Banks and credit cards

[nobbie48]

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I paid less than $10 total credit card interest in my life. I have redeemed about $5000 GM dollars under the GM/TD card and a bunch of gas discounts so them boosting the rates doesn't bother me other than the 19 pages of changes to terms and conditions. Included is the rate hike to 22%. My savings account gets me a quarter of a percent and each cheque costs me $5.00.

I guess they have to make back for their errors.

https://www.cbc.ca/news/business/td-bank-penalties-1.7348819

TD Bank May Owe You Money From Its $28M Settlement. How to Check

If you had a credit card or bank account with TD bank in the past nine years, you could get $150.

www.cnet.com

Maybe a banking expert can connect the numbers to reality

 

[Jampy00]

When I was younger and dumber, I lived in overdraft and interest.
Learned my lesson as my lifestyle changed, now besides the big things I'm almost debt free. Credit card interest rates no longer scare me like they used to...

 

[Mad Mike]

I paid less than $10 total credit card interest in my life. I have redeemed about $5000 GM dollars under the GM/TD card and a bunch of gas discounts so them boosting the rates doesn't bother me other than the 19 pages of changes to terms and conditions. Included is the rate hike to 22%. My savings account gets me a quarter of a percent and each cheque costs me $5.00.

I guess they have to make back for their errors.

https://www.cbc.ca/news/business/td-bank-penalties-1.7348819

TD Bank May Owe You Money From Its $28M Settlement. How to Check

If you had a credit card or bank account with TD bank in the past nine years, you could get $150.

www.cnet.com

Maybe a banking expert can connect the numbers to reality

$0, unless your TD Visa card is with TD AMCB (TD - America's Most Convenient Bank) which is the American part of TD Bank based in New Jersey, USA.

If you're in Canada, you most likely deal with TD CT (TD Canada Trust)

 

[Mad Mike]

When I was younger and dumber, I lived in overdraft and interest.
Learned my lesson as my lifestyle changed, now besides the big things I'm almost debt free. Credit card interest rates no longer scare me like they used to...

You are not alone. The number of people who are maxed out on LOCs and credit cards is mind-blowing. I used to counsel people at the bank, providing them simple advice to get back on track. I'd setup schemes that did not cut into their cashflow, but paid down their debts. Most followed the advice for a week, then went straight back to bouncing off their financial redlines.

If anyone reading this is maxed out, here are 2 really easy things you can do with your bank. Neither will hurt your credit score, neither need to raise your debt ceiling.

1. Convert to a low-interest credit card. If you carry a balance, the saving in interest is way more than the benefits you get from points or card features. If you're bouncing off the ceiling on a $10K credit limit, you can save about $1000/year.

2. Ask your bank about converting some or all of your credit card debt (and credit limit) to a term loan or a fixed rate segment on a line of credit. These can save even more than using a low-interest card.

The important thing is to use the savings gained by changing products to pay down debts -- and not to increase your monthly spending!

 

[PrivatePilot]

I paid less than $10 total credit card interest in my life. I have redeemed about $5000 GM dollars under the GM/TD card and a bunch of gas discounts so them boosting the rates doesn't bother me other than the 19 pages of changes to terms and conditions. Included is the rate hike to 22%. My savings account gets me a quarter of a percent and each cheque costs me $5.00.

I guess they have to make back for their errors.

https://www.cbc.ca/news/business/td-bank-penalties-1.7348819

TD Bank May Owe You Money From Its $28M Settlement. How to Check

If you had a credit card or bank account with TD bank in the past nine years, you could get $150.

www.cnet.com

Maybe a banking expert can connect the numbers to reality

Looks like that TD $150 thing is USA only.

Ironically it was chased down and enforced by the US consumer protection bureau, an agency that looks out for consumers and has returned billions to them- also an agency which was completely disbanded by Musk and Trump last week.

I’m sure absolutely nothing bad will come of that decision. /s

 

[nakkers]

You are not alone. The number of people who are maxed out on LOCs and credit cards is mind-blowing. I used to counsel people at the bank, providing them simple advice to get back on track. I'd setup schemes that did not cut into their cashflow, but paid down their debts. Most followed the advice for a week, then went straight back to bouncing off their financial redlines.

If anyone reading this is maxed out, here are 2 really easy things you can do with your bank. Neither will hurt your credit score, neither need to raise your debt ceiling.

1. Convert to a low-interest credit card. If you carry a balance, the saving in interest is way more than the benefits you get from points or card features. If you're bouncing off the ceiling on a $10K credit limit, you can save about $1000/year.

2. Ask your bank about converting some or all of your credit card debt (and credit limit) to a term loan or a fixed rate segment on a line of credit. These can save even more than using a low-interest card.

The important thing is to use the savings gained by changing products to pay down debts -- and not to increase your monthly spending!

Agreed. And ensure you have the loan on a fixed term as most locs default to interest only monthly payments.

Even a higher interest consolidated loan with a fixed term to pay off revolving cards is positive way to reduce debt and improve credit rating.

Canada is one of the most disciplined consumers with paying off cards monthly. USA is one of the worst.

This is why Canadian banks are raising rates on credit cards because the interest income isn’t great in Canada compared to USA and the interchange rate the merchant pays typically goes to the credit card company.

 

[Lightcycle]

I paid less than $10 total credit card interest in my life.

In credit card parlance, you're what's known as a "deadbeat" customer - someone who pays off their balance each month, thus making it difficult for credit card companies to make money off of you.

Why you want to be a credit card deadbeat

Also known as "nonrevolvers" and "transactors," these consumers are the bane of credit card companies' existence.

www.cnbc.com

While the term “deadbeat” generally carries a negative connotation, when it comes to the credit card industry, it’s a compliment. Card issuers refer to customers as deadbeats if they pay off their balance in full each month, avoiding interest charges and fees on their accounts.

That’s a healthy financial habit, but it makes you less profitable for the card companies who generate a lot of revenue from late and missed payments

 

[crankcall]

It’s taken years but I went from a credit card companies best friend to a guy they hate . Zero interest paid , no balances , no mortgages, no car loans . I lived well beyond my means till my means caught up . I had a plan and lucky for me it played out , and I had a wife with a steady income and benefits while I fumbled around for a decade . My trapeze had a net .
I’m not involved in banking , a few friends are , one owns a private financial institution. They have horror stories , houses of cards and people so far in the tunnel may have no end . People retiring with mortgages? I did not know that was a thing .


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[nobbie48]

Looks like that TD $150 thing is USA only.

Ironically it was chased down and enforced by the US consumer protection bureau, an agency that looks out for consumers and has returned billions to them- also an agency which was completely disbanded by Musk and Trump last week.

I’m sure absolutely nothing bad will come of that decision. /s

There are some scary things happening in the USA with private capital taking over low cost housing. People with lots of money and power vs people trying to make ends meet. The gutting of the already slim protections doesn’t look good.

 

[GreyGhost]

. People retiring with mortgages? I did not know that was a thing .


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I'm probably going to retire with a mortgage. That's annoying but ok. If you buy or upgrade your house in your 40's, you shouldnt have a lot left when you retire but most people would still have some. Im trying to build a big enough warchest that mortgage payments aren't a big deal. ~Two more doublings and I can retire if I want.

 

[Lightcycle]

People retiring with mortgages? I did not know that was a thing .

Times are tough. Especially if you've got all your net worth tied up in your principal residence, leading to your classic "house rich, cash poor" situation.

There are also edge cases where there can be substantial funds tied up in RRSPs, which can finally be unlocked to service mortgage debt. Though I think those are very, very, marginal edge cases...

Back to the mainstream though - not only is retiring with a mortgage a thing, but Reverse Mortgages amongst retirees is rising as well:

A growing number of retirees have mortgages. And they’re turning to reverse mortgages

Lenders are seeing more seniors using reverse mortgages to consolidate debt

www.theglobeandmail.com

As a growing number of Canadians retire with mortgages, some are turning to reverse mortgages to tackle that debt.

Reverse mortgages are still a niche product, but the business has grown rapidly in the past five years, as seniors who want to remain in their homes struggle amid higher interest rates and soaring living costs.

“We’re seeing a lot more people using [reverse mortgages] for mortgage repayment, but in general just a lot more seniors being interested in reverse mortgages,” said Mahima Poddar, senior vice-president and group head of personal banking at Equitable Bank.

 

[nobbie48]

Times are tough. Especially if you've got all your net worth tied up in your principal residence, leading to your classic "house rich, cash poor" situation.

There are also edge cases where there can be substantial funds tied up in RRSPs, which can finally be unlocked to service mortgage debt. Though I think those are very, very, marginal edge cases...

Back to the mainstream though - not only is retiring with a mortgage a thing, but Reverse Mortgages amongst retirees is rising as well:

A growing number of retirees have mortgages. And they’re turning to reverse mortgages

Lenders are seeing more seniors using reverse mortgages to consolidate debt

www.theglobeandmail.com

Reverse mortgages scare me. Smiling well known faces (Shatner and Browning) push them on media and the impression of immediate large sums of cash are tempting.

I don't know how many people understand the rates are high and interest accrues silently, eating away at the remaining value in the property. Borrow a quarter million for that dream vacation, luxury car and splurge on the kids. Ten years later the debt load is well over double. Fifteen years later there could be next to no equity in the house.

Maybe that's why they limit the mortgage to 50%. Compounded interest could take it up to 100% in a little over a decade.

A lot depends on how long one expects to live and necessities of life. Does the homeowner have kids? Would the full value of the house give them and the grandkids a boost in life?

I see reverse mortgages as silent killer of finances.

On the other hand, if the money allows for a renovation that allows the senior to stay in their home instead of paying five to ten thousand in a senior's residence......

 

[LePhillou]

Agreed. And ensure you have the loan on a fixed term as most locs default to interest only monthly payments.

Even a higher interest consolidated loan with a fixed term to pay off revolving cards is positive way to reduce debt and improve credit rating.

Canada is one of the most disciplined consumers with paying off cards monthly. USA is one of the worst.

This is why Canadian banks are raising rates on credit cards because the interest income isn’t great in Canada compared to USA and the interchange rate the merchant pays typically goes to the credit card company.

Still, about half of canadians are paycheck to paycheck...and half of them carry a balance month to month on their credit cards. I generally flip flop and might carry for a few months (looking at you end of the year with anniversary, birthday and xmas within one month!!!) but it's nothing i can't reign in.

It requires a tiny bit of knowledge but a decent amount of discipline to keep it going.

 

[Lightcycle]

Reverse mortgages scare me.

It's definitely a last resort solution, for those who have exhausted all other avenues of lending, either due to maxed out lines of credit, or poor credit rating, etc.

The harsh reality is that as a retiree, it's difficult to prove you have means to repay a traditional loan, like a HELOC. With a reverse mortgage, there are no repayments required until the sale of the home.

There's also an element of gambling as well. Just like those who are living off their HELOCs, the thinking is that, "Hey, my home is appreciating 30% every year. It's like a magic ATM machine! I can totally afford to continually take out 20% of my equity and still come out ahead!"

Because, as everybody knows, house prices *never* come down...

 

[Hardwrkr13]

I have a points CC and never carry a balance and a LOC I've never used. After 10yr+ of not using the LOC they sent me a card tied to it last week to use as a CC. They're really trying every angle.

 

[GreyGhost]

I have a points CC and never carry a balance and a LOC I've never used. After 10yr+ of not using the LOC they sent me a card tied to it last week to use as a CC. They're really trying every angle.

If you don't use a LOC for a few years, they often make it dormant. To bring it back to life, it needs a transaction but you can't do it as the account it dormant. Call the branch and they give you a buck in the LOC to bring it back to life. After having that happen a few times, one year I transfer in a buck, the next year I transfer it back out. Keeps the LOC available in case a situation arises where I need it quickly. That is for an unsecured LOC. Afaik, Heloc doesn't behave that way.

 

[backmarkerducati]

I always use my CC for non cash over debit due to the "end user agreements/risk". Like many I have for most of my life paid it off each month and no real debt these days but of course mortgages etc. before.

Unlike some here I wasn't always a baller and when I was in my early 20s there were times where I paid mins on card x by borrowing from card y.... also there were some times where I had significant debt on my LOC. One thing I did when I had debt on the LOC was put my entire pay into the LOC and then paid bills from the LOC. It was not a huge savings but it keeps the LOC a bit lower then say dropping a little on it each month. Just make sure the paying bills etc. was less than income each month!

 

[crankcall]

We have been looking at which cards give the best bang for the buck ( for me) the RBC Avion black has stupid annual fees but big upside on travel benefits , my World elite MC has some built in travel insurance and we get rental car upgrades . What are folks finding ?


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[Scuba Steve]

We have been looking at which cards give the best bang for the buck ( for me) the RBC Avion black has stupid annual fees but big upside on travel benefits , my World elite MC has some built in travel insurance and we get rental car upgrades . What are folks finding ?


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I have the momentum cash back black but am looking as well something with more rewards would be good the doubling of warranty has been handy for appliances. Used it once to get a new dryer.

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[Mad Mike]

I have a points CC and never carry a balance and a LOC I've never used. After 10yr+ of not using the LOC they sent me a card tied to it last week to use as a CC. They're really trying every angle.

LOCs are great to have, I tell people to get as much unsecured credit as lenders will give you.

Wanna cheap tip? Open a ULOC with your bank, use it as your chequing account. Unlike a credit card, ULOCs can hold funds. It will have no fees - zero - nota. They will give you free cheques, free overdraft, and it can be placed into the chequing or savings slot on your bank card.

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