Category Archives: Credit

A 50% Service Fee!?

Consider this to be a “What not to do” lesson in personal finance.

I’m usually pretty much on the ball when it comes to our finances. But recently I had a slip-up that cost us 50% in fees.

We have most of our Canadian financial assets with one financial institution, which are spread over a number of accounts. The bulk of our cash savings are sitting in a high-interest account with the bank. I’ve also had my main credit card at that bank for about 13 years.

I have never had any problems transferring money or paying off my credit card because there are no fees to worry about when moving money from one account to another within the bank.

I applied for a new credit card in January with another financial institution, however, and recently set it up to make a monthly donation to a charity. When my first bill came in, I went online, set up a new payee, and paid off my credit card… all $10.00 of it… from our high-interest account. I checked my new card a few days later to confirm that the payment went through, and thought nothing more about it.

Last week I was going over my April transactions and noticed that right after my $10.00 credit card payment, there was a $5.00 service fee for a payment to an outside account.


Okay, I admit that 50% sounds worse than $5.00,  but it’s still a hard pill to swallow.

On one hand, I want to leave it as-is, as a bit of self-punishment; a 50% stupidity fee, of sort (I long ago read and knew about the fee, I had simply forgotten). More likely, however, I will call the bank and ask them to reverse the charge.

Hopefully they will allow me to leverage my very long history with them against my very recent stupidity.


Using Credit Card Points Toward RRSPs Revisited

One year ago I wrote my first post on this blog. It was a simple little post about using reward points on RBC or National Bank credit cards toward RRSPs held with those banks. I don’t think anyone read that post for months.

Starting this past January, however, that first post of mine has seen a massive spike in traffic generated from search engines, as people think about making their RRSP contributions. I thought I would repost for those thinking of getting a start on this coming year’s contributions. Remember, by contributing earlier in the year, you have more time to compound your money on a tax deferred basis.


If you have a Royal Bank or National Bank of Canada credit card that accumulates points, you can redeem those points for much more than a new desk lamp.

While certain TD, Scotia, BMO and CIBC cards give “cash back” credit of 0.25% – 2% of your yearly spending, RBC and National Bank of Canada encourage saving and lowering debt with their point system by allowing those points to be redeemed for “financial rewards” coupons.

At RBC points can be redeemed for vouchers that can then be deposited into your Royal Bank RRSP, TFSA, or RESP account. If you hold your mortgage or line of credit with the bank, you could also apply your points to the principal of those loans.

Redemptions start at 12,000 points for a $100 voucher, and move in increments of $25 per 3000 points. At these numbers, and assuming 1 point per dollar charged, it works out to a bonus of 0.83% of your credit card spending.

National Bank of Canada cards work out to a little higher (0.91%) but have slightly different options. Like at RBC, points can be redeemed toward your National Bank RRSP or TFSA account, but they do not seem to have an RESP option.

Points can also be used to pay down your mortgage or other loans held at National Bank, and if you are a Quebec resident, they can even be used for a rebate on your car or home insurance.

Redemption starts at 11,000 points for $100, and can only be redeemed in amounts of $100 (ie. 11,000 points, 22,000 points etc.)

Though it’s too late to use your points for the 2010 tax year, you can redeem anytime and get a good start on this year’s contributions.

After a few years of compound interest, I’m sure that the tax sheltered cash will be worth a lot more than the frying pan you could have had.

Related Posts:
  1. Using Cash Back Cards Toward RRSPs etc.

Obtaining Your Canadian Credit Score

Long time readers will know that I request a free credit report by mail in about June, and pay for my online credit report and score in December of each year.

When I ordered my report and score this past December, I noticed that the sites of both Transunion and Equifax have become… labrynthesque, shall we say. It took me a good while to find the order forms that I was looking for, and I suspect that is because both companies want you to purchase their monthly monitoring option rather than the one time option. The monthly monitoring options were very easy to locate, by the way.

I feel most people would benefit from knowing their score on an annual or semi-annual basis, but would not suggest that the average person would need to know their credit score monthly.

  • At Transunion the one-time credit profile and score page can be found here and currently costs $22.90 (down considerably from the $30.85 I paid in 2009!!) Make sure you have the box checked to obtain your score.
  • At Equifax the one-time report and score can be found here and currently costs $23.95.

With both companies, you will only have online access to your score and report for one month, so it is a good idea to print out a hardcopy and save the file as a pdf.

Once you begin following your score over time, you can start to notice how your yearly activity affects your score. I rarely have hard-checks performed on my file, and pay my bill in full every month. This conservative use of credit has resulted in my score moving up about 1% per year. My score is quite high (2010 saw me improve to a score of 806 from 799 at Equifax, for example), so I think it takes more to move the needle. Someone with a lower score might see larger percentage increases after a year of good credit.

I am very interested to see my score this year, as I applied for a new credit card after I obtained my credit score… I’m looking forward to seeing where I go in 2011 as a result. I’ll have to wait until December to find out, however.

The following posts may also be of interest:

  1. A Primer to Credit Scores and Reports
  2. A Walk-through to Obtaining a Free Credit Report
  3. Checking Your Report for Errors
  4. Understanding Your Credit Report and Score (FCAC Site)

Watching Out for Credit Card Fraud

Recently, Larry MacDonald posted an article about credit card fraud in the States. In that situation people’s cards were being charged a small amount ($0.20 or $9, apparently) though they had no idea what the charge was for. Presumably, many people just thought it a small amount of money so never looked into it. The groups behind the theft, however, pulled in about $10 million.

The Japan Times recently reported of another type of scam that is targeting foreigners here. In this case, credit card information would be stolen at a bar, and then massive amounts are charged to the card. The reason foreigners are being targeted seems to be similar to the reason small charges are being billed in the States – there is a good chance that it won’t be challenged, or that it will be too late by the time it is realized.

Foreigners in Japan could be made up of one of two groups: people who live here or people who are on vacation here. In either case, there is a chance that the victim cannot fully communicate in Japanese, and would therefore have trouble explaining the situation to the police or in court. In the case of vacationers, they may be half the globe away by the time they realize there is a remarkable charge on their card.

The situation in the Times tells of an Italian man who lives in Tokyo. He spent about $60 at a bar, his card was returned, and then a $4000 charge from a restaurant appeared a couple of weeks later. The bar in question has since disappeared, it seems.

Luckily the victim not only lives in Japan, but can speak Japanese. Because of that he was able to notify police and win his court battle against the restaurant and credit card company.

Japan is generally a safe place to live, but it is certainly not lacking in scammers.

Free Credit Report: A Follow-Up

Back on June 11th I wrote a walkthrough to obtaining a free credit report from the two agencies in Canada. When I wrote that article, I also downloaded the forms and sent away, as I do every June.

I’m guessing that anyone who sent away when I did will have already received their report. The websites say that one can expect to receive the report 5 to 10 business days after they receive the paperwork. Since I first have to deal with a 10-day delay mailing from Japan to Canada, I only received my first report (from Transunion) today.

I thought I would give a second walkthrough in case anyone was not entirely sure what to look for in the reports.


Page 1 should just be an explanatory page, letting you know a little about credit reports and scores, why they have your file, and a Rosetta Stone of codes (M for mortgage, R for a normal credit card).

Page 2 begins your actual file. On this page you first want to look for any mistakes in your name, address or phone number. After that comes the meat of the report, which is a breakdown of all the accounts you have, and how well you have done paying them off. Again, you want to make sure there is nothing out of the ordinary in this. If there is a credit card listed that you don’t own, you will want to do some investigating.

You also want to check this page to see that all of your credit information is correct. If you know you have a $5000 limit, for example, but only $2500 is listed, you will want to have this corrected. This is important because part of your credit score is based on your credit ratio, which means how much of available credit you use. You should also check that your payment history is correct.

After your account history is finished, there should be a list of account inquiries, meaning any companies that have looked at your file. Some of these have no bearing on your credit score, others do. Look carefully and see if the inquiries make sense to you.

This is followed by a correction page. If there were any mistakes in your file, you should correct them on this page and send it back to Transunion.


Equifax has a different layout, but the information is generally the same as Transunion.

Page 1 will tell you how long Equifax has been tracking your accounts, and gives a list of you current and previous addresses. Of course, you want to check this. Starting on this page, or possibly page 2, is a list of inquiries into your file. Again, make sure nothing looks strange.

Page 2 will probably begin your credit and banking history. Depending on your accounts, this may be several pages. But just like before, make sure that you know all the accounts on your file and that nothing looks out of the ordinary.

Following your banking and credit information, there should be an explanation about your files in general. And after this there should be a correction form that you should use if there are any mistakes on your file.

And that should be it. Depending on the complexity of your banking and credit accounts, there may be more pages or greater detail. I’ve tried to list just a basic outline of what to expect.

The main thing to remember is that you should look through everything to make sure there are no mistakes. Mistakes on your credit file mean that there may be a mistake in your credit score, which means you may be paying more in interest than your should be.

Free Credit Reports: A Walkthrough

About this time every year I try to remind myself to send away for a free credit report from both TransUnion and Equifax. Taking a look at your own report allows you to see how lenders view you, and also lets you check to make sure there are no mistakes.

In case some of you are unsure of how to get this information, I thought I would walk you through it.

First we’re going to download the report request forms from the two companies: Transunion and Equifax and fill them out. While providing your Social Insurance Number is optional, I have heard that it speeds up the process.

You will also have to photocopy both sides of two pieces of major ID, such as your driver’s license and passport, and submit that with your request form. Combined, the two pieces of ID should have your address, name, signature, and date of birth.

And that’s it. Mail them to the respective agencies (addresses on each form) and wait to get your free credit report.

I should point out that this is just your credit report. It has all the information about your credit history, but not your credit score.

Once you get it in the mail you want to check for mistakes and correct any if they exist. Mistakes may be as small as a mis-spelled street name, so take a good look. A good document to look through while you wait, and alongside the credit reports once you get them, is called “Understanding Your Credit Report,” which I have linked under “Resources” in the side-bar to the right.

Change Cards… Not Accounts

Banking can sometimes be a lot like baking. Change an ingredient and you change the result.

Sometime ago I changed my bank account to reflect my usage. I changed from a monthly fee to a free, pay per debit charge plan. The side-effect was that the fee on my credit card was no longer waived. The annual fee was less than the total monthly fees on the bank account, but it was still annoying.

I didn’t want to close my credit card account, however, because it had a 12 year history, and removing that would affect my credit score, which is something I want to keep relatively intact.

What I then thought about, and confirmed through a phone call, is that changing cards on the same account keeps the account in tact, so does not affect your score. Doing so keeps the same account active, and the information still flowing to the reporting agencies.

To clarify, your credit card is merely the piece of plastic. Your credit account is broader, and dates back to when you first applied for credit with a particular provider. In my case, I have had 3 credit cards on the same account. The first was a student card, the second was the normal version of the previous card that I switched to after graduation, and now a third card. However, my account is the same 12-year-old account.

You may not be able to switch from, say, a point card to an airmiles card, or a gas point card to a cash-back card (check with your provider), but you should be able to switch to a similarly structured card with the same provider. I switched to a no annual fee card that has the same point system (though it accumulates at a slower rate), so I can still use my points toward my RRSP or TFSA. I also ended up getting half of my last fee credited back to my account. The change also gives me some better travel insurance, and extended warranty of products bought with the card.

When it comes down to it, unless you are putting a lot of purchases on your card to justify the annual fee, you are probably better off with a no-fee card. Calling to change cards on the same account will save you money and leave your credit score untouched.