RateHub Roundup: September 2016

by Jordan Lavin September 5, 2016 / No Comments

This summer wasn’t quiet when it came to personal finance stories. The marquee—a new tax on foreign homebuyers in Vancouver—sent ripples in all directions throughout the housing market. There’s lots to talk about on that subject, but it’s not the only story out there. Here’s our roundup of the personal finance stories that caught our eye in August:

B.C. tax quick to cause problems

The 15% tax imposed on foreign homebuyers by the government of B.C. caused waves when it was announced last month, and now the effects are starting to show. And hundreds of real estate deals are in peril because the Aug. 2 start date was based on when the sales closed, not when they were signed. At least 400 deals are at risk of falling through and there’s a chance that sellers, who had in turn bought other homes based on their sale agreements, will have to back out of their purchases as well. While all this is going on, legal analyses have argued the law is unconstitutional (discrimination based on national origin is prohibited by the Charter of Rights and Freedoms), and pointed out it could violate NAFTA and other Canadian trade agreements. And the Vancouver real estate market? The price of homes and pace of sales are both down, but these are early numbers and it will be a while longer before we know what the new normal is.

There’s a new low interest credit card on the market

American Express has launched a new low interest credit card in Canada. The American Express Essential Credit Card has an annual interest rate of 8.99%, and no annual fee. You can also get a promotional balance transfer rate of 1.99% for six months if you transfer your balance from another card when you sign up. At less than half the rate of a regular credit card it’s a strong offering, but is it the best low interest credit card you can find? There’s big competition from the MBNA TrueLine MasterCard, which offers interest rates as low as 5.99% without an annual fee—plus the benefit of being more widely accepted than American Express. If you tend to carry a balance on your credit card, either of these options could help you save a lot of money in the long run.

Savings account interest rates keep coming down

The low-rate environment that’s been keeping mortgage rates low has also been bringing down interest rates on deposits, and savings accounts are no exception. Last month, EQ Bank dropped the rate on its Savings Plus Account from 2.25% to 2.00%. It’s the second rate change for the digital bank launched in January. With its new rate, EQ Bank still has the highest interest rate of any savings account in Canada—it’s marginally ahead of second-place Alterna Bank’s High Interest eSavings account at 1.95%. So what to do if you need a higher rate of return? If you don’t mind committing to a term of at least a year, you can still find GIC rates above 2%. Other than that, higher-risk investments might be the only way to go.

How does your postal code affect your insurance costs?

Residents of a town in southern Ontario have found out that even though you can control where you live, you can’t control where your insurance company thinks you live. A change in postal codes for residents of Waterdown from L0R to L8B has led to increased insurance costs because their “L8” prefix puts them in the same territory as the much larger City of Hamilton, even though there’s been no change to their actual location. As Don Mather of the Insurance Bureau of Canada told local newspaper the Flamborough Review, insurance companies generally split up their customers by territories with defined boundaries. And it’s possible that if your neighbours across the street have a different postal code, their insurance rates could be much lower than yours simply because they’re in a different territory. The good news is each insurance company draws its own map, and they’re not set in stone. Whether you’re from Waterdown or elsewhere, be sure to compare car insurance rates (and home insurance rates) at renewal and maybe you’ll find a company that puts you in a better neighbourhood.

RateHub Updates

How do you go back to school and still grow your savings account? We asked six very smart people for their Back To School Money Hacks.

If you want to win free gas, read our writeup of how the Esso Extra rewards program works and enter to win a $50 Esso gift card while you’re at it.

RateHub is built on the hard work of a few talented people who had a vision of inventing new tools for Canadians to compare financial products. Since starting up, the team’s hard work and innovation has been rewarded with more than $1 million in government grants. RateHub CEO Alyssa Furtado wrote a column for The Globe And Mail discussing how to take advantage of grant opportunities for your business.

RateHub’s marketing director Kerri-Lynn McAllister was interviewed by lifestyle blogger Mahsa Joyce about being a startup founder and woman in leadership. Read their conversation here.

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