Pattie Lovett-Reid: Macklem's low-rate signal not a green light to take on more debt
Consumer debt loads drop for first time in a decade
In March, consumer debt levels dropped sharply for the first time in more than a decade, according to data from Equifax Canada released Tuesday. Average debt balances fell by 0.5 per cent in the first quarter from a year earlier, a result of Canadians cutting back on credit card spending amid COVID-19-related retail closures across the country.
Federal government extending CERB by eight weeks
The federal government’s signature benefit for people who have lost income during the pandemic will be extended by eight weeks, Prime Minister Justin Trudeau announced Tuesday. The Canada Emergency Response Benefit (CERB), which pays recipients $500 a week for a maximum of 16 weeks, has been a financial lifeline for many Canadians. But it’s also been plagued by suspected fraud. The program, which carries a budget of $60 billion, has paid out $43.5 billion in aid as of June 4. The parliamentary budget officer estimated in a report last week that extending the program through to January 2021 would cost an additional $57.9 billion.
Bank of Canada’s new governor in no rush to raise rates
Tiff Macklem, the Bank of Canada’s new governor, said Tuesday the central bank has no intention of raising interest rates in the foreseeable future. In his first public remarks before the House of Commons finance committee, Macklem said rates will only go up once the country is well into an economic recovery. Low rates, he said, will help decrease the debt-servicing costs for households and businesses. While he expressed confidence “the economy will be recovered,” he warned “it’s going be a long way out of this hole.” Earlier this month the Bank of Canada dropped its key interest rate to 0.25 per cent, which it said is as low as it can go.
Stop-losses can help investors manage risk in uncertain times
A spike in lockdown-related retail trading activity has helped fuel the recent market rally, but it has also increased the risk factor by a few notches. One way to manage that risk is through stop-losses: an order an investor can place to buy or sell a stock when it reaches a certain price. As Personal Finance Columnist Dale Jackson explains, a stop-loss provides do-it-yourself investors the ability to pre-program their entry and exit strategies to avoid big losses or protect a potential profit when stocks run up.
Should you invest your COVID-19 aid payments?
With the Canada Emergency Response Benefit (CERB) being extended, some are left wondering whether it’s wise to invest the payments they receive from the government into markets. CTV’s Chief Financial Commentator Pattie Lovett-Reid advises against it. “Those collecting a government aid by way of benefits presumably need that money to get by, and the intended purpose was never for short-term trading,” she says, adding putting the money toward debt repayment would be a better way for Canadians to build their balance sheets.
Moving back in with the family during COVID-19 may not save you money
As social-distancing orders continue in cities across Canada and a growing number of companies shift toward remote work models, many millennials are left weighing their options about moving back home with their families. Audrey Carleton of The Canadian Press outlines why some Canadians are not saving money making this move.
Financial aid for workers in the travel industry: Ask BNN Bloomberg
With COVID-19 restrictions, many workers in the travel industry have seen either a reduction in hours or temporary layoffs. Charles in Winnipeg says he has experienced reduced hours and income, but he does not qualify for CERB because he still earns more than the threshold set by the government. Meanwhile, his bills haven't changed. Charles asks if there's any additional support for travel workers in his position. Jordan Damiani of Meridian Credit Union outlines the different programs available for his situation.
"Borrowing can make all kinds of sense if you borrow to go back to school, start a business, or buy a home. But when it comes to borrowing for the sake of enhancing a lifestyle you can't afford, it’s a recipe for disaster." —Pattie Lovett-Reid in her column on money lessons learned during the pandemic
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