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5 Credit Card Fees You Should Never Pay – Consult with Bruce Coleman

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5 Credit Card Fees You Should Never Pay – Consult with Bruce Coleman

Mark Twain once said “Everybody talks about the weather, but nobody does anything about it.” But when it comes to credit card fees, there is actually a lot that credit card users can do to reduce or eliminate them. In fact, conscientious cardholders can avoid paying these fees altogether when they choose the right cards and use them wisely.

Here are the top five credit card fees, and how to avoid them.

1. Annual fee. It is true that many credit card issuers now charge an annual fee, but there are stillplenty of free products available. And even when a card does have an annual fee, there are several clever ways to avoid paying it.

2. Foreign transaction fees. Of all the credit card fees, this might be among the more controversial ones. Credit card issuers exchange currency at interbank exchange rate, which is the best possible rate. And actually, they impose these charges on any transaction processed outside the U.S., even if it’s in U.S. dollars. Nevertheless, most banks choose to tack on a 3% foreign transaction fee to all of these charges. Thankfully there are now many cards without this fee, and several banks that never charge it. For example, Capital One, Discover, and the Pentagon Federal Credit Union (PenFed) have eliminated this fee on all of their products. All you need is just one of these cards to use in foreign countries, and you are good to go.

3. Late fees. In most cases, cardholders must take responsibility to make their payments on time in order to avoid this fee. Setting up automatic payments makes it impossible to forget a payment while paying electronically avoids the risk of having a check lost in the mail. In addition, there are a few cards that boast of no late payment fees. But be careful, it is important to know that ‘No Late Fees’ isn’t an excuse to pay late.

4. Cash advance fees. Most cards have a cash advance fee of 3% with a minimum of $5 or $10. And beyond cash advance fees, a higher APR will be charged on the cash withdrawal, and there is no grace period. To avoid paying this fee, never use a credit card for a cash advance. In fact, it is best to avoid this possibility by not creating a PIN code with your credit card.

5. Balance transfer fee. Most credit cards that feature 0% APR promotional financing on cash advances also have a 3% balance transfer fee. There are two ways to avoid this fee. First, consider the Chase Slate, the only card from a major issuer that has a promotional balance transfer offer and no balance transfer fee. But most of these offers also feature interest-free financing on new purchases. If you absolutely must finance a purchases with a credit card, use a 0% offer on new purchases before you do, and not a balance transfer offer afterwards.

Credit card fees may always be with us, but we don’t have to pay them. By taking the right steps to avoid paying unnecessary fees, you can enjoy these powerful financial instruments for free.

In a nation of borrowers, savings on the rise – Consult with Vancouver Mortgage Broker

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Are Canadians switching from a nation of borrowers to a country of … savers?

New numbers suggest they are.

The household savings rate in Canada rose to 5.5 per cent in the first quarter of this year, according to GDP data released last week by Statistics Canada. That’s now well above the U.S. rate, which had been higher than Canada’s in prior quarters.

“After tracking fairly closely for the past 15 years, there appears to be a bit of daylight between Canadian and U.S. savings rates again,” said Bank of Montreal chief economist Douglas Porter. “At the very least, this calls into question all the yammering about an overextended Canadian consumer.”

In the past year, the savings rate has averaged 5.2 per cent, compared with 3.7 per cent in the U.S.

Income revisions suggest Canada’s much-fretted-about household debt-to-income measures may not be as lofty as previously reported, Mr. Porter said in a research note this week. He figures that ratio – due for release later this month – is “closer to 162 per cent” rather than the 165 per cent first reported.

Canadians’ household debt levels are running at record highs, and while the pace of debt accumulation has slowed markedly, the Bank of Canada has cautioned heavy debt loads represent the greatest domestic risk to the country’s economy.

The savings rate has fallen dramatically in the past few decades – from about 18 per cent three decades ago to below 6 per cent today. Still, the rate has grown from the lows seen in pre-recession levels.

A higher savings rate means many households have a better buffer against economic shocks, like a job loss or injury. On the flip side, it suggests consumer spending will remain soft in Canada as people focus on reducing debt loads.

Sal Guatieri at BMO sees the increase as a net positive. “Given elevated debts, it’s probably a good thing that our saving rate has turned up recently.”

For all of last year, this country’s savings rate is now pegged at 5 per cent – a big revision from the prior estimate of 4 per cent (with the fourth quarter seeing hefty revisions, to 5.4 per cent from 3.8 per cent).

Evidence mounts of soft landing for Canada’s housing market – Consult with a Vancouver Mortgage Broker

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You’d have to see rates move dramatically higher for a major correction

Canada’s housing market is showing signs of a soft landing amid evidence of robust demand and buoyant new construction plans.

Home prices in Toronto, Canada’s most-populous city, rose 5.4% in May from a year ago, the biggest increase in five months, the Toronto Real Estate Board reported Wednesday. Statistics Canada said the value of April municipal building permits posted a 10.5% gain.

Housing-market data are showing few signs of a sharp correction even amid warnings from analysts and policy makers that a bubble may have been forming. Finance Minister Jim Flaherty tightened mortgage rules for a fourth time last year on concern that an overbuilding of condos could lead to sharp price declines. Former Bank of Canada Governor Mark Carney identified record household debt as the biggest domestic risk to the economy.

“The base case scenario is a soft landing,” said David Tulk, chief macro strategist at Toronto-Dominion Bank’s TD Securities in Toronto. “You’d have to see rates move dramatically higher” for a major correction, he said.

Driven by historically low interest rates, Canadian banks have been increasing dependence on real estate lending to drive earnings, with residential and non-residential mortgage assets totalling $955 billion at the end of March, or 26% of total assets, according to OSFI data. That’s up from $521 billion five years earlier, which represented 20% of assets at the time.

Fading Impact

The impact of Flaherty’s policy changes are beginning to fade, Toronto Real Estate Board President Ann Hannah said in Wednesday’s release.

“A growing number of households who put their decision to purchase on hold as a result of stricter lending guidelines are starting to become active again in the ownership market,” Hannah said.

The average sale price rose to $542,174, from $514,567 a year ago, while a composite home benchmark price index for the city was up 2.8%, the Toronto Real Estate Board reported. Unit sales dropped 3.4% from a year earlier to 10,182, the board said in an e-mailed statement Wednesday.

The decline in Toronto sales was led by condominiums and townhouses, while purchases of detached homes rose in May. Prices were up in all categories of homes.

On a year-to-date basis, Toronto sales are down 9.6%.

‘Weaker Volumes’

“The story continues to be one of weaker volumes,” Derek Holt, vice-president of economics at Toronto-based Scotiabank, said in a note to investors. “The question is how that will carry over into construction and prices.”

Residential building permits rose 21% to $4.35 billion in April, Statistics Canada said today, led by a 51.9% jump in condominium construction intentions.

Vancouver made one of the largest contributions to the national increase among 34 cities, Statistics Canada said, with permits rising 50.7% led by multifamily dwellings. Calgary permits also rose 40.6% to $773 million on commercial buildings.

Vancouver’s real estate board said Tuesday that home sales rose 1% in May from a year ago, with composite prices down 4.3%.

Falling home construction, which helped lift Canada’s economy out of recession, has been a drag on growth over the past year, shrinking at an annualized pace of 4.7% in the first quarter, according to GDP data released last week.

www.bloomberg.com

How Bond Yields Affect Fixed Mortgage Rates

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How Bond Yields Affect Fixed Mortgage Rates

For those of you who are seeking to buy a home or if you’re considering refinancing your mortgage, then now might be the ideal time to do so.

Why? Vancouver mortgage brokers are keeping a close watch on what is happening with Canadian Government Bonds (GoC’s). The reason why GoC’s are important is because bond yields often have a direct impact on the direction of fixed mortgage pricing.

Just recently, Canada’s 5-year bond yield broached a 3-month high. The expectation of most Vancouver mortgage brokers is that the impact of these higher bond yields will also result in increased fixed mortgage rates.

The impact is already being felt as several mortgage lenders have already announced they are raising fixed mortgage rates 5-10 basis points higher on longer fixed mortgage terms. For those not familiar of what a basis point means then as a simple explanation 1 basis point is equivalent to 1/100 of a percent so 50 basis points for example would be equivalent to ½ %.

The Government of Canada 5 year bond yield has increased by 33 basis points in less than a month and is used by the mortgage industry as the pricing benchmark for determining fixed mortgage rates.

There are several reasons why this has occurred but it mainly stems from the rosier outlook which has transpired recently in the U.S. and abroad including:

• Home prices which has seen risen by 10.9% and the highest increase in the past 7 years
• Increased consumer confidence which is a 5-year high
• Record high prices for the U.S. stock market
• A diminished global risk perception (This generally results in lowering the demand for government bonds which are perceived as “safe”)

Bond markets have been rather bullish of late because of the global economic uncertainty but some analysts contend this might be coming to an end. These predictions should be taken with “a grain of salt” as they have made similar predictions before which didn’t pan out.

In any event, when it comes to a bullish bond market, even when the bond market cools it doesn’t necessarily mean it will suddenly reverse as it could just as easily stay flat and remain so for many years to come. Keep in mind that a bond yield will move in an inverse pattern to the bond price.

Another key factor which fuels bond yields and ultimately mortgage rates is the rate of inflation. The core inflation rate in Canada came in at a tepid 1.1% despite the fact that 2.0% was expected by the Bank of Canada. The low inflation rate was largely due to a weak GDP (Gross Domestic Product) and diminished gains on the employment front. It is not really certain that Canadian bond yields will continue to rise, but eventually you can expect that the higher bond yields will begin to fizzle out.

Most of the major economists in Canada have now changed their tune about the Bank of Canada making a rate change this year and now anticipate that it won’t happen until the latter part of 2014.

However, many Vancouver mortgage brokers are also aware this doesn’t mean that fixed mortgage rates won’t change now as they also usually increase well before the Bank of Canada raises its own rates.