Tag: low interest

Credit card interest calculator – MoneySense
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Play around with our credit card interest calculator to calculate credit card interest and figure out how long it will take you to repay the debt. This tool can help you develop a plan to address your balance and avoid paying interest going forward.

How to use the credit card interest calculator

Our credit card interest calculator can help you figure out two key pieces of information:
- How much money you’ll pay in interest based on your current monthly payment
- How many months it will take to pay off your credit card balance
Start by inputting your credit card balance and your card’s annual percentage rate (APR). If you don’t know this number, log into your credit card account and pull up your card’s terms and conditions.

Next, decide if you want to see how much total interest you’ll pay based on your current monthly payment (and enter that amount) or specify your payoff goal in months to see how the total interest charges.

How to calculate credit card interest

Since interest is expressed as an annual percentage rate, card issuers take several steps to determine how much to charge each month. Here’s how you can figure out their method:
1. Convert your APR to a daily rate. Most issuers charge interest daily, so divide the APR by 365 to find the daily periodic interest rate. Make sure you’re using the purchase interest rate (not the cash advance or balance transfer rate).
2. Figure out your average daily balance. Check your credit card statement to see how many days are in the billing period. Then, add up each day’s daily balance, including the balance that carried over from the previous month. Once you have all the daily balances, divide the figure by the number of days in the billing period to find your average daily balance.
3. Multiply the balance by the daily rate, then multiply the result by the number of days in the cycle. Now that you have all the details you need, multiply the average daily balance by your daily periodic interest rate. Then multiply that number by the number of days in the billing cycle. This shows you how much interest you’ll pay in a month.
A quick example

If you have a credit card with a $1,000 balance and 20% APR, your daily interest rate would be 0.0548%. Assuming you don’t add to the debt, you’ll be charged around $0.55 in interest every day. If there are 30 days in the billing cycle, you’ll pay $16.50 in interest for the month.

How to avoid paying credit card interest

When you get a credit card statement each month, you’ll see a minimum payment amount listed. This is often a flat rate or a small percentage of your balance (usually 3%), whichever is higher.

While it’s tempting to just pay the minimum payment your credit card issuer asks for, doing so guarantees you’ll be charged interest because you’ll be carrying a balance into the following month.

Instead, make a point of paying off your balance in full every month. Not only will you avoid paying credit card interest, but your card issuer will report these payments to the credit monitoring bureaus, which can boost your credit score. Plus, the cash back or rewards you earn with the card won’t be offset by the interest you’re charged, so you truly get more out of using your card.

How to reduce credit card debt

If you already have a credit card balance, don’t despair. There are strategic things you can do to get out from under credit card debt.

1. Negotiate with your credit card provider

As a first step, call your bank or credit card provider to request a lower interest rate. Your card issuer may be willing to work with you, so don’t hesitate to ask. They might agree to lower your rate, offer to switch you to a lower-interest card, or create a repayment plan that works for your situation—but you’ll never know if you don’t ask.

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2. Make a budget and pay with cash or debit

It’s important to honestly track your income and expenses so you can trim unnecessary costs. Stop charging purchases to your credit cards and switch to cash or debit, instead.

While it might seem difficult, try to contribute to an emergency savings fund. If an unexpected expense comes up (like an appliance repair or vet bill), you can pull from your fund rather than charge it to your credit card.

3. Open a balance transfer credit card

If you have significant debt, find a balance transfer credit card with a great promotional rate. Then, move your existing balance to the card. You can quickly pay down the balance while you’re not being charged interest. The golden rule of balance transfer cards: never charge new purchases to the card.

Canada’s best credit cards for balance transfers

4. Try the avalanche or snowball repayment strategy

There are two main approaches to paying off debt:
- Avalanche method: Focus on paying off the debt with the highest interest rate first, while making only the minimum payments on your other accounts. Once the highest-interest debt is paid off, move on to the next-highest-interest debt.
- Snowball method: Start by paying off the debt with the smallest balance first, while continuing to make minimum payments on your other debts. After clearing one debt, move to the next-smallest balance. This method may cost more in interest over time, but it can provide strong motivation and momentum to stay on track with debt repayment.
5. Work with a credit counselling agency.

It’s completely understandable to feel overwhelmed by your credit card debt, which is why a credit counsellor can be so helpful. Speak to representatives from your financial institution, a credit counselling agency, or a debt consolidation program to discuss your options. They can help you create a tailored plan to resolve the situation.

5. Consider debt consolidation.

If you’re juggling multiple loans and credit card balances and having trouble paying them off, it may make sense to consolidate your debt. This means combining two or more debts into one, with just one payment to make each month.

Another option is a debt consolidation loan from a bank or other financial institution. Or you could work with a credit counselling agency to negotiate a debt consolidation program (DCP) or consumer proposal (repaying only part of your debt) with your lenders.

Learn more about each of these options by reading “How to consolidate debt in Canada” and “Who should Canadians consult for debt advice?”
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Jessica Gibson

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December 9, 2025
Making sense of the Bank of Canada interest rate decision on October 23, 2024 – MoneySense

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Changes to the BoC rate impacts the prime rate set by Canadian lenders, which in turn affects the pricing of variable-based borrowing products, which are based on the prime rate plus or minus a percentage. Following this most recent cut, the prime rate at most Canadian lenders will drop to 5.95% from 6.45%. What does that mean to your money and your debt? Keep reading.

The BoC is taking action with this larger-than-usual cut

When the central bank lowers its benchmark rate, it typically does so in quarter-point increments —unless there’s an economic reason for a heftier cut. Half-percentage point decreases like today’s are rare, but they do have a precedent; the last time the BoC doled out cuts of this size was back in March 2020, when it implemented three in rapid succession to support the economy amid the onset of the COVID-19 pandemic. Outside of the COVID era, today’s rate cut is the largest since March 2009.

That the BoC is once again supersizing its cuts points to concerns that the economy is slowing at a faster pace than expected. The most recent inflation report for September from Statistics Canada revealed the year-over-year inflation as measured by the Consumer Price Index (CPI) fell to 1.6%, which is below the BoC’s 2% target. That’s considered sustainable for the Canadian economy. The BoC tweaks its benchmark rate to keep it as close as possible to target. When inflation is running hot, it hikes rates to cool consumer spending and access to credit. The opposite occurs when inflation gets too soft; the BoC must ease borrowing conditions to encourage consumption, and bolster economic growth, otherwise it risks an impending recession. We’re in the latter situation right now.

Will the BoC continue to drop its rate?

Should economic data, such as inflation, GDP, and job market numbers, continue to trend as it has, additional rate cuts are a certainty, including more supersized cuts. Much will hinge on the next CPI report, due out on November 19. Should inflation remain sluggish, that increases the chances of another half-point cut in the BoC’s next rate announcement, on December 11.

The BoC is also keen to lower its rate down to “neutral” state, which is a range between 2.25% to 3.25%. This again is a rate that neither inflames or stunts economic growth, and remaining above it too long poses economic risk.

Following this rate cut today, the overnight lending rate remains 0.50% above the higher end of the neutral range. Overall, analysts think the BoC will lower its rate by another 1.75% by the end of 2025.

What does the BoC rate announcement mean to you?

What does it mean for you, your home, your finances and more? Read on.

The impact on Canadians with a mortgage

Whether you’re shopping for a brand new mortgage rate or renewing your existing term, today’s rate cut will make it slightly more affordable to do so.

The impact on variable-rate mortgages

Variable mortgage rate holders are the most heavily impacted by the October rate cut, as their mortgage payments—or the portion of their payment that services interest—will immediately decrease along with their lenders’ prime rate. These borrowers in Canada also have much to look forward to, with anticipated rate cuts on the horizon.

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Penelope Graham

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October 23, 2024
Borrowing from your HELOC to invest in equities – MoneySense

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Borrowing to invest can be risky. It can magnify your returns, as well as your losses. The best candidate for leveraged investing is someone with a high risk tolerance, a long time horizon and low investment fees.

Leveraged investing for the short term can be risky, because stock prices can fall several years in a row, even if they rise most of the time.

If you’re a balanced investor buying stocks and bonds, particularly if you pay high investment fees, it can be hard to earn a profit over and above the interest costs.

Borrowing to invest

You can deduct interest on money that you borrow for investment purposes if the investments are taxable. So, you cannot deduct interest on money borrowed to invest in a registered retirement savings plan (RRSP) or tax-free savings account (TFSA).

When you borrow money to invest in stocks, you can deduct the interest on line 22100 of your personal T1 tax return. You can also deduct other expenses or carrying charges on this line, such as fees for investment management or for certain investment advice, or accounting fees if you have income from a business or property.

If your investments produce only capital gains, you cannot deduct your interest. If you are in Quebec, you may be limited provincially from deducting interest that exceeds your investment income for the year.

What is a HELOC?

HELOC stands for home equity line of credit, a type of loan secured by your home—meaning that your home is collateral for the loan. HELOCs provide revolving credit, so you can borrow money as you need it, up to a certain amount—usually a percentage of the value of your home. Most HELOCS have no fixed repayment schedule, although you will have to pay interest monthly. In contrast, a home equity loan is a lump sum with a fixed repayment schedule for the full amount.

Read the full definition in the MoneySense Glossary: What is a HELOC?

HELOC vs. mortgage

You mentioned you borrowed using a home equity line of credit (HELOC), Jackie. Most HELOCs have interest-only payments, so that ensures your payments are all tax-deductible when you borrow to invest in eligible investments. However, HELOCs tend to have higher interest rates than mortgages.

A typical HELOC rate is the prime rate, plus 0.5% or 1%, whereas a variable-rate mortgage may have a discount to the prime rate of 0.5% to 1%. It may make sense to consider converting a tax-deductible HELOC to a mortgage to reduce your cost of borrowing. This would increase your payments, since mortgage payments include principal and interest, so it might slightly increase your cash-flow requirement. However, paying lower interest may make the leverage more beneficial overall.

Can you port a HELOC?

If you are moving to a new home that you are buying, Jackie, you could consider porting your HELOC to the new property. This way, the debt can be preserved, as well as the tax deductibility.

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Jason Heath, CFP

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September 16, 2024
Making sense of the Bank of Canada interest rate decision on September 4, 2024 – MoneySense

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What does the rate cut mean?

The immediate impact of today’s rate cut will be interest rate relief for Canadians.

As a result of today’s rate cut, most Canadian lenders will now lower their prime rates to 6.45%, from the previous 6.7%. This in turn will cause variable-rate borrowing products, including variable-rate mortgages, to also drop, as their pricing is based on prime plus or minus a percentage. Those with home equity lines of credit (HELOCs) will also see their interest rates decrease.

Will the BoC continue to drop its rate?

Today’s quarter-point cut was widely anticipated. In fact, markets had priced in a 100% chance that it would occur. The deal for the rate cut was sealed after the latest inflation numbers trended in the direction the BoC wants: down between 2% and 3%. The July Consumer Price Index (CPI) report revealed inflation fell to 2.5%.

“As expected, inflation slowed further to 2.5% in July. The Bank’s preferred measures of core inflation averaged around 2.5% and the share of components of the consumer price index growing above 3% is roughly at its historical norm,” wrote the BoC’s Governing Council—the body that makes the central bank’s interest rate decisions—in its announcement.

The BoC also pointed out that shelter inflation—the largest contributor to the CPI—is also starting to slow. This includes mortgage interest costs (MIC), which measures the amount of interest Canadians pay on their mortgages. As a result of the previous two rate cuts, MIC dropped to 21% from 22.3% in July. That’s great news. but it also reflects just how much mortgage costs have soared for Canadians since the start of the pandemic.

In addition to inflation, the BoC also stated that recently revealed second quarter gross domestic product (GDP) numbers indicate the economy slowed in June and July. This suggests further rate cuts are to come; in fact, it’s expected the BoC will dole out two more quarter-point cuts in its October and December announcements this year, bringing the Overnight Lending Rate to 3.75%—its lowest since December 2022.

The prognosis is also looking good for 2025, should economic trends continue as the BoC expects. And we could be in store for another four cuts, totalling 1%, by the end of next year, which would bring the benchmark rate to 2.75%. That would be a low not seen since September of 2022, when the BoC increased its rate from 2.5% straight to 3.75% as part of its aggressive hiking cycle.

What does the BoC rate announcement mean to you?

What does it mean for you, your home, your finances and more? Read on.

… if you’re a Canadian with a mortgage

Renewing or borrowing, this rate cut spells relief for Canadians.

The impact on variable-rate mortgages

Today’s rate cut is music to variable mortgage holders’ ears. Variable interest rates will lower to reflect the cut, and how borrowers will be impacted will depend on the type of variable mortgage they have. Those who hold adjustable-rate variable mortgages will see their monthly payment immediately lower, while those on a fixed payment schedule will see more of their payment going towards their principal mortgage balance.

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Penelope Graham

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September 4, 2024
Stay cool all summer with these home-cooling appliances you can get at low interest through Skyro!

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Whether you’re seeking a powerful AC to chill your space or a sleek fridge to keep beverages frosty, Skyro has you covered with flexible installment plans and irresistibly low-interest rates.

Summertime is when staying cool and fresh can either be a breeze or be quite a challenge. While some prefer beach parties and outdoor adventures to make the most out of this season, others find solace in the refreshing comfort of their homes.

Here, they can cherish quality moments with family and friends, whether it’s gathering for a movie night, sharing stories, or simply enjoying a peaceful and relaxed indoor environment.

If this is your ideal summer retreat, you’ll definitely love the selection of cooling appliances available through Skyro. Here’s a curated list of what’s in store for you!

Perfectly Chilled Drinks with Fujidenzo Chest Freezer

No summer is complete without refreshing beverages on hand. Make sure you’re always prepared with the Fujidenzo IFC-90GDF!

This HD inverter chest freezer serves dual functions as both a freezer and a chiller, adapting to your needs effortlessly. Its intuitive digital temperature control panel allows for precise temperature management, ensuring your food stays fresh and your drinks remain icy cold.

Ultimate Comfort with Samsung Air Conditioner

Combat the discomfort of hot and humid weather with the Samsung AR10BYHAMWKNTC.

This innovative split-type air conditioner transforms your warm environment into a cool oasis with its WindFree Cooling technology. Delivering air gently and evenly, it eliminates the discomfort of harsh cold drafts. Plus, its energy-efficient mode lets you enjoy cool comfort without the worry of high energy bills.

Spacious and Fresh Food Storage with LG Refrigerator

Indulge in refreshing, fruity delights this summer, but make sure you have the perfect place to store your ingredients. The LG GR-Y331SLZL Refrigerator offers just that and more!

Featuring LG’s Inverter Technology, this spacious refrigerator operates efficiently and quietly. Its Moist Balance Crisper™ vegetable drawer ensures the optimal moisture level for your produce, keeping them fresh for extended periods. With this appliance, your food and fun stay fresh and enjoyable.

Comfort and Savings Combined with Carrier Air Conditioner

Experience continuous coolness without breaking the bank with the Carrier WCARZ006EC.

This window-type, non-inverter air conditioner stands out for its remarkably low electricity consumption at only Php 2.15 per hour. Enjoy uninterrupted sleep with its 12-hour automatic off-timer, designed to turn off the AC while you rest deeply. Additionally, its multi-pore filter effectively removes dust and pollutants, ensuring excellent air quality every time.

Who says you have to go outside to have fun this season? Sit back, grab a drink, and put on your favorite movie because summer just got a lot cooler!

Visit the nearest Skyro partner stores to explore the range of available items that won’t break the bank. Locate these stores conveniently through an interactive map at www.skyro.ph.

Customers may also enjoy flexible payment terms of 6, 9, or 12 months at low interest in all Skyro partner stores nationwide.

Skyro is a fintech company duly licensed and supervised by the Securities and Exchange Commission (SEC). To learn more about digital financial products from Skyro, visit its official website www.skyro.ph. Follow its official Facebook and Instagram accounts to know more about its latest promos and offerings.

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Gadgets Magazine 17

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April 23, 2024
Benefits, fees, hidden perks: Choosing the right credit card for your lifestyle – MoneySense

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“They will do all the comparisons for you, across all the different providers, and you can organize a list based on: I prioritize Air Miles, I prioritize cash back, I prioritize low interest rates,” Marques said.

“They’ll compare all the providers with best in class in those categories, and show you their current rates, their current signup offers, et cetera.”

As for younger consumers, Marques said low interest rates aren’t typically a priority, assuming you aren’t already managing a lot of credit card debt and you’re not transferring a balance.

Instead, travel rewards and cash back from your favourite retailers are likely the biggest returns on your spending, she said. Options with no annual fees are also valuable for someone just starting out, although there will be fewer rewards.

Can you negotiate with credit card issuers?

When getting a new card, there isn’t much room for negotiation, Terrell said—what you see is what you get. If you want different or better perks, the provider will just point you to another card that offers them.

Negotiations come into play if you already have debt, Marques said, or are transferring debt between cards to take advantage of the lowest rate.

Using signup offers—such as zero interest for the first 12 months—with a balance transfer means you can get a break from interest and pay down your balance faster, she said. Or if you want to keep your current card, you can simply call your provider and move your balance to a lower-interest option.

“There is an opportunity to negotiate their interest rates or even negotiate on your annual fees,” Marques said. “I think a lot of consumers don’t realize that if you just call and ask … in a lot of cases, they will.”

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The Canadian Press

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March 5, 2024