European Explorer Map
Part D: Now, the department store cards>
https://www.capitalone.ca/credit-cards/compare/?filter=all
https://hudsonsbaycredit.capitalone.ca/credit.html
https://www.pcfinancial.ca/en/credit-cards/
Dept Store | Interest on purchases | Interest on cash advance | Annual Fee | |
Costco (Capital One) | ||||
Hudson Bay | ||||
Canadian Tire | ||||
PC Financial (Loblaw) |
So, let’s calculate how much more you will have to pay if there is an outstanding balance of $750 on your department store card.
Interest rate for outstanding balance is 26.99%.
Step 1: convert 26.99% into decimal = 26.99/100 = 0.2699
Step 2: use outstanding amount multiply by interest rate 750 x 0.2699 = $202.42
Step 3: so your $750 purchase turns out to be $750 + $202.42 = $952.42 (really expensive)
Step 4: if you still cannot pay that off by the end of the year, more interest will be added to the $952.42
Your turn to calculate the interest charges
a. iPad, $666.00 @ 30% b. Air fare, $1500 @ 19.5%
c. Smart phone, $450.50 @ 9.99% d. Chromebook $325 @ 18.88%
e. A car, $32000 @ 7.99% f. BBQ, $750 @ 29.99%
g. A bicycle @ 16.75% h. Furniture $999 @ 25.99%
Credit cards and Debit cards
Credit Cards | Debit Cards | |
Offered by | Most banks | Most banks |
Examples | AMEX, Visa, MasterCard | Prepared or Debit cards |
What is it for? | To buy most merchandise in store and online | To buy most merchandise in store and some online |
How does it work? | Basically, when you buy an item, the bank lends you money for a short period, usually 3 weeks. You must pay it back before the end of the grace period. Otherwise, the bank will charge an insane amount of interest (around 20% till everything is paid off completely) | You need to put money in a debit first before buying anything. Say, if $200 is deposited in the debit card, and if you spend $15 at lunch time, there will only be $185 left in the debit card. Once there is no money left, you must deposit more money in the debit card before buying more things |
Advantages | - You can shop online and buy a lot of items. - Great when you travel to another country. Don’t have to bring a lot of cash - Some rewards such as travel points, cash back or shopping credits for supermarkets or drug stores | - Will never over-spend on items you cannot afford - Ideal for young people or those who cannot control their spending habits - No annual fee |
Disadvantages | - Spending can get out of control (buy stuff you cannot afford) - very high interest rate and takes forever to pay them off - annual fee | - some stores do not accept Debit cards - most do not accept them out of Canada. Debit cards do not work well when you travel |
Kwok’s advice | - Get one when you are 19 and control your spending habits (good way to learn financial responsibility) | - Get one when you are 15 or 16 and learn to spend money responsibly |
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