take to bankrupt this company?

If they're not making money, then by the definition of free enterprise, they should be left to reorganize and downsize themselves to a point where they can start making money.

Here's what bothers me about their bailout...

We Lived on $60 per week in groceries - family of four (1993)
When I was first starting my business in 1992, our revenue was pretty light as you can imagine... we lived on $60 per week for grocery money. One week we were pretty desparate so I called social services and asked them if they could help out. Social services told me that I would have to sell my house, because that would provide me with cash!!

I needed money then to feed the family. I was furious at that reply. Here I was ... working 7 days a week, trying to feed the family and had genuinely asked for help. I was refused !! At that point, I said, NEVER AGAIN, would I ask for help from the federal government.

The Federal Government is giving Welfare money to GM
The federal government is now giving bailout / welfare money to people who make $50-$60 per hour. That doesn't seem right, in my opinion.

Is this the alternative to having these families on Employment Insurance? I'm not sure..

This situation is completely wrong IMO.. General Motors should be left to fend for itself. That is the painful choice, however it will be better in the long run, in my opinion.

I've been self employed since 1992.. This means that I've earned money the real way.. creativity, hard work and sacrifice. I've made money , and I've lost money. My family has experienced the severe highs and lows of being self employed. However, we've never asked for a dime since those start up days.

We've had to adapt to our situation as it has happened. We've learned to deal with expanding the business and contracting the business. It's been painful and in some cases it's taken years to do. That's the nature of business.

If you have to down size, then you get back in the saddle and innovate. You create enough value that your customers will start to buy from you again. Again.. some times this takes years, however, you need to do what it takes.

End of rant..

Good luck General Motors, your workers, your suppliers etc!

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Canadian Consumer Toxic Debt? What do we have to show for it?
- Posted March 07, 2009 by Monty Loree
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Canadian Consumer Toxic Debt? What do we have to show for it?

I am starting to research monetary policy and the money supply system.. in my travels I came across this Canadian money supply page that talks about how much savings Canadians have along with how much debt Canadian individuals have.

I was alarmed that Canadians have $412 billion in Consumer debt, and $1.3 trillion in debt when you add in mortgages.

I can understand the mortgages part of the equation as this debt is backed by real assets.

The $412 billion I would assume includes car loans, renovations loans, lines of credit and credit cards. I contacted the government of Canada and they couldn't give me an exact breakdown of the consumer debt portion.

What I'm really worried about is, what kind of assets do we have to back these debts? IE... are all of these debts based on highly depreciated assets?

The basis of my comment is the current collapse of the stock market.. the recent economy has been built on debt on all levels... now that the economy is crashing , there is alot of debt that we're dealing with, but it doesn't seem like this debt is backed up by solid assets.

So.... if our $412 billion in consumer debt isn't backed up by real assets, then how does that make our economy look?

It makes the Canadians balance sheet look pretty weak.

I should say that the it appears from the chart that the money supply in Canada (M2++ gross) is $1,735,973,000,000 ($1.8 trillion) so we have cash to back up the debt.

The point of this post is to express concern so that we can become a little more aware of what we're using consumer debt for. If we're buying holiday & travel, restaurants, and electronics which all have zero asset value after the purchase, then we're buying too many empty items with our consumer credit.

The other point I wanted to bring across.. if we're paying an average of 10% on our consumer credit... that's $41.2 billion dollars per year in interest. Is that what you want to be spending your hard earned dollars on?

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AIG Gets $30 billion more? - Let them go bankrupt!
- Posted March 02, 2009 by Monty Loree
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AIG Gets $30 billion more? - Let them go bankrupt!

My pet project is to talk about General Motors and how the federal government should let them go bankrupt.

AIG Insurance company needs an additional $30 billion bailout after losing $61.7 billion in the fourth quarter.

So... we're debating whether to give General Motors $4 billion but we're easily going to give AIG Insurance $30 billion.

This is completely ridiculous... the problem is... I can understand a little about the car industry... I have no idea about the insurance business.. (I understand life insurance) I don't understand the high level complex financial products that AIG has created.


These companies who are getting bailout money enjoyed making alot of money during the hay days. They all enjoyed the upswing. Now, with the downswing they're not enjoying themselves.

From my understanding, capitalism is all about peaks and valleys.. You make profit in the good days, and manage carefully during the down times.

Nobody wants to take the lumps of a down market.

This isn't right. And it's going to cause more problems in the future.

As painful as it may be... why not let AIG fail and restructure. Isn't business about Caveat Emptor? If individuals and companies have insurance with AIG... let them buy insurance from other companies...
I know that's not as simple as it sounds, however, caveat emptor...

AIG performed badly and should be treated accordingly. It's customers should realize that they purchased products from a bankrupt company.

CAVEAT EMPTOR - A business term for capitalism

I think consumers are getting pretty sick of government bailouts... myself included.

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