How to reduce credit card interest rate?
One of the most depressing things about having credit card debt is the fact that the high interest rate can mean that most of your monthly payment goes to paying interest, rather than reducing your principal. This can mean a long, slow slog as you try to pay off debt.
However, you might not have to keep paying that interest rate. In some cases it’s possible for you to reduce your credit card interest rate… just by asking.
Steps to Reduce Your Credit Card Interest Rate
Is your credit card interest rate 18% or higher? Call the number on the back of your card, tell them you have seen lower rates and chances are that you can get them to lower it. It’s not always that simple, of course, but it’s a start.
Call and ask to speak to someone about your interest rate. In some cases, representatives are allowed to drop your interest rate by as much as 3% in order to retain you as a customer. If the first representative can’t help you, ask for someone who can help you lower your interest rate.
Your best leverage during the is if you have a recent offer in the mail with a low introductory rate of 0%-10%. Many credit card issuers are willing to drop your rate if there is the chance that you will take all of your money elsewhere. They’d rather have you pay some interest than ditch them and pay no interest at all.
If you don’t have a recent offer, check out the best current offers on low interest credit cards and balance transfer credit cards. Anytime you can offer a concrete possibility for switching to someone else, you have a bit of leverage during the phone call.
If you have been paying your minimum payment on time and they consider you a good customer, they will likely be willing to work with you to negotiate a lower rate. If, even after you have mentioned that you will switch your business, and they still refuse to lower your rate, remain polite and make ready to transfer your balance.
ASK YOUR ADVISOR
If you want to reduce your credit card interest rate, you will need to make sure that you have it together on the phone. Here are some tips for speaking with credit card companies:
It's official. Today the Liberal government announced that they will make a change to federal income tax brackets starting in 2016.
There are two parts to this change. The first is cutting the "middle class" income tax bracket from 22% to 20.5%. If your taxable income is between $45,282 and $216,987 you'll pay less tax. The second part of this change is the introduction of a new 33% tax bracket for people who earn more than $200,000 each year.
So, how will this impact you? Here's a calculator we whipped up so you can find out.1
Your taxable income
You'll see no difference because of these changes.
Are you curious about today's other announcements?
UNIVERSAL CHILD CARE BENEFIT INCREASES FROM $100 to $160 and up to Age 17.
Prime Minister Stephen Harper on October 30, 2014 has announced some changes to the tax system to make life more affordable for Canadian families. He was joined by Joe Oliver, Minister of Finance, Julian Fantino, Minister of Veterans Affairs, Candice Bergen, Minister of State (Social Development), and Stella Ambler, Member of Parliament for Mississauga South.
You thought that universal child care benefits (UCCB) for children were not enough? Well now families have reason to smile. If you have a child upto 6 years of age or older maximum upto age 17 can receive child care benefits from the government of Ontario.
1) Universal Child Care Benefits for children under 6 years as of January 1, 2015, will increase up to $160 for each child. Previously, was $100 per month per child in 2014.
Maximum parents receive per child - $1,920
Expansion of the universal child care benefit has increased from age 6 years of age to 17 years of age.
2.) UCCB - Universal child care benefit will be paid up to $60 per month per child aged six through 17. In a year, parents will receive up to $720 per child. WOW!
Just finished school! Got a loan? Is it tax deductible?
Congratulations, recent college graduates! You’ve finished your last final exam and will finally sleep late during the holidays. The job search—or perhaps grad school—can wait until January.
Unfortunately, not far behind is the repayment of any student loans you took out to fund your education.
If you’re looking for a silver lining from the cash impact of what paying back your loans might do for your lifestyle, look no further than your tax return. That’s because interest paid on student loans may be tax deductible if you were enrolled at least half-time in a degree program.
Is My Student Loan Interest Tax Deductible?
Interest on your student loan may be tax deductible if:
• Your student loan is qualified—basically, that the money was used to pay tuition or very closely related expenses.
• It’s your loan. You signed up for it and you (not Mom, Dad, or Grandma) are obligated to pay it back and your parents are not claiming an exemption for you.
• Your filing status is not married, filing separately.
• Your Modified Adjusted Gross Income (MAGI) is less than $80,000 (or $160,000 if you file jointly with your spouse).
How Much Student Loan Interest Can I Deduct?
Each year, you can deduct up to $2,500 of student loan interest, provided you have paid that much. As a result, new graduates who have not made any payments on their student loans during 2014 will not be able to deduct any student loan interest on their 2014 tax returns due on April 15, 2015. You must pay it to deduct it.
What About the (My) Parents?
Parents can deduct the interest paid on the student loan – instead of the student – if they took out the loan, they are liable to pay it back, and they are claiming the student as a dependent. In such a case, student loan interest is not tax deductible by the student.
Where do I Deduct Student Loan Interest? Do I Have to Itemize to Take Advantage of This Deduction?
The student loan interest deduction is known as a deduction for Adjusted Gross Income (AGI). As a result, you do not need to itemize to take advantage of this deduction.
How Do I Determine How Much Student Loan Interest I Paid?
You can find the total amount you paid in student loan interest on Form 1098-E, which you should receive from your lender by mail in early 2015.
Courtesy - Turbo Tax
Too many Canadians are being forced to use unacceptable vehicles as many banks have turned to extremely stringent approval qualifications. In a country with winters as harsh as Canada’s it is increasingly important that Canadians are able to get a quality vehicle without being strapped with high payments and unmanageable debt loads.
1. Rent to Own Programs This is an option, but typically only with older vehicles and at higher interest rates. You must be sure that these places will report the positive repayment history to the credit bureaus (Transunion / Equifax) or there’s a chance your credit score may not improve even after full repayment.
2. Buy a Vehicle with Cash Although this is not an option for a lot of Canadians, the one way to beat the bank is to avoid them all together. The downside is if your cash savings don't allow for a very good vehicle purchase.
3. Online Car Loan Service There are services like Canada Drives that allow customers to apply for a vehicle and financing (even with bad credit) online.
4. Large down payment Again, this is only possible if you have a sizable savings account.
5. Credit Rebuild Programs There are programs available that allow Canadians to slowly improve their credit score by making payments on time (sometimes with secured credit cards). This is only a good option if you have time to wait to get a vehicle and don’t need one right away as it may take a while for your credit to improve to a point where you can get an auto loan through your local bank.
6. Dealership with Non-Prime Departments Some dealerships have special departments that can assist customers with low credit scores (or new to credit) in getting a vehicle. These dealerships can be hard to find as many will advertise this service, but few will be effective at helping hard-to-finance customers.
CRA TARGETING CANADIANS WHO TRADE EXCESSIVELY IN TFSA
Tax-free savings accounts, created just five years ago by the Harper government as a tool that would allow Canadians to grow retirement investments while sheltered from capital gains taxes, are increasingly being challenged by Canada Revenue Agency auditors targeting investors that show large gains in their account. Here's what will get your TFSA audited by the CRA Canada’s Taxman has an audit project targeting Canadians it feels are in the business of trading securities and using their tax free savings accounts to shelter the proceeds. Here are the eight factors it looks at click here.
The CRA is also hitting invesors with audits if they trade too frequently for the agency’s comfort. The CRA has argued that investors who use their TFSAs for frequent trading and earn large gains are effectively running a trading business, and should be taxed on income.
The sudden growth in CRA scrutiny has triggered concern from the Investment Industry Association of Canada, which recently complained of “insufficient guidelines” for TFSA investors to determine whether they’ve run afoul of tax rules, in a letter to the Finance Department and the director general of the Canada Revenue Agency (CRA).
In addition, a Calgary law firm says it is readying to fight Ottawa over the growing use of the “business” interpretation.
Sources from the tax and legal sectors confirmed to the Financial Post that the CRA has rolled out a TFSA audit project that has become increasingly active in the past couple of years. However, the amount of activity or balance that will trigger an audit remains unclear and the CRA was unable to offer comment to the Financial Post on Monday.
Now a Calgary law firm says it is readying for a legal fight with Ottawa.
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“There are a lot of people, day traders, with online brokerage accounts and they sit and buy and sell securities. Maybe 10 to 15 trades a day,” says Tim Clarke, a lawyer with Calgary’s Moodys Gartner Tax Law LLP, which is preparing to challenge the tax agency’s interpretation. “The CRA says that means you are trader in securities and you are carrying on a business.”
In the past, the CRA had targeted investors who were undervaluing closely held shares in their TFSA, exploiting the lack of liquidity to understate the equity’s likely value. Few people in the industry had argued against that crackdown.
But targeting vigorous — and successful — traders is a different approach by the CRA.
“They have no sense of humour about this. They assume since the maximum contribution you could make [as of 2013 was $31,000], if you’ve got $10-million in your TFSA something is wrong,” said Mr. Clarke. But often big TFSAs are held by high-risk investors who are simply enjoying their appropriate reward, he maintained.
If you’ve got $10-million in your TFSA something is wrong
“If you buy penny stocks and you’re an initial investor, you are taking a huge risk,” he said.
The TFSA, introduced in the 2009 tax year, is widely seen as a place to better take risks with investments, since all income including windfall gains, are tax-free forever, whereas in a registered retirement savings plan the money is taxed on withdrawal.
“There is a no case law on this business of carrying on a business in a TFSA,” said Lauchlin MacEachern, another lawyer with Moodys Gartner, who says he can’t comment on specific cases. “In the next year or two we expect there to be a case that goes to court and we’ll know whether carrying on a business in your TFSA means trading securities actively. We say that’s a question of fact and we also disagree with their legal interpretation.”
In all of these cases, the CRA has only to declare a “balance of probabilities” burden of proof has been met, leaving the onus on the taxpayer to prove that he or she should not be taxed as a business.
FotoliaSome taxpayers report that the CRA has offered them a deal where, if they agree to pay taxes on income within a TFSA, it will not demand additional penalties. The Investment Industry Association of Canada seems to agree there needs to be some clear-cut rules and is also concerned about liability its members may have if a taxpayer were to withdraw all their money out of a TFSA before the tax bill arrives.
“The IIAC requests comfort that TFSA trustees will not be liable for any shortfall in taxes should funds within a TFSA be insufficient to cover off any liability arising by virtue of a TFSA being found to have carried on as a business,” the group wrote, in its submission to Ottawa.
Some taxpayers report that the CRA has offered them a deal where, if they agree to pay taxes on income within a TFSA, it will not demand additional penalties. That tactic has resulted in settlements, according to sources.
That’s what happened to one Quebec investment advisor, who says he was called a “pirate” by a CRA auditor. The advisor — who did not want to be identified due to his clash with the tax agency — was told he must pay income tax on all the gains inside his TFSA or face his wages being garnished along with interest penalties. The CRA says someone operating a “business” pays income tax on earnings, which is an even higher rate than the capital gains tax usually charged on investment income.
The Quebec investment advisor says he was flagged after making about 200 trades in his TFSA, manoeuvring his account to a value of about $180,000. He has since taken all the money out and paid taxes on it.
The accountants and lawyers have told me to shut up
“I’ve already paid the $35,000 and now I’m sure the province is going to come after me for their money,” he said, referring to provincial taxes he’ll owe based on the federal assessment. “The accountants and lawyers have told me to shut up.”
He claims he was able to make all this money because he has some expertise in resource stocks. “I could have lost that money,” he says, adding when he filled out forms for his TFSA under the know-your-client rule he said his profile was “100% risk and 100% speculation.”
He said the idea that he is a “professional trader” makes no sense because he’s never taken any specific trading courses and doesn’t execute trades for clients. “I can tell you what caught their eye. It was the amount. The [auditor] told me ‘you’re not allowed to make $180,000 in there.’ You know what? I think they’re jealous.”
Mr. Clarke thinks this would not be happening if not for some of the high balances seen from a bullish stock market.
“To have a portfolio that increases in value, you need a run up in shares and the value of the stock market, which is what we’ve had, and you need the CRA to be scrutinizing it,” said the lawyer. “In my view, what we need is a black line test, if you put a qualified investment into a TFSA, as long as it’s within the categories of qualified investment, it shouldn’t matter how you earn or lose money. The income should not be taxable and the losses not deducted.”
Courtesy- Garry Marr Financial Post
MONEY NEEDED TO RETIRE?
We are always looking for a way to secure our future! We deserve plenty of money when we have all the time to ourselves. However, you can’t expect to just have enough money to live on if you want to be comfortable. You have to plan ahead.
A recent survey from the Employee Benefits Research Institute indicates that more than half of workers in the United States haven’t done a retirement needs assessment. It wouldn’t be unreasonable to assume that Canadians have similar results. This means that there is a good chance that you might not have figured out how much money you need to retire.
Check our Forbes in their recent article mentioned "Is $1 million enough to retire?"
If you don’t know what you need to accomplish with your money, there is no way that you will be able to figure out how much you need in the end, or how much you need to set aside each month to reach your goal. In order to live a comfortable retirement, you need to ask yourself the following question: how much money do I need to retire?
The answer to that question will depend on a number of factors, including when you plan to retire and how much you will need to spend during retirement to maintain your desired lifestyle. Because of this, knowing what you need to retire in Canada is not a simple answer. However, there are a few simple calculations that might help to give you an idea.
The 4% Rule
The 4% rule says that you can withdraw 4% from your portfolio in the first year. Then in future years you withdraw the same amount plus the adjustment for inflation. This allows you to decide if you have saved up enough money to cover your desired income level in retirement.
If you use this rule of thumb as a starting point, you need to determine how much you need each year to live on. If you think that you can live on $40,000 a year, then you will need $1 million, since $40,000 is 4% of $1 million. However, you also have to consider inflation as well.
There are those who point out that the 4% rule doesn’t really work out anymore. However, it doesn’t make a bad starting point.
The Rule Of 20
The rule of 20 suggests that for every $1 of annual retirement income you would like, you’ll have to have $20 saved up. So if you’re looking for $20,000 over and above CPP and OAS, then you’ll want to have portfolio worth $400,000 by the time you retire. This is another rule that you need to be careful of. Just make sure that you accurately gauge your retirement needs.
The 10% Rule While a little too simplified, the 10% rule tells us to save 10% of our gross income towards retirement. The idea being that it will give us a retirement income equal to what we’re used to now. My issue with this is the effect of this level of savings is dependent on what age someone starts saving towards retirement. The later you start, the higher percentage you might need to put away.
The 10% rule works well if you start in your 20s, but if you don’t start until your mid- to late-40s, just saving 10% of your income isn’t going to be enough. It won’t have time to grow. You need to adjust the amount you put aside depending on how much time you have to let it grow.
The Rule Of 72
You can find out how long it should take to double your money with the rule of 72. For this calculation, you divide 72 by your expected return. A 5% return would take 14.4 years to double your money.
Of course with this rule, you’ll need to have a realistic percentage you expect for a return, you can’t always expect double digits in every single year.
You also need to realize that it works better if you have a lump sum to invest. It’s easier to figure out how much money you’ll end up with if you’ve got a large amount of capital to invest for the future.
So, how much money do I need to retire? Remember that these are just rules of thumb. You don’t want to base your entire strategy on these rules of thumb alone. Part of what you need to do is figure out how much money you think you will need during retirement, each year. You can use your current expenses as a starting point and try to figure out what your needs will be during retirement. Keep in mind that there might be tradeoffs. You might no longer have a mortgage payment, but you might travel more. Even though you might think that your expenses will be less during retirement, it doesn’t hurt to assume that your expenses will be similar, or perhaps even a little higher.
Hopefully these retirement calculations will help you see what you’ll need to save to have the retirement you’re looking forward to. Keep in mind that a couple that have worked most of their adult lives and retired at 65 can expect CPP and OAS to pay as much as $30,000 a year. Many people get discouraged about their retirement needs because they forget about CPP and OAS. Work those programs into your numbers and you’ll likely be pretty pleased with how easy it can be to retire comfortably with just a little planning!
Courtesy: Tom Drake
GET RID OF CREDIT CARD DEBT!
When it comes to tackling debt, most of us know what to do: Spend less, save more. But if it were really that simple, Canadians wouldn't be so mired in red ink. Stephanie Holmes is a Nova Scotia-based financial advisor and author of Diffusing the Debt Bomb and $pent, who recognizes that there is no easy answer to any debt problem.
Holmes offers small tweaks that will help you speed up your repayment and get out of debt faster.
Ways to get out of debt:
1. Pay bills every pay day
Most debt statements are due monthly, but most salaries are paid every two weeks. So pay part of every bill, every time you get paid. Benefit: smaller amounts feel more manageable and the chance of missing a payment (and incurring a penalty and more interest) is reduced.
Automate bill payments so that you pay your creditors without having to write a cheque or log on to an online account.
Ratchet it up a notch: Let's say your credit card minimum payment is $100. Pay $60 every two weeks and you'll make more headway with over payments you barely notice.
2. Change your debt structure
When it comes to debt vehicles and the lending institutions that have extended them, "the fewest number possible means the least amount of effort and stress," says Holmes.
If you want to get out of debt, get rid of the retail credit cards, since they have onerous interest rates compared to those from major lenders. Two credit cards should be enough; close the rest. You'll pay less in annual fees.
3. Start a debt 'snowball' plan
Make a list of your debts (excluding your mortgage), starting with the smallest balance and ending with the highest. Make the minimum payments on all your debts, but make an extra payment on the one with the smallest balance. When that debt is paid off, divert the payment you were making on it to the next debt on the list. By the time you get to the second and third debts, you'll be making significant payments to the principal, which is the only way to actually eliminate a debt.
Holmes recommends the website WhatsTheCost.com. "I love it," she says. "It's a neat little calculator that when you press 'solve', it gives you a table so you can literally see how fast you could pay off that debt." When a debt is paid off, close the account associated with it.
The success of snowballing is based on the assumption that you can afford the minimum payments on all your debts. (If you can't, consider credit counseling.)
4. Start a debt 'stacking' plan
Make a list of your debts (excluding your mortgage), starting with the one that has the highest interest rate. Make the minimum payments on all your debts, but make an extra payment on the one with the highest interest rate. When that first debt is paid off, divert the payment you were making on it to the next debt on the list.
Since most credit card interest is compounded, you will save money focusing on interest rates. If, however, you need quick gratification, the encouragement of small successes (a credit card statement that finally reads "balance: $0"), to commit, 'snowballing' might be more lucrative for you.
Bottom line: pick the plan you can stick to. That's the one that will help you get out of debt fastest.
5. Sign up for an 'all-in-one' account
All-in-one accounts replace the traditional scenario of a mortgage and separate checking and/or savings accounts with a single account that includes your mortgage and into which your salary is deposited.
"It's a giant line of credit with checking and savings accounts attached," says Holmes. The advantage is that deposits earn interest every day. These small amounts add up and are automatically applied to your debt.
You do have to be disciplined though, because "you're walking around with a debit card attached to your house," says Holmes. Here's what she does to protect herself: "Every week, I move a certain amount automatically to my checking account held at a different institution," she says. That is the money she spends -- no more -- leaving the rest in the all-in-one.
"It creates a vicious cycle in the right direction," says Holmes. "Every penny of interest is going toward debt repayment."
6. Rent things
"Let go of the idea that owning is better," says Holmes. This is especially true for depreciating assets, the largest of which is probably your car. It's unrealistic to think people will go from commuting to taking public transit, but in larger cities, long-term car rentals or car co-ops can be cheaper than owning.
If you can find a monthly rental for the same price as your lease payment, and use insurance attached to one of your credit cards (many include this coverage as a standard feature; car co-ops include insurance in their rates), you'll save money that can be diverted to paying down debt.
This also applies to tools that pile up at home. How often do you use that drill, reciprocating saw and palm sander? You'll clear out square footage by off loading these items on CraigsList. You'll also make a dent in your debt (by putting the money you get on the principal) and free up enough cash to rent the items if you need them again. (You won't need them again.)
STOP CYBER BULLYING!!
THIS WEEK WE ARE PROMOTING STOP CYBER BULLYING AS A PART OF GIVING BACK TO THE SOCIETY!
IT COULD BE ANY FORM AND IN ANY AGE AND IS RELATED TO BULLYING.
11 tips for Social Media Safety
Social networking websites like MySpace, Facebook, Twitter, and Windows Live Spaces are services people can use to connect with others to share information like photos, videos, and personal messages.
As the popularity of these social sites grows, so do the risks of using them. Hackers, spammers, virus writers, identity thieves, and other criminals follow the traffic.
Read these tips to help protect yourself when you use social networks.
HOW DO I MAKE A BUDGET - STUDENT
How to budget in three steps:
Step One: Figure out your income
Income comes from many sources - your monthly or weekly paycheque when you work at a job. The amount you get from parents, allowance, birthday monetary gifts, interest from savings account, if you can add up all these sources on a monthly basis that will be your total income.
Step Two: Figure out your expenses
Expenses are the opposite of income. An expense is anything you spend your money on. For ex: Bus Tickets, Your cell phone bill, meals, groceries, rent for an apartment are all examples of expenses.
As in Step one, you can figure out your expenses by adding up these sources. Save your receipts, use bank or credit card statements and look at bills and other documents to find the sum of what you spend monthly or yearly.
Step Three: Evaluate your budget
Simple Math can help you find your total income. Subtract your expenses from your total income to see what money you have left.
If your expenses exceed income you will get a negative number which means you are in trouble. Reduce your spending in some areas to keep your bank in positive.
If you have money left over end of the month or year GOOD JOB! Now, you can put this money in a savings account to get 1% interest each month or INVEST and get a return of upto 5-10%. (ASK US HOW)
By following these three steps you can save up to meet your goals, like attending college or university, buying a new video game console or that purse you've had your eye on for way too long. Keep your budget up to date as your income and goals change.
But trust me this simple MATH WORKS!
Author - Atul Prakash
Please, check our blogs about different elements in Personal Finance - such as Insurance, Critical Illness, RRSP, RESPs etc.