Can I Pay Off My Consumer Proposal Early?

When you’re entering a consumer proposal, you’re typically looking at a 60-month term to pay it down. Five years is a long time in anybody’s life, and having an active or recent consumer proposal on your credit bureau can have a serious impact on your ability to access financial services and credit – not to mention the stress of keeping on top of your monthly payments. All of that may leave you wondering: Can I pay off my consumer proposal early?

The short answer is yes. If you have extra income and you want to pay off your consumer proposal early, you can certainly do so. 

What are the options for paying off your consumer proposal early?

You have a couple of choices when it comes to paying off a consumer proposal early. Suppose you’ve increased your monthly income (for example, through receiving a raise at work). In this case, you can amend your consumer proposal to accelerate your monthly payments and pay more each month. For example, if you’re currently paying $200 a month and you get a raise, you could up your payments to $250. You can also add smaller extra payments without amending your proposal, and these will serve to put you ahead of schedule on your consumer proposal.

If you have come into a more significant sum of money (for example, through inheritance or your tax return), you can also make a lump sum payment. So if you got $1,000 back on your taxes, you could choose to use all or some of that money to put towards your consumer proposal.

There are no penalties for paying off your consumer proposal early. The real question is, should you?

The advantage of paying off your consumer proposal early

Many people in consumer proposal are eager to get it paid off as quickly as possible for it’s own sake – it’s a major goal to achieve. Not only will you be rid of the stress of the monthly payments, but you also typically see an immediate increase in your credit score. After you finish paying off your consumer proposal, the debts you’ve been paying off will be marked as “settled” on your credit bureau. 

A consumer proposal remains listed on your credit report for three years after you finish paying off your debts, up to a maximum of six years. You’ll see another big jump in your credit score when your consumer proposal falls off your credit report.

If you pay extra money towards your consumer proposal regularly or in a lump sum, it will put you “ahead of schedule”, giving you some leeway if you need to skip a payment in the future. We would never advise a person to miss a consumer proposal payment if they can avoid it, but if you have built up extra payments with your trustee, they can use that money to cover a future payment if you need to.

For example if your proposal payment is usually $300 and you have paid an extra $500 towards your consumer proposal, the trustee can take a payment from your “extra” payments to keep you on track if you were otherwise going to miss your payment. Your monthly payment will be met and you’ll now be $200 “ahead of schedule”.

Is paying your consumer proposal off early worth it?

Most people want to pay off their consumer proposal as quickly as possible so they can get their financial lives back on track and under control… but paying off your consumer proposal off early won’t save you money. You’ll still have paid the same amount overall.

The other thing to think about as you make an early repayment plan is to remember that making extra payments won’t positively affect your credit score—additional payments on your proposal aren’t reported to the credit bureaus.

There are also risks to paying extra funds towards your consumer proposal instead of using them to build up your savings. While you may feel you have enough money to increase your payments or pay a lump sum now, if you direct your maximum cash flow to paying off your proposal, you won’t be able to access those funds for an emergency like a car repair.

We all know that life can throw us curveballs. If your circumstances change or you have an unplanned expense, will you still have enough cash to meet your expenses?

If you default on your consumer proposal, your creditors may not accept reducing your monthly payments, and you could end up filing for bankruptcy.

Making the right choice for you 

If you’re confident you can afford the extra cash towards your consumer proposal, and it’s crucial for
you to get your consumer proposal paid off early, doing so may be the right decision. 

However, Climb’s Accelerator Plan may be a better way to reach your goals. 

Imagine you have that extra $200 a month in income. Instead of using it to pay off your consumer
proposal each month, you could instead enroll in the Accelerator Plan. Every time you make a payment,
Climb reports that to the credit bureaus—helping you establish a positive payment history every
month. 

The Accelerator Plan also helps you save money for a rainy day. If you need to access your equity early,
we make it easy. If you complete your contract in full, you’ll get your equity back, and you can choose to
use it to pay off your consumer proposal early or put it towards something else. Either way, you’ll have
the added benefit of a positive payment history on your credit report. 

Learn more about Climb’s Accelerator Plan by starting with a free credit consultation with one of our
experts.

*

Author: Climb

How Do You Protect Yourself in a Data Breach?

You’d like to think you’ll never be involved in a data breach, but the sad reality is that data breaches are happening all the time these days. A quick search online will bring up plenty of recent examples. Personal information that may be compromised in a data breach includes names, dates of birth, addresses, SINs and even credit card details. That begs the question, how do you protect yourself? Thankfully there are things you can do to be protect yourself if you’re ever a victim. Here are four simple ways to protect yourself in a data breach.

Fraud Alert

The first thing you can do is place a fraud alert on file with the credit reporting agencies Equifax and Transunion. A fraud alert is a great way to protect yourself in the event of a data breach. When a creditor pulls your file, they’re supposed to take extra precaution before approving your credit application. That means calling you on the phone to confirm your identity. This should help stop anyone who tries to a fraudulently use your personal information to obtain credit.

Credit Monitoring

While fraud alerts helps immensely, another way you can protect yourself is by signing up for credit monitoring. With credit monitoring, you can regularly check your credit history. Although it won’t stop fraud, it’ll help you spot anything suspicious. If you see anything fraudulent on your credit report, you can report it to the police.

Change Passwords

Sometimes it’s not just your name, address and personal details that are compromised. If you use your online password for more than one website, your other accounts could be compromised too if the fraudsters gain access to your email address or bank account. As such, it’s a good idea to change any of your passwords associated with the data breach. It’s better safe than sorry as the saying goes.

Credit Card Alerts

Credit cards alerts are another great way to prevent fraud. Usually there’s a bit of lag between when a data breach is discovered and when it’s made public by the company involved. As such, your credit card details may have been stolen without you even knowing it. However, by adding an alert on your credit card, you can help protect yourself. You can add an alert by text message or email every time someone makes a purchase on your credit card. If it’s too much, you can set it up so you only receive an alert for purchases over a certain threshold.

Most of us don’t check our credit card statements every single day, but by setting up alerts, you’ll know right away if someone is going on a shopping spree at your expense instead of days or weeks later.

Are you looking for other ways to protect yourself in the event of a data breach? Contact our offices today for some assistance.

Climb’s Personalized Credit Prescription provides you with customized recommendations to help rebuild your credit score.

About the Author

Sean Cooper is the bestselling author of the book, Burn Your Mortgage: The Simple, Powerful Path to Financial Freedom for Canadians. He bought his first house when he was only 27 in Toronto and paid off his mortgage in just 3 years by age 30. An in-demand Personal Finance Journalist, Money Coach and Speaker, his articles and blogs have been featured in publications such as the Toronto Star, Globe and Mail, Financial Post and MoneySense. Connect with Sean on LinkedInTwitterFacebook and Instagram.

Going Back to School Without Breaking the Bank

Can you believe it’s almost that time of year again? You know what time I’m talking about – the “most wonderful time of the year.” No, I’m not talking about the holiday season; I mean back to school.

While back to school can be an exciting time for parents, it can also be a costly time. The last thing you want to do is start the school year in debt, but with the list of must-haves for children getting longer and longer every year, keeping your back to school budget in check is often easier said than done. Thankfully it is still possible.

Here are some ways to go back to school without breaking the bank.

Plan Ahead

Did you know that people who go to the supermarket without a shopping list are more likely to spend more than those who go with a shopping list in hand? It shouldn’t come as a surprise. Those with a shopping list know exactly what they’re going to buy. They can get in and out, without the temptation to wander and wonder what they need.

You may be wondering what the supermarket has to do with back to school shopping, but the two have more in common than you think. Similar to going to the supermarket, you want to plan ahead for back to school shopping. Take the time to do an inventory of what your child already has. That way you won’t end up buying supplies like pencils, pens and paper that your kid already has a ton of at home.

Once you know what your kid has, create your list together with your child. This can be a great learning experience for them. They can help you choose the items that they need, while still working within the budget you’ve set for them, teaching them a valuable money lesson.

Shop Around

For basics like pens and papers, there’s nothing wrong with heading to your local retailer, but if you’re going to be buying anything expensive or anything in large quantities, it’s worth spending the time to shop around. By shopping around, you can see if there are better details to be had out there.

And don’t just limit yourself to brick and mortar stores. See if there are better deals to be had online. You may be surprised about the deals available out there.

Share with Other Parents

Buying in bulk can save you money, but what if it’s way too much of something like pencils and you’re afraid your child isn’t going to be able to use them all even when they graduate from university? You might consider going in “halfsies” and split the cost with another parent. By doing that you can still get a great deal on an item and not end up with way too much of it. It’s a win-win situation for everyone involved!

Start Shopping Early

Don’t make the mistake of waiting until the day before school is back in session to go shopping. Not only could the supplies you need to be sold out, you’re probably not getting the best deals on them either. By planning ahead of time, at the end of July or early August and starting your back to school shopping early, you’ll save money (even if your kids don’t like hearing about back to school so early on in the summer).

Are you looking for other ways to save on back to school? Contact our offices today for more great savings tips.

Climb’s Personalized Credit Prescription provides you with customized recommendations to help rebuild your credit score.

About the Author

Sean Cooper is the bestselling author of the book, Burn Your Mortgage: The Simple, Powerful Path to Financial Freedom for Canadians. He bought his first house when he was only 27 in Toronto and paid off his mortgage in just 3 years by age 30. An in-demand Personal Finance Journalist, Money Coach and Speaker, his articles and blogs have been featured in publications such as the Toronto Star, Globe and Mail, Financial Post and MoneySense. Connect with Sean on LinkedInTwitterFacebook and Instagram.

What Are NSF Fees? (and How to Avoid Them)

You’re running around doing errands and you stop to log onto your bank account. You discover that in the midst of your busy day, you’ve somehow overdrawn your account. Now you’re being charged an NSF fee, and you’re so confused.

What’s this fee dragging down your balance even more? And how can you get rid of it?

What is an NSF Fee?

A non-sufficient funds fee is a fee your bank charges when you overdraw the account and you have a negative balance. Banks charge this fee because they have to cover the difference while your account is in the red.

You may also be charged if you wrote a check to someone else and they tried to cash it, but there weren’t enough funds in the account. The bank will charge an NSF cheque fee. The fees depend on your bank, but are often around $45.

These fees are designed to discourage people from overdrafting their accounts and not having enough money.

How to Avoid NSF Fees

The easiest way to avoid NSF fees is to always have enough money in your bank account. If you keep a buffer in your checking account, you never have to worry about overdrawing your account.

If you keep incurring NSF fees because you keep too much money in your savings and not enough in your checking, move a small amount from your savings to your checking account. It’s not worth trying to earn a higher interest rate in your savings account if you end up paying a $45 NSF fee every few months.

You can also find a bank that notifies you when your balance is low. Some banks do this by text or email. When you get this notification, you can transfer more money from your savings account to your checking. Some fintech apps also send reminders when you have a low balance.

If you still use checks, make sure to note how much money you have when you write the check. It’s easy to forget about checks you’ve written because there’s no way to be reminded of them. If possible, try to switch to online payment. Most checks expire only after six months, so you could wind up having an account overdrawn because someone deposited your check five months after you wrote it.

Some people experience NSF fees because they set their bills to be automatically paid the same day. If possible, stagger your dates so they don’t all fall on the same day. You can base them on different pay cycles.

If you accidentally spent more than you earned one month, you may have to keep a balance on your credit card to avoid overdrawing your bank account. You’ll pay interest on the credit card, but that’s preferable to owing an NSF fee.

It’s better to make minimum payments on your debt than try to pay the max and overdraft your account. Make the minimum payment automatic and then pay extra manually, once you know how much you can afford to pay.

About the Author

Zina Kumok is a trained journalist and has covered everything from professional sports to murder trials. Now, she specializes in personal finance and has written for brands and publications such as Mint, Investopedia and Discover. She paid off $28,000 worth of student loans in three years.

Identity Theft: What It Is and How to Prevent It

Identity theft is a growing problem in Canada. Every year thousands of Canadians fall victim to it. While the Internet and computers have made our lives easier in a lot of ways, it’s also made it easier for fraudsters to steal your personal and financial information. The good news is there are ways you can protect yourself. Let’s take a look at what identity theft is and how you can prevent it.

What is Identity Theft?

Identity theft is the deliberate use of another person’s identity, usually for financial gain. Identity theft comes in all different shapes and sizes. It can be something as simple as stealing someone’s mail or more sophisticated like hacking into your computer. Even companies aren’t safe from data breaches. There have been countless stories of personal data breaches over the years.

The aftermath of identity theft can leave you in financial ruins. Not only could fraudsters ruin your credit, but you could also suffer thousands of dollars in losses. This can hurt your ability to get credit later on when you need it if you want to get a mortgage or car loan.

How to Prevent Identity Theft

You don’t just have to sit idly by hoping you aren’t the victim of identity theft. There are things you can do to be proactive and prevent it. You should be extra careful about handing over personal and financial information, especially your address, date of birth, social insurance number (SIN) and credit card information. If someone were to obtain those online they could assume your identity.

Without further ado here are our best tips on how to prevent identity theft.

Safeguard Personal Information

Be extra cautious when sharing your personal information. Examples of sharing personal information include buying goods online and filling in an application for employment. Before willing handing over your personal data, you should ask why it’s needed and how it will be used.

Be even more careful with your SIN. If your SIN ends up in the hands of fraudsters, your credit could be damaged. Unless your SIN is absolutely required, it’s best to leave it off a form.

Protect Your Wallet or Purse

Hold onto your wallet and purse and keep eyes on them at all times. A criminal will have hit the jackpot if they obtain them. When you bring your wallet or purse with you, it’s a good idea to leave as much of your personal data at home. For example, don’t make the common mistake of bringing your SIN card everywhere with you. Only bring it when you truly need it.

Be Cautious with Your Credit Card

You should be cautious when sharing your credit card information with anyone. Although the majority of credit cards have zero liability protection where you aren’t at fault if your credit card is fraudulently used, it’s still a good idea to be proactive and takes steps to prevent it from happening in the first place.

Although it’s convenient, don’t save your credit card information directly on websites. If the website is ever hacked, your credit card information could be stolen.

Also, only share your credit card information with companies that you trust. Don’t ever give it to an incoming caller unless you’re 100 percent certain who it is.

Looking to rebuild your credit after being the victim of identity theft? Contact our offices today to come up with a game plan.

Climb’s Personalized Credit Prescription provides you with customized recommendations to help rebuild your credit score.

About the Author

Sean Cooper is the bestselling author of the book, Burn Your Mortgage: The Simple, Powerful Path to Financial Freedom for Canadians. He bought his first house when he was only 27 in Toronto and paid off his mortgage in just 3 years by age 30. An in-demand Personal Finance Journalist, Money Coach and Speaker, his articles and blogs have been featured in publications such as the Toronto Star, Globe and Mail, Financial Post and MoneySense. Connect with Sean on LinkedInTwitterFacebook and Instagram.

Lines of Credit versus Personal Loans: Which Should I Choose?

You want to borrow money, but you’re not sure the best way to do it. You know a credit card doesn’t make sense since it will be a large expense that you plan to pay off over an extended period of time. You’re thinking a line of credit or personal loan makes sense, but you don’t know which one is best.

Let’s take a closer look at lines of credit and personal loans and when you might want to choose one over the other.

What’s a Line of Credit and When Might It Make Sense?

Lines of credit are loans that allow you to borrow up to a predetermined limit. A line of credit is quite flexible. You’re able to borrow as much money as you need and pay it back on your own schedule (when you’re approved for an interest-only repayment schedule).

A line of credit is revolving credit. This is just a fancy way of saying that you’re able to borrow against it whenever you want and pay it off on whenever you like without applying for a new loan. Lines of credit don’t have a specific date you’re required to pay them back in full. Instead, you can pay them off on a schedule that works with your finances. (However, the longer you take to pay off your line of credit, the more you’ll pay by way of interest.)

With a line of credit, you can make interest-only payments, making your payments more affordable. Also, you’ll only pay interest on money that you’ve borrowed. (You’re charged interest only on the money you withdraw from your line of credit, not on the credit limit itself.)

Lines of credit can make the most sense for both short- and long-term borrowing needs. For example, if you’re looking to consolidate debt and you may need to borrow more money down the line, a line of credit makes a lot of sense. You’ll be able to borrow more money later on without applying for a new loan.

Likewise, if you’re planning to borrow money for a major expense, such as a costly home renovation, or you’re planning to borrow money on an ongoing basis (i.e. for a serious of home renovations), then those are other instances when lines of credit can make sense.

What’s a Personal Loan and When Might It Make Sense?

A personal loan is a loan in a fixed amount that you agree to pay back over a specific time period by way of instalments. Loans usually need to be paid back over six to 60 months.

Loans are less flexible than lines of credit. If you need to borrow additional funds or you’d like to extend the repayment period, you may need to apply for a new loan.

The monthly payments on loans tend to be higher. Unlike lines of credit where you can make interest-only payments, the payments on loans must consist of interest and principal. Also, unlike a line of credit, you’re charged interest on the total loan amount the moment you take out a loan, regardless of when you use the money.

Loans make the most sense for specific needs, like paying for a vehicle or a one-time home renovation. If you don’t plan to borrow any more money, a loan can make a lot of sense.

A loan is also handy for those who lack financial discipline and prefer a fixed payment schedule. With a line of credit, it can be tempting to make interest-only payments, but by doing that, you’re no further ahead. With a loan, you’re required to make interest and principal payments. Because of that, your minimum monthly payment is higher, helping you pay off the loan sooner and save on interest.

Are you still not sure whether a line of credit or personal loan makes the most sense for you? Contact our offices today. Our credit consultants are happy to help.

Climb’s Personalized Credit Prescription provides you with customized recommendations to help rebuild your credit score.

About the Author

Sean Cooper is the bestselling author of the book, Burn Your Mortgage: The Simple, Powerful Path to Financial Freedom for Canadians. He bought his first house when he was only 27 in Toronto and paid off his mortgage in just 3 years by age 30. An in-demand Personal Finance Journalist, Money Coach and Speaker, his articles and blogs have been featured in publications such as the Toronto Star, Globe and Mail, Financial Post and MoneySense. Connect with Sean on LinkedInTwitterFacebook and Instagram.

4 Simple Ways to Make Your Grocery Budget Work Double Time

Do you have a family budget? You’re ahead of a lot of Canadian families. According to this Ipsos survey, three in 10 Canadians say that they’ve never created a budget for themselves or their household.

If you have a family budget, the biggest spending category after mortgage/rent and transportation for most families is groceries. We all need to eat. There’s no debate about that, but that doesn’t mean you can’t save money off your grocery bill. While I was paying down my mortgage in three years by age 30, I managed to spend about $100 a month on groceries. I’m not saying you have to follow on my footsteps, but it just goes to show you that there are plenty of ways to save.

Here are four simple ways to make your grocery budget work double time, so you don’t have to.

Creating a Shopping List

You’d think this would be simple enough. You should create a shopping list before heading to the supermarket, but you’d be surprised to know how many of us fail to do this simple thing. Not only does creating a shopping list save money, it saves time. It saves money because you don’t end up buying perishable food, such as romaine lettuce, that you already have sitting in your fridge. It saves you time because you know exactly what you need to buy. You can quickly head to those aisles and leave, avoiding any temptation to spend on food that you don’t need.

Shopping at Discount Supermarkets

Instead of shopping at premium supermarkets, have you ever considered shopping at a discount chain? I’ve heard the argument that the produce and meat aren’t as good quality at the discount stores versus its premium counterpart. While it is true that the discount stores don’t usually have as good a selection as the premium stores, a box of cereal is a box of cereal. What that means is whether you buy a box of Cheerios from a premium or discount store; essentially, it’s the same box. The only difference is that you’re spending $1 or $2 more for the exact same thing at the premium store.

If you want to buy some items at a premium store that’s fine, but for a quick trip to the discount store for your other items, you can save yourself some decent money.

Buying in Bulk and on Sale

When it comes to non-perishable goods, you can save a lot of money by stocking up. When a staple like spaghetti or macaroni and cheese is on sale, load up. By buying enough to last you until the next sale, you’ll never have to pay full price for anything.

Just be careful with expiry dates and don’t go overboard. You won’t save any money if you end up throwing out half the jars of peanut butter you bought on sale because they went past their expiry date before you could use them up.

Buying in Season

You can really save yourself a lot of money by buying produce when it’s in season. I love cherries as much as the next person, but it’s going to cost you a mint if you buy cherries during the wintertime. I’ve seen the price at $10 per pound or higher sometimes. I know it may be tough, but by skipping cherries and watermelon during the wintertime when they’re most expensive and saving them until the summertime, you can trim your grocery budget considerably.

These are just four of the simple ways to save money on your grocery bill. By following one or all of them, you should have no problem saving yourself at least $25 or $50 a month on groceries. With that extra cash flow, you can put it to good use like paying down debt.

About the Author

Sean Cooper is the bestselling author of the book, Burn Your Mortgage: The Simple, Powerful Path to Financial Freedom for Canadians. He bought his first house when he was only 27 in Toronto and paid off his mortgage in just 3 years by age 30. An in-demand Personal Finance Journalist, Money Coach and Speaker, his articles and blogs have been featured in publications such as the Toronto Star, Globe and Mail, Financial Post and MoneySense. Connect with Sean on LinkedInTwitterFacebook and Instagram.

How to Choose the Right Secured Credit Card

Without a credit card, life can be a whole lot tougher. Whether it’s making an online purchase, renting a car, or securing a reservation, many everyday transactions seem to require a credit card, even if you have the cash in hand. 

If you’re in a consumer proposal or have a poor credit rating and fear being turned down for a credit card, don’t panic. A secured credit card may offer you the flexibility you need and a chance to get your credit score back on track. 

Want to get an expert opinion on which secured card is best for your situation? Contact us for a free credit consultation and our expert consultants will recommend the secured Visa card or secured Mastercard you’re most likely to qualify for. Note: this post contains affiliate links marked with a *. Climb may receive a commission for signups made through these links.

What is a secured credit card?

A secured credit card is a type of credit card that allows you to access the benefits of a credit card, even if you’re in a consumer proposal or you have a low credit score. 

A secured credit card, like it’s name suggests, requires a security deposit. This is usually around 1-2 times the limit you’re applying for. For example, if you’re applying for a $500 limit, you’ll give the lender $500-1000 as a deposit. 

That means the lender takes on less risk: if you fail to pay back what you owe, they’ll use your deposit to clear that debt. 

The real long-term value of a secured credit card lies in its ability to help rehabilitate your credit score. Unlike a prepaid credit card, your lender will report your payments to credit agencies, meaning using a secured credit card will build a positive payment history, which can help you improve your credit score. Having a “revolving” form of credit on your credit report is one of the best ways to rebuild your credit, especially if it’s paired with an “installment” form of credit like a Climb Accelerator Plan. Learn more about the different types of credit here, or talk to one of our credit consultants about your own credit rebuilding goals.

Factors to consider when comparing secured credit cards 

As with any financial product, it’s important to understand what you’re signing up for when you take on a secured credit card. Here are some questions you’ll want to ask. 

1. What are the fees?

It’s relatively easy to find out whether the card you’re applying for has annual fees or not. 

But look out for other hidden fees, such as fees for foreign transactions, cash advances, declined transactions or going over your limit. One popular card advertises a low annual rate but then tacks on a monthly fee. You should ask to see a full fees schedule before you commit to a card and make sure the fees will be manageable for you. 

2. What’s the interest rate?

Secured credit cards typically have higher interest rates than a standard unsecured card. However, if you intend to avoid carrying a balance on your card this may not pose too large a problem. We recommend treating your secured credit card like a debit card and paying it off in full every month.

3. How much is the deposit and what happens to it?

Most cards will have minimum and maximum deposit requirements. Make sure you can afford the minimum deposit and that you understand how the deposit relates to the amount of credit that will be available to you. 

While you use your secured credit card, you won’t have access to the funds you’ve deposited and the deposit can’t be applied to your monthly payments. However, if you’ve paid your bills on time and in full, your deposit will be refunded to you when you close your account. 

Which is the right secured credit card for me?

Making the right choice of secured credit card will depend on your financial situation. Here are some of the options available to Canadian borrowers with a comparison of their different features and benefits. 

Home Trust Secured Visa

 
 Fees

 No Annual Fee

Other fees include:

  • Overlimit fee: $29.00
  • Dishonoured cheque fee: $45.00
  • Inactive account fee: The lesser of $10.00 or the full account balance if the account has been inactive for 360 days
  • Foreign currency conversion fees: 2%
  • ATM Charges: $2.50 for up to $250 cash advance within Canada—fees are higher internationally
Interest Rate  19.99%
Minimum Deposit  $500
Monthly Minimum Payment  3.00% or $10 (whichever is larger). 

 

Home Trust Secured Visa offers a great no annual fee option. The minimum deposit starts at $500 and maxes out at $10,000. The amount of credit available to you scales directly with the amount of your security deposit: so if you put $500 down, you receive $500 worth of credit

While Home Trust does require a credit check as part of their application process, the card has a high approval rating, and a low credit score is not usually associated with rejection. The catch is that you need to send a physical cheque to their office with your security deposit, which can be inconvenient.

The card offers the worldwide flexibility of the Visa brand, as well as an interest-free grace period of 21-days.  You can apply directly here.*

Home Trust Secured Visa (Annual Fee Option)

 
Fees

$59.00 annual fee (or $5 per month)

Other fees include:

• Additional authorized user fee: $19 annual fee (or $2 a month)
• Overlimit fee: $29.00
• Dishonoured cheque fee: $45.00
• Inactive account fee: The lesser of $10.00 or the full account balance if the account has been inactive for 360 days
• Foreign currency conversion fees: 2%
• ATM Charges: $2.50 for up to $250 cash advance within Canada-fees are higher internationally

Interest Rate  14.90%
Minimum Deposit  $500
Monthly Minimum Payment  3.00% or $10 (whichever is larger).

 

Almost identical to their no-fee option, the annual fee Home Trust Secured Visa has the benefit of one of the lowest interest rates available with a secured credit card. If you think you may carry your balances forward, this may be a better fit for you, so long as the fee is manageable.  You can apply for the HomeTrust Secured Visa Card here.*

Refresh Financial Secured Visa

 
Fees

$12.95 annual fee

$3 per month maintenance fee

Other fees include:

• Declined transaction: $0.10
• ATM Charges: $5 cash advance fee in Canada
• Overlimit fee: $5 for first time—additional times will result in the cancellation of your card
• Foreign Transaction Fees: 3.5%
• Inactive fee: $2 per month for each month you don’t use your card

Interest Rate  17.99%
Minimum Deposit  $200
Monthly Minimum Payment  Information not publicly available

 

Refresh Financial’s Secured Visa offers a secured credit card with a minimum deposit of just $200. It allows deposits up to a maximum of $10,000 and provides a comparable interest rate to other secured cards. This card offers a 21-day interest-free grace period on your transactions. 

This card requires no credit check and so your application is virtually guaranteed to be approved provided you meet the eligibility criteria and can provide the deposit. 

Capital One Guaranteed Secured Mastercard

 
Fees

$59 annual fee

Additional fees may apply

Interest Rate  19.8%
Minimum Deposit  $75-$300
Monthly Minimum Payment  Information not publicly available

Capital One’s Guaranteed Secured Mastercard promises that as long as you meet their conditions, you’ll be approved for a card. Capital One will set your credit limit and then require a deposit of either $75 or $300 based on that limit. You can increase your limit up to $2,500 by increasing the size of your deposit. 

With your Capital One Card you also receive Mastercard Global Services and Zero Liability protection for unauthorized purchases. Capital One also allows you to add an additional authorized user with no fees. 

Still have questions?

Grappling with secured credit cards when you’re in a consumer proposal can be a headache. If you have more questions about your credit score, its impact on your ability to get credit, and the options you have available to you, book a free credit consultation with one of our experts. We’ll help you explore your options and get your credit score back where it belongs.

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Author: Climb

Ultimate Glossary of Consumer Proposal Terms

Are you struggling with debt and considering a consumer proposal? Have you recently entered into one? Here’s an A-Z glossary of important terms related to debt and consumer proposals to help inform and empower your decisions.

Complete List of Consumer Proposal Terms

Bankruptcy – When a person is unable to pay their debts, they may choose to file for bankruptcy. Bankruptcy is a formal process where you work with a Licensed Insolvency Trustee (LIT) and sign over all your assets (except those exempt by law) towards debt repayment. When you declare bankruptcy, payments to creditors are stopped, as are any legal actions like wages being garnished. Your first bankruptcy appears on your credit report for six years after your date of discharge and is listed as an R9 rating.

Bankruptcy and Insolvency Act – The Bankruptcy and Insolvency Act (BIA) is the Canadian act that outlines how bankruptcies and insolvencies work in Canada. It also details the roles and requirements of the Superintendent of Bankruptcy, the court, trustees, creditors, consumers and more.

Certificate of Full Performance – When you pay off your consumer proposal amount in full, your Licensed Insolvency Trustee (LIT) will complete a Certificate of Full Performance to make it official. Make sure that your Certificate of Full Performance is shared with the credit bureaus immediately since this will trigger your old debts to be marked as settled and begin the 3-year countdown until the consumer proposal is removed from your credit report entirely.

Consumer Proposal – A consumer proposal is a debt relief program authorized by the government of Canada, which is available to individuals as an alternative to bankruptcy. If you file for a consumer proposal and it’s accepted by your creditors, you’ll pay back a percentage of debts to creditors, distributed over monthly, interest-free payments usually spread over a period of five years. A consumer proposal appears on your credit report for three years after your last payment and is listed as an R7. A consumer proposal must be administered by a Licensed Insolvency Trustee (LIT).

Credit Bureau – This term can be used two ways. A “Credit Bureau” is another term for a credit reporting agency (TransUnion or Equifax). Financial industry professionals such as trustees and credit counsellors also often refer to a person’s credit report as their “bureau”.

Credit Counseling – The goal of credit counselling is to help you improve your financial situation by providing advice on various topics like how to budget your money, improve your credit score and create a plan to assist with debt repayment. There are different types of accreditation from province to province, but it’s important to check that the credit counselling agency you work with is trustworthy and their counsellors are qualified.

Credit Counselor – A Credit Counsellor is someone who provides credit counselling. There are many individuals or agencies who might advertise this service without the right education and credentials so before you commit to working with a counsellor, check to see if they’re accredited in your province.

Credit Report – A credit report (also called a “credit bureau” by some industry professionals) is a document meant to show a complete overview of your financial history. It’s important to check your credit report regularly for errors as reporting mistakes do happen. Your credit report is one of the items used by institutions when determining your eligibility for getting approved for credit.

Credit Score – A credit score is a three-digit number assigned to you by the credit bureaus, which include Equifax and TransUnion. Credit bureaus use a mathematical formula to determine your score, taking into account all aspects of your credit report. Just like your grades in school, the higher your credit score, the better it is. A higher score increases your chances of getting approved for a loan and securing a lower interest rate – but you may see a different credit score number depending where you check.  

Debt Consolidation – Debt consolidation is the act of combining multiple smaller debts together into one loan. By consolidating all of your small loans, bills and other debts into one, it allows you to focus on one monthly payment rather than managing multiple payments each month.

Equifax – One of the two major credit bureaus in Canada. If you want to request a copy of your Equifax credit report or report an error to Equifax, contact them here.

Insolvency – Insolvency occurs when an individual isn’t financially able to pay their debts on time. Consumer proposals, debt consolidation and filing for bankruptcy are all options for individuals should they become insolvent.

Installment Credit – Installment credit is a type of loan that is extended for a predetermined amount of time, which is often referred to as the term of the loan. This type of loan usually has an amortization schedule to direct the borrower to pay off the principle through fixed installment payments over several years. Mortgages, car loans and student loans are popular examples of installment credit.

Licensed Insolvency Trustee – A Licensed Insolvency Trustee (LIT) is a are federally regulated professional that individuals and businesses can turn to for advice and services when they’re facing debt problems. The goal of an LIT is to help clients make informed financial choices.

Office of the Superintendent of Bankruptcy – The Government of Canada’s Office of the Superintendent of Bankruptcy (OSB) is responsible for the administration of the Bankruptcy and Insolvency Act (BIA) and duties under the Companies’ Creditors Arrangement Act (CCAA). The OSB licenses and regulates the insolvency profession, maintains public records and statistics and more.

Revolving Credit – Revolving credit is a type of credit that replenishes (up to a limit) each time the customer pays off their debt. Credit cards are an example of revolving credit.

Secured Credit Card or Secured VISA – A secured credit card or secured VISA is a type of credit card that is backed or “secured” by a cash deposit from the borrower. This provides the lender with security if the borrower can’t make their payment. A secure credit card is usually issued to individuals with limited or poor credit history.

Secured Debt – Secured debts is a type of debt where the borrower provides collateral for the loan. This could be a cash deposit, a car (for a car loan) or a house (for a mortgage). If the borrower defaults on the loan, meaning they’re unable to repay the debt, the lender can use the collateral to repay the funds.

TransUnion – Alongside Equifax, TransUnion is the other major credit bureau in Canada. If you want to request a copy of your TransUnion credit report or report an error to TransUnion, contact them here.

Unsecured Debt – Unsecured debt is debt that doesn’t involve any form of collateral support, such as a cash deposit from the borrower or a car or house (in the case of a car loan or mortgage). In the event that a borrower defaults on the payments, the lender must seek legal action (such as having a collections agency sue the borrower to garnish wages, file a lien on property, etc.) to be able to collect the balance owed.

Author: Climb

RRSP’s vs. TFSA’s: Which One is Right for Me?

Should I contribute to my RRSP or TFSA? It’s a common decision faced by thousands of Canadians each year. Ideally, we’d contribute the maximum to both. Unfortunately, life has a way of being expensive. Many of us have other financial priorities, including mortgage payments, car payments, child care expenses, contributing to our children’s RESP and the list goes on. This means that although we’d like to contribute to both RRSPs and TFSAs, we might only have enough to contribute to one.

So how do you choose the right one? Let’s take a closer look at RRSPs and TFSAs to help you figure out.

RRSPs

RRSP short for “Registered Retirement Savings Plan” is a tax-sheltered account primary used for saving toward retirement. If you have earned income (you have a job), you can contribute to the RRSP. You’re able to contribute 18 percent of your earned income in the last year or the RRSP limit, whichever is less (unless you’re earning six figures, it’s most likely 18 percent of your earned incomed). If you’re fortunate enough to have a pension at work, please be aware that your RRSP room will be reduced to account for it. This is to help level the playing field between the pension have’s and the pension have not’s.

When you put money inside your RRSP, you’ll get an immediate tax break. Also, any money you invest inside your RRSP will grow tax-free until it’s withdrawn.

You can hold a variety of investments inside your RRSP, including savings accounts, GICs, ETFs, index funds and mutual funds. To find out your RRSP contribution room, refer to your notice of assessment you get after you file your taxes.

TFSAs

TFSA is short for “Tax-Free Savings Account” and is the newer of the accounts. TFSA started in 2009 and have been popular with Canadians ever since. In fact, Canadians now contribute more money to TFSAs than RRSPs. Unlike the RRSP, you don’t need earned income to contribute to a TFSA. You just need to be above 18 years old.

TFSA contribution room isn’t based on how much you earn. Everyone receives the same annual contribution room. In 2019, the annual contribution limit is $6,000.

Unlike the RRSP, you don’t get a tax refund up front, but similar to the RRSP, your investments grow tax-free inside. However, where the TFSA has a leg up on the RRSP is that when you withdraw your investments, you don’t have to pay any income tax (you do with the RRSP). Your contribution room is also restored January 1st of the following year after a withdrawal.

Similar to RRSPs, TFSAs can hold a variety of investments, including savings account, GICs, ETFs, index funds and mutual funds.

Deciding Between the Two

A lot of articles like to overcomplicate matters in terms of whether you should contribute to the RRSP or TFSA. I like to keep things simple. If you’re earning less than $50,000, you’re generally better off contributing to the TFSA. If you’re earning more than $50,000, you’re generally better contributing to the RRSP.

Other things to consider are your income in retirement. If you’ll be earning more in retirement than during your working years, then the TFSA can make more sense than the RRSP, since being in a higher tax bracket in retirement can lead to claw backs of government benefits such as Old Age Security.

Likewise, if you aren’t going to be earning very much in retirement, contributing to your RRSP often doesn’t make sense, since it would result in Guaranteed Income Supplement being clawed back.

These are just some things to consider when choosing between the RRSP and TFSA. My best advice is to choose one and make regular contributions to it. By getting into this good habit, you’ll reap the rewards later on in life.

About the Author

Sean Cooper is the bestselling author of the book, Burn Your Mortgage: The Simple, Powerful Path to Financial Freedom for Canadians. He bought his first house when he was only 27 in Toronto and paid off his mortgage in just 3 years by age 30. An in-demand Personal Finance Journalist, Money Coach and Speaker, his articles and blogs have been featured in publications such as the Toronto Star, Globe and Mail, Financial Post and MoneySense. Connect with Sean on LinkedInTwitterFacebook and Instagram.