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Donít use your house as an ATM
by FCNB on 

Donít use your house as an ATM

Home ownership is often seen as an opportunity to build equity at the same time as having a roof over your head. But with loans such as the Home Equity Line of Credit (HELOC), it can be tempting to use your home like an ATM - even if it's not the wisest choice for you and your family. Today in her guest post Lucie Tedesco, Commissioner of the Financial Consumer Agency of Canada, describes how mortgages have changed, how HELOCs work, and how you can use them wisely. You can watch the related HELOC video here.

If youíre like millions of Canadians, youíre busy paying down your mortgage. It could take 25 years or so, but it can be a great way to accumulate personal wealth, especially if house prices rise. However, with changes to mortgages in recent years, itís important to understand just how they are different if you want to fully benefit from your homeís potential to build your personal wealth over the long term, rather than your debt.

Today, to finance your house most banks will offer you a readvanceable mortgage if you have a down payment of 20 per cent or more. It combines a traditional mortgage with a home equity line of credit (HELOC). Thereís a big difference between these two forms of debt.

First, your mortgage debt only goes one way ó down ó because you must make regular payments against both the interest and the principal borrowed. This increases the equity you have in your home, meaning the difference between what you still owe and the value of your home.

But as you pay down your mortgage, a HELOC lets you borrow against your growing equity as part of your mortgage. Unlike your mortgage, you only have to make regular payments against the interest. You can ignore the principal until you sell the house. This short-term credit advantage can mean a long-term debt problem.

With flexible repayment terms, low interest rates and a credit limit that rises with your equity, a HELOC can be used to pay off other, higher-interest debt or home renovations.

But would a HELOC tempt you to use your home like an ATM? Mounting HELOC debt could put you at increased risk if you lose your job, get sick or injured, interest rates go up or your home decreases in value. If it consumes too much of your equity, you might end up owing more than your home is worth, lose your home or have to sell it to pay down your debt.

To use this borrowing tool wisely, stick to a plan to pay it off fully and avoid continually borrowing against your home equity.

Learn more online at

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Payday Loans in New Brunswick: What You Need to Know
by FCNB on 

Payday Loans in New Brunswick: What You Need to Know

When you are low on cash or faced with a surprise expense, payday loans might seem like the way out. But, did you know that payday loans are one of the most expensive ways to borrow? By a long shot!

Payday Loan vs. Credit Card Cash Advance

Which do you think costs more: a payday loan or a cash advance on your credit card?

Letís take a look...

Loan amount: $300

Term: 14 days

Payday loan: A payday lender can charge you $15 for every $100 you borrow. So a $300 payday loan will cost you $45. At the end of the 14 days, you must pay back $300 plus the $45 fee. TOTAL: $345

Credit Card: The annual percentage rate (APR) for this example is 23 per cent.  At the end of the 14 days, you would pay $300 plus $2.65 in interest for the cash advance. TOTAL: $302.65

The payday loan costs $42.35 more. Thatís money that could stay in your pocket!

A report by the Financial Consumer Agency of Canada, however, found the use of payday loans has more than doubled in Canada recently. Disturbingly, it also found less than half of consumers understood that payday loans cost them more money than other borrowing options Ė like credit cards, banks or credit unions.

How payday loans work.

They are usually small, short-term, high-interest loans that are meant to get you through until your next paycheque. Typically, you write a personal cheque to the lender or give permission for them to automatically withdraw the loan amount and fee from your bank account on your next payday.

On your next payday, the lender cashes the cheque you wrote them, or makes the withdrawal electronically from your bank account. If you do not pay your loan back in full and on time, you may face additional fees Ė including penalties and NSF (non-sufficient-funds) charges.

New Brunswick introduced new rules for the payday loan industry on 1 January. Payday lenders in New Brunswick must be licensed by FCNB. You can check their registration by contacting FCNB.

The new rules also give consumers more rights, better disclosure and stronger protection.

Top 10 things you need to know about payday loans in New Brunswick:
  1. The most you can be charged is $15 per $100 you borrow. This includes all charges and fees - no matter what.  Learn more about how much payday loans cost.
  2. You can cancel the payday loan within 48 hours, without paying any charges. Learn more about cancelling a payday loan.
  3. You donít have to get insurance on the loan.  It's okay to tell the payday lender that you don't want it.
  4. Payday loans are expensive.  Before getting a payday loan, check out other ways to borrow money (from family or friends, a bank or credit union or your credit card). Learn more about alternatives to payday loans 
  5. Payday lenders must have posters showing the rates they charge.
  6. The loan agreement must list all of the charges, terms and conditions of the loan. Learn more about payday loan agreements
  7. Payday lenders can't issue you more than one loan at the same time. They also canít rollover your loan.  This means that they canít extend or renew your loan at an additional cost or give you a new loan to pay out an old loan.
  8. Payday lenders can't give you a loan for more than 30% of your net pay cheque. Learn more about getting a payday loan.
  9. The most you can be charged in penalty fees for not paying off your loan in full and on time is 2.5 per cent per month on the loan amount. The most you can be charged is $20 for each NSF charge, and the payday lender can only attempt to withdraw the amount from your bank account once more after the first NSF charge.
  10. NEVER give a payday lender direct access to your bank account. Do not give your bank card PIN or your online password. Learn more about Protecting your Credit.

Taking out a payday loan when you are in a hard financial situation is risky.  You may be less able to pay it back and fall into a debt trap.

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Charitable Giving
by FCNB on 

Charitable Giving
The holiday season is a time of giving to family and friends. For many New Brunswickers it is also a time to give to the less fortunate through charities or non-profit organizations. Not only are you improving the quality of life of others, charitable giving can help improve your own quality of life. Studies have shown that the act of giving can increase the psychological wellbeing, self-esteem or social status and reputation of donors.
Here are some things to consider before making a charitable donation:

Make sure it is a registered charity
It is great that youíve decided to donate your money to help a cause you are passionate about and that is dear to your heart. Before you donate your hard earned money, make sure that the charity you have chosen to donate to is a registered charity with the Canada Revenue Agency (CRA). It is quick and easy to check the CRAís database to ensure you are dealing with a charity that offers official donation receipts. Registration with CRA does not speak to an organizationís credibility, so itís important to do your research before donating money.

Be careful of scams
When making a donation to charity, you are donating your money to help a specific cause or organization that is meaningful to you. You will want to make sure your money is actually going to the intended organization and the intended cause. There are approximately 82,000 registered charities in Canada making it very difficult to choose which one to donate your money to. With so many options it can be overwhelming with deciding where you want your money to go.

Scam artists often will target and profit on peopleís generosity.  Be cautious of appeals that tug on your heart strings, especially when it involves current events. 

If you are contacted by telephone asking for a donation, do not give out your personal or banking information. Donít hesitate to ask questions such as if they are registered with the CRA and their identification. If the solicitor refuses to tell you or does not have verifiable identification, hang up and report it to law enforcement officials.

For more guidance on how to avoid charity scams, check out the RCMPís tips on how to watch out for charity scams.

Tax receipts
To encourage charitable giving by taxpayers, the New Brunswick government provides income tax credits or it will match the amount donated by individuals in certain cases.  Registered charities under the Income Tax act can give an official donation receipt. You can file this receipt with your Income Tax Benefit Return to reduce the income tax that you owe.

Unfortunately, some charitable donation programs promise major tax savings by offering a charitable donation tax receipt for more than the person actually donated. Reputable and registered charities cannot and will not issue tax receipts for more than the value of your donation. If they do, they can lose their registered charity status with the Canada Revenue Agency (CRA) and will be ineligible to issue receipts for tax purposes.

Right to Information
Before making a donation, you have the right to know where your money is going and what it is being spent on, such as how much goes to administrative costs. Be sure to ask about this before you make a donation. You have the right to be informed of the organizationís mission and of the way the organization intends to use the donated money.

The holiday season is seen as a time for giving, not only to your friends and family but to others who may not be able to enjoy the season due to specific circumstances. Charitable giving is a great way to give back to the community and spread the holiday spirit. Use these tips to help you spend smart and spend safe this holiday season.

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Last minute holiday shopping-returns & smart shopping tips
by FCNB on 

How to Be a Savvy Holiday ShopperÖ even If you waited Ďtill the last minute

The snow is falling and coffee shops are serving up delicious eggnog flavored treats. All seems right in the world until you realize that your holiday shopping isnít done and Christmas is almost here! Before you run out to the stores check out our tips on how to be a savvy holiday shopper.  You (and your bank account) will thank us after the excitement of the holiday season dies down and you donít gasp in horror when you open your credit card statement.

Tip #1: Make a list and check it twice. Santa does it and so should you!
Start by setting a budget for your holiday spending. We all like to give as much as we can during the holidays but you donít have to blow your budget and max out your credit cards to show your loved ones that you care. You will regret it come January when the bills start to roll in. Next, make a list of everyone you want to buy a gift for and set aside part of your holiday budget for each person on your list. This will help you brainstorm gift ideas within your price range.

Tip#2: Think twice before you use credit
If you are considering a purchase that doesnít fit in your holiday budget ask yourself if you truly need it before paying with credit. Does your adorable niece really need another Barbie or will the 3 others you already bought and gift wrapped be enough? Do you absolutely have to buy yourself another party dress or will the little black dress you have only wore twice look just as great?  Give yourself a cooling off period.  Go home and consider the purchase.  If you do choose to pay with credit, make sure you can afford the payments and have a plan for paying off the balance.  Interest can quickly drive the price up if you donít pay off your statement and all of a sudden that great sale can end up costing you a lot more in the long run.  Read our guest blog post on ďHoliday credit triageĒ for more tips on getting through the holidays debt free.

Tip #3: Do your homework
Research products before you buy. I know I know Christmas is right around the corner, but you still have time to compare prices, after sale services and warranties. This is especially important when buying big ticket items. You may also want to check out Health Canadaís Consumer Product Safety website for product recalls, warning and advisories to make sure the gift you are giving is safe.

Tip #4: Always check a retailerís return and exchange policies BEFORE you buy.
Contrary to popular belief, you do not always have the right to return or exchange any product or cancel a service contract within 30 days of purchase. In fact, retailers have the right to set their own return and exchange policies. If the retailer does have a return policy it is up to them if they will provide you with a cash refund, an exchange on goods  or a credit slip.  Asking before you buy will save you time and money after the thrill of the holiday season has died down.  For more information on understanding warranties, check out our ďAsk Before You BuyĒ tip sheet!

Tip #5: Know your rights when buying gift cards
People love gift cards. I mean, who doesnít want free money to spend at their favorite store? This great gift idea will save you the headache of trying to figure out the sweater size of your significant otherís best friendís nephew but can be a disappointment if the card has expired or has been eaten away by service fees by the time he gets around to using it.

Within New Brunswick service fees are restricted and expiry dates are prohibited with some exceptions. For more information on your rights when buying gift cards check out our Gift Cards info sheet!

Tip #6: Keep your receipts
Always keep your receipts, warranties and service contracts. You may need these to make a claim if something goes wrong or to return a product if you change your mind. It is also a good idea to ask for a gift receipt! Many stores offer gift receipts around the holidays which allow you to extend the return/cancellation period on the items you bought, making exchanges and returns much easier.

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Holiday Crash Crunch
by FCNB on 

Holiday Crash Crunch

The holidays are fast approaching!  Does the countdown to December 25th make you (or rather, your bank balance) cower in fear?  Youíre not alone!  Many of us fall prey to over-spending during the holidays.  In fact, in 2014, 28% of Canadians went into debt (on average $963) due to holiday spending[1].

While the holidays can be a lot of fun, who wants to spend the next 12 months paying them off?!  In an effort to help you stay as debt-free as possible this holiday season, weíve polled our fellow FCNB-ers and have created a series all about holiday spending.  Youíll find tips to stay on budget without missing out and to protect yourself, and more!

What do the holidays mean to you?  When I think of what I love most about the holidays I immediately think of made for TV holiday movies (the cheesier the better),  hot chocolate , cozying up on the couch with someone I love and sharing a meal with family and friends. Those things donít have to cost a lot. So why do we spend hundreds or thousands of dollars on gifts when enjoying time with the people we love is most important?

This holiday season give yourself - and your bank account - the gift of a holiday budget! A budget can make this time of year even more magical by helping us focus on whatís important and avoid the stress of credit card bills and low bank balances.

Download our Holiday Budget template and follow these tips to stay on budget this holiday season!

Ditch your credit cards: Instead of buying gifts on credit, spend only what you can afford from your holiday savings and household budget, after your regular expenses (including savings) have been taken care of.

Plan ahead: Donít wait until the last minute. Desperation and panic can lead to poor gift choices and overspending.

Donít be afraid to cut back on gift giving: You (and your budget) can breathe easier - receiving expensive gifts doesnít make us happier; in fact, one study found that receiving expensive gifts actually has a negative effect on our holiday happiness. Make cutting back fun! Download our ď4 Gifts of Christmas templateĒ. Let your kids choose something they want, something they need, something to wear, and something to read.

Donít forget all the little extras: Gifts arenít the only extra expense that the holiday season brings. Make sure your holiday budget also includes:

  • Travel: Whether you are travelling by plane, train or automobile, donít forget to include extra travel costs in your budget. Even if you arenít venturing far over the holidays be sure to include extra gas money in your budget to account for trips to the mall and visiting family and friends. 
  • Food & Entertainment: Many of us underestimate the amount we spend on food and entertainment over the holidays. Are you hosting a family dinner? Have a holiday party or two to attend? The cost of groceries, hostess gifts, restaurant bills and gifts for your office gift exchange can quickly add up.
  • Donations: Do you have a favorite charity of two that you give to over the holidays? Check our post on charitable giving for tips on avoiding charity scams.
  • Decorations: Do you buy a freshly cut tree every year or need to replace your artificial tree? Do you buy a new ornament every year to mark the season? Are you planning on buying your pets some fancy new holiday apparel?
  • Miscellaneous: Every year I am surprised at how much I spend on wrapping paper, ribbons, tape, gift boxes and bags, cards, and shipping fees! Make sure these expenses are part of your holiday budget!  You could even consider alternatives to traditional holiday wrapping that ends up in the trash can.  Try making your own by decorating craft paper and using reusable ribbon or a little bit of holiday greenery!


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