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moneysense.ca, 29/07/10
This and That: Taxwiki, Credit card rewards and more…
- Prof. Benjamin Alaire of the University of Toronto has recently launched a new, non-commercial, website called Taxwiki.ca that aims to provide better, faster and more accurate tax guidance to Canadian taxpayers. The wiki’s materials are based on original CRA documents which are updates after consultations with authoritative resources, including the Income Tax Act and its regulations, rulings and other disclosures of the CRA, as well as decisions of the Tax Court of Canada , the Federal Court of Appeal , and the Supreme Court of Canada to provide straight answers.
- It is not entirely surprising that credit card rewards raise the retail costs for everyone. What is surprising is that this amounts to a transfer of wealth from low-income to high-income households. A study by the Federal Reserve Bank of Boston that was widely reported in the media found that on average, those with a household income of $20,000 or less pay $23 and those with a household income of $150,000 or more receive $756.
- Jon Chevreau points out that a significant number of seniors are missing out on Canada Pension Plan, Old Age Security and Guaranteed Income Supplement benefits that they are eligible for.
- Ellen Roseman excoriates Enbridge for undercharging customers under the Budget Billing Plan and then socking them with a huge monthly bill.
- Larry MacDonald takes a look at some estimates on when all that monetary growth will trigger inflation.
- Canadian Financial Stuff finds that pets are hugely expensive.
- Preet says that current benchmarks for active management ignore such things as price of advice. Problem is the majority of investors receive little value for the advice portion of their mutual fund fees.
- Million Dollar Journey featured a guest post on the risks in bonds and their suitability for portfolios.
- If you rent, Financial Highway has ten reasons why you need renter’s insurance.
- Turns out getting a mortgage ain’t so simple anymore. The Financial Blogger what’s required to obtain a mortgage.
- After a free lunch gave him an upset stomach, Michael James asks an eternal question: Why is FREE so irresistible?.
I’m unable to highlight all the articles worth checking out in my weekly round up but you can check out the interesting columns I come across in my Twitter feed.
No post on Monday owing to Civic Holiday in Ontario. It promises to be another glorious summer weekend in Ottawa. Have a great weekend everyone.
moneysense.ca, 29/07/10
I almost feel complicit in a crime when banks give me a 1% reward for using my credit card and then charge the merchant 3% for the transaction. It’s like i’m getting a kickback. But then if I don’t use the card I still have to pay the higher prices due to all these fees. It’s extortion. It’s basically banks levying a 2% GST on everything. These points cards should be illegal.
minor typo:
risk in ‘bongs’?! I think most investment advisors would say they’re not suitable for portfolios
N.
@Benoit: I haven’t read that paper fully yet but I was thinking along those same lines. What about those banks and credit card companies which are making money off *both* low-income and high-income families, eh? I’ll be writing a post on this after reading that paper.
@nate: Oops. Thanks. Yes, “bongs” are quite risky, especially and are probably not suitable for any portfolio. I’ll fix it right away.
Thanks for the mention. I’m over the free burger and ready for my next irresistible free nausea burger.
@Benoit: I am also a credit card user (abuser?). I use it routinely even for very small amounts. I think the key is the No Surcharge Rule (NSR), that credit card companies push on merchants. Basically, forbidding the merchant from charging a different price to cash users. The NSR is illegal in some European countries.
[...] This post was mentioned on Twitter by Canadian Capitalist, youngandthrifty. youngandthrifty said: RT @CCapitalist New Blog Post: This and That: Taxwiki, Credit card rewards and more… http://bit.ly/aEuZq0 [...]
Thanks for the mention, have a great weekend! I still have my pets, for now.
Will have to check out that taxwiki. Looks useful. Thanks for pointing it out.
@Slacker: I think NSR should be illegal here as well. Without a NSR rule, stores may offer, say a 1.5% discount on cash purchases. Then the free market would fix the problem identified by the Fed report.
I agree making the NSR rule illegal would probably solve the problem. That is a very good idea. There is no good reason why this legislation doesn’t exist yet.
Thanks for the link CC! Have a great long weekend!
This is a free market economy. If you don’t like credit card charges, you can always buy shares of mastercard, visa or american express (all on US exchanges, of course). Similarly, if you don’t like bank fees, then buy shares of the banks, if you don’t like high oil prices, then buy shares of oil companies. The list goes on and on.
For me personally, I prefer using my credit card purchases for everything, including small purchases because I don’t like to carry large sums of cash, nor do I enjoy frequenting the bank to take out small sums of cash. And I do enjoy my Air Miles.
@Phil S: Your argument that this is free market is a classic oversimplification. This is not a free market, because VISA and MasterCard have overwhelming share of credit payment methods. The barrier of entry into this market is too high, and the oligopoly status allows them to force upon merchants with high fees, which are invisible to consumers.
@Slacker. I didn’t say that it isn’t an oligopoly. But we have the option of buying into many of the companies that people complain are overcharging. So, if you really think that we’re getting overcharged and there’s nothing you can do about it – you get an opportunity to get a piece of the action.
From an investment opportunity perspective, buying into names in an oligopoly can sometimes lead to some safe & secure dividend yields.
I didn’t buy into Amex, MC or VISA, but then again, I’m not one of the people complaining about their fees. I, for one, enjoy the convenience of carrying plastic as opposed to cash.
[...] Canadian Capitalist and Canadian Financial DIY draw attention to a new tax resource, taxwiki.ca, founded by Prof Ben Allaire [...]
Thanks for the link Ram, hope you enjoyed the weekend!
Phil S, you really think it is okay to scam people, force them to pay you even if they don’t use your product, take huge salaries and bonuses for yourself while doing it as long as you give a small % back to shareholders?! This is not a case where they are producing value in exchange. Giving out 1% rewards in exchange for taking in 3% behind the curtains is not value creation. The consumers should have used their debit card. If everyone had used their debit card, they would have saved almost 2%.
People can buy shares all they want, assuming the over leveraged banks don’t fall on a hiccup in the economy, they will get a share of the profits but they will never recoup the money they were scammed out of because much of it goes to pay for the operation of the scam and the yachts of its lead scammers. I can’t believe you think that’s anywhere near a solution to the problem.
@Phil: It’s not overcharging that I have a problem with. If credit card companies are using their market power to force retailers not to offer discounts to those paying cash, I think it is a problem. If regulations disallow that, then the free market will decide which payment options consumers will prefer.