Spring Cleaning? Don’t Forget Your Wallet

The Polar Vortex is (finally) retreating, and it’s time for Canadians to turn their focus to starting spring on a fresh foot. For many, that means clearing out stuffy closets, cluttered home offices or sprucing up the lawn – but don’t forget to add your finances to your spring cleaning list.

This year, give your wallet a clean slate by banishing hidden fees and subpar features. For example, consider your credit card; millions of Canadians carry one or more daily, and reach for them to pay for everyday essentials such as gas or groceries. Yet many are in the dark about the fees charged on their cards – and their higher-value options.

If you didn’t consciously pick your card from among the best offerings in Canada (or worse – signed up directly from a mailed bank offer!), chances are your plastic isn’t packing the most competitive features or interest rate.

Click here to see the best credit cards in Canada>

Switch This Spring For Savings… And Score A FREE $100

In fact, according to financial rates comparison site RateSupermarket, an average cardholder (carrying a $6,000 balance with a 19.9% interest rate), could earn $1,194 more in rewards annually with the best cash back option on the market – proof there’s much to gain by shopping around!

DEAL ALERT: Until the end of April, you could score up to a $100 value in FREE gift cards, just by switching to a market-leading credit card. Choose from 2 great options: Learn more>

Enjoy Cash Back

  • Up to 5% cash back on all of your eligible gas and grocery purchases for the first 6 months‡

  • Up to 2% cash back on eligible gas and grocery purchases thereafter‡

  • And, up to 1% cash back on all of your other eligible purchases‡

  • 1.99% annual interest rate (AIR)† on balance transfers* and deposits* for the first 10 full months

Get a Break on Interest

  • 0% annual interest rate (AIR)† on balance transfers* and deposits* for 12 months.

  • Pay down your credit card debt fast, or use it as a short term loan to finance your spending interest free for 12 months.

Click here to Learn More>

No, Prepaid Cards Are Not A Good Alternative To Credit Cards

Prepaid cards are like debit cards but they have their own set of rules and restrictions.  They are marketed toward students and low-income earners with a history of poor credit as an alternative to traditional bank accounts and credit cards.

On the surface, prepaid cards seem like a good way to spend money without going into debt. That makes them ideal for post-secondary students – parents just preload a card with a fixed amount and don’t have to worry about their child living beyond his or her means.  Once the money is gone you can’t use the card again until you load more cash.

But prepaid cards come with hidden fees that aren’t apparent unless you comb through the terms and conditions.  Activation fees, monthly service fees, ATM fees and transactions fees can eat up a good chunk of the money on your card.

A question about Prepaid Cards

I recently received an email from a reader named Carmen asking about prepaid cards.  She wrote:

What do you think about the Canada Post Prepaid Visa Card?

From what I understood this card can be used for purchasing online where ever Visa is accepted.  In this regard, is it a good option since it is more affordable than a credit card?

My first question would be – where do you bank?  Most of the big banks (TD, Scotia, CIBC, and RBC) offer a Visa Debit card, which acts just like a regular debit card only you can use it like a Visa to shop online or to book a flight or hotel room.

I would avoid this prepaid card.  Just look at the fees associated with the Canada Post Prepaid Visa Card:

  • Activation with load up to $500.00 (one-time fee) – $15.00
  • Monthly service fee – $3.00*
  • Reload fee – $3.00
  • ATM & cash advance – $2.00**
  • Foreign currency conversion – 2.5%

*Fee will be deducted from your card balance at the beginning of each month

**The ATM service provider may charge an additional fee

Visa, MasterCard and American Express all offer prepaid cards with different features so you’ll have to do your research to compare them.  Most come with a host of unnecessary fees that should be avoided.

Final thoughts

Despite their many disadvantages, prepaid cards are growing in popularity and are heavily advertised around the holiday season and for students to use while they attend University or College.

They’re promoted as a budgeting tool that allow parents to control how much their child spends and makes it impossible to go into overdraft or unwanted debt.  The cards also give parents a way to get money to their child in a pinch.

A better approach for mom and dad is to buy regular store gift cards that come without fees and expiry dates.  A gift card to a grocery store chain like Loblaw or Sobeys can make sure your child is eating well while he or she is away studying.

Alternatively, you can always send money with an Interac e-Transfer – it will cost the sender $1 to $1.50 each time but it’s free for the recipient and beats the extra fees that are attached to prepaid cards.