Advice in Challenging Times

With inflation and interest rates steadily climbing, you might not know what to do. You’re not alone. Here are some tips to help with your financial wellness. Please reach out; we’d love to help.



How to Manage Your Debt

Switch from variable to fixed

The Bank of Canada continues to raise its benchmark interest rate to slow inflation.

What does that mean?
If you have a fixed loan or mortgage, your rate and payments stay the same since your rate is locked in.

However, if you have a variable loan or mortgage, your payments may look the same, but your borrowing rate will have significantly increased. This means more of your monthly payment is going towards paying off interest.

At the end of your loan or mortgage term, the amount you still owe on your principal will be much larger than you expect.

How can more of my money go towards my principal amount?

You can make principal-only payments in addition to your monthly payments if that's a financial option for you.

  • Log into digital banking
  • Select Payments & Transfers > Transfers > Transfer Money
  • Select the loan or mortgage you'd like to make an additional payment to
  • Follow the prompts and you're set

How can a fixed loan or mortgage help?

With a fixed loan or mortgage, you have the same known interest rate throughout the term of your loan or mortgage. This means the amount of your payment going towards interest stays the same. No surprises.

More of your payment will go towards paying off your principal loan or mortgage amount in inflationary times. 

There’s no penalty for making the switch, but a $100 fee applies. Contact us today to explore your mortgage or loan options.


Review your credit cards

Credit cards are convenient and can earn you significant rewards, but you might be paying more than you realize for using them.

It's a great idea to review the cards you have and their outstanding balances to see how you could save more money:

  • Transfer your balance to a low-rate card
    Do you have a credit card with a high interest rate? Do you typically carry a balance on it each month? Try transferring your balance to a card with a lower rate. You can find excellent balance transfer offers, like the Visa 3.9% Balance Transfer Offer, where you'll only pay 3.9% interest on the balance you transfer to your new card for 6 months.
  • Reduce rates and fees
    There are many card options available today. Consider a credit card that offers a lower interest rate and charges no-to-low annual fees. The Visa* Classic Card is a perfect example. You'll pay no annual fee and enjoy a low interest rate.

  • Consolidate your credit cards
    If you use many different credit cards, consider simplifying to just one. 
    • You'll avoid unnecessary annual fees.
    • Managing bill payments is much easier.
    • You could earn more rewards by using the card with the best program.

  • Make a plan
    Create a budget plan where you aim to pay down your high interest credit card debt first. Even paying a few more dollars each month towards an outstanding balance will make a difference.

  • Monitor spending
    Only use your credit card on items you can afford to pay off quickly. You should always aim to pay off your balance in full every month.

  • Consider other loan options
    A line of credit or personal loan might be another borrowing option that offers lower interest rates than your credit card. Contact us to discuss your loan consolidation or borrowing options.

For more tips, see our advice article on managing credit card debt.



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Consolidate Your Debt

If you have several high-interest loans, you may want to consider consolidating your debt. This means combining your debt into one new loan (or one credit card) at a lower interest rate.

Benefits:

  • It could lower your interest rate.
  • It makes for simpler borrowing – making one payment vs many.
  • It can improve your credit score since you’re less likely to make a late payment. Plus, your credit use percentage will decrease. This is beneficial for your credit report if your credit usage rate is 30% or higher.
  • It could decrease your monthly payment amount (since your loan could be for a longer term).

Things to consider:

  • A new consolidation loan may involve fees.
  • Is your credit score high enough to access a lower rate?
  • Your new consolidation loan could take longer to pay back which means you’ll pay more interest in the long run.

Contact us if you feel like debt consolidation is right for you.

Or take advantage of our Visa balance transfer offer, where you could pay a lower interest rate on the credit card balance you transfer to your new Visa card.