Zero Percent Balance Credit Cards

Credit has been used to make purchases for centuries, however it wasn’t until the  the 1970’s that the charge cards we know today became available and popular among the public sector.  At that time, consumers were charged an annual fee for the privilege of having credit.  In addition to paying an annual fee, most lenders offered a standard interest rate in the high teens for everyone regardless of credit worthiness.  Over the years we have seen many changes within the industry with more on the way in upcoming months.  One of those changes involves the introduction of zero percent interest credit cards.  Here we will learn more about the zero percent credit card.

What Are Zero Percent Balance Credit Cards?

Credit cards are a multi-billion dollar per year industry for the banks that issue credit to consumers.  Banks make their money on the interest they charge to consumer who use credit.  As the credit card industry became more competitive, many banks began introducing zero percent credit cards to lure consumers from credit cards that charge a higher interest rate.  The strategy works well and many consumers can benefit from using zero percent interest credit cards properly.  Most zero percent balance credit cards are issued for a temporary period that expires within a few months.  Once the introductory period has expired, the terms and conditions of the credit card will change based on the original contract.

How Can Zero Percent Balance Credit Cards Be Used?

Most consumers find zero percent credit cards tempting in that they have an opportunity to either transfer higher interest balances to a new card with no interest or make new purchases without having to pay interest during the introductory period.  When used correctly, zero percent credit cards can be a great tool to reduce your debt or purchase a big ticket item without paying high interest fees in the first few months after the purchase.

The Dangers Of Zero Percent Balance Credit Cards.

As many consumers already know, the credit card industry is undergoing many changes as a result of new rules and regulations.  The number of credit cards offering zero percent interest has dropped considerably in the past two years, however there are still offers available for those with excellent credit.  It is important for consumers considering zero percent credit cards to carefully read the terms of the credit card contract before applying.  While there are many benefits to using a zero percent interest credit card, there are not without negative consequences.  The biggest danger of zero percent credit cards is dealing with the higher interest rate once the introductory period has expired.  Consumers who make purchases and fail to pay off the balance during the introductory period often face a much higher interest rate for the remainder of their contract.  The same theory applies to those who transfer a large balance from a higher interest credit card.  Unless you are certain you can pay off the balance of your card, either purchases or transferred balances, you may end up paying more after balance transfer fees and future interest is applied.

Zero percent credit cards can offer consumers a great way to save money if used properly.  As with all credit card contracts, it is important to read and understand the terms and conditions before using any new credit card.


Some Hurried Links

Find out the best high yield savings account.
Wealth and Socioeconomic Class | Million Dollar Journey
How do you say “bubble” in Chinese? | Canadian Capitalist
Discretionary Investment Management :
Time Management Tips
Intelligent Speculator | Top Stock Picks: Dividend ETF’s
Michael James on Money: Misalignment of Interests on Wall Street
The Bad Credit Remortgage
A Short Guide to Retirement Plan Terminology
TurboTax – Prepare Taxes Online – Free eFile
PocketSmith Personal Finance Software Review


Carnival of Personal Finance
Economy and your finances carnival March 28th 2010


Reward Credit Cards

Credit card companies understand that everyone likes to be receive rewards.  They have created hugely popular rewards programs that offer incentives for consumers to remain loyal to one credit card.  This concept is not new and was first introduced to consumers in other industries as early as the late 1800’s.  Today loyalty or reward programs are offered by credit card companies, airline industries and grocery store chains across the nation.

What Are Reward Credit Cards?

The first rewards program offered by a credit card was introduced by AT&T which provided cash back on purchases that could be used toward the account holder’s phone bill.  In the late 1980’s Discover got on board when they rolled out their cash back program which made it possible for card holders to receive money at the end of the year based on the total amount of purchases charged that year.  Today there are hundreds of credit cards offering rewards programs to encourage consumers to use their card exclusively.  The rewards programs are as varied as the consumer who use them.  The rewards can range from cash back, airline miles and credit toward merchandise or meals at restaurants.  In most cases consumers receive rewards based on where they use their card and how much money is charged for purchases.

How To Use Reward Credit Cards.

Before applying for a rewards program, it is important to first find out how the program fits in with your current spending habits.  Choose a card that best reflects your habits as well as one that offers rewards you can actually use.  Consumers benefit most from programs that reward them for purchases they would routinely make regardless of whether or not they had the rewards card.  After you determine which program best suits your current needs, you simply use your card as you would normally and watch your rewards grow.

The Downside Of Reward Credit Cards.

While it is true that rewards programs are extremely popular among consumers who benefit from the programs, they are not for everyone.  In fact, using a rewards credit card can end up costing some people more money in the long run.  Credit cards which offer lucrative rewards programs often come with higher interest rates than credit cards without a rewards program. This make is an unwise choice for consumers who do not routinely pay off their balance each month.  A small percentage of rewards cards charge an annual fee which may reduce the overall “reward” of using that particular card.  In addition to annual fees and higher interest rates, many rewards programs can be confusing at best.  If you are not organized and willing to track your purchases and pay attention to how and when your rewards are available you may find you are unable to claim your rewards before they expire.

Generally speaking, reward credit cards are a great tool when used properly and by those who qualify for the program.  Consumers who lack the ability or discipline to manage their credit cards responsibly will not reap the rewards of most programs regardless of how much money they spend.  To get the most from your rewards card, you must fully understand how the program works, how you build rewards and the proper procedure to claim your rewards.  To find the best reward credit card, shop around and carefully compare each program to find the one that best reflects your needs.


CPP Contribution Limits For 2011 And How They Are Calculated

Just a heads up that the maximum contribution limits for the Canada pension plan (CPP) have new values for 2011.

CPP maximum pensionable earning and maximum contribution amount

In 2011 the maximum pensionable earnings will be increasing to $48,300 (up from $47,200).  What this amount means is that you will contribute to the CPP based on a percentage of your earnings up to $48,300.  Any money earned over $48,300 will not have any CPP deduction applied to it.

The basic exemption amount is $3500 which means that you only make CPP contributions based as a percentage on any income above $3500.

The percentage charged for CPP contributions will be 4.95% for employees and their employers (they both pay 4.95%).
This 4.95% applies to any income earned above $3500 and below $48,300.

The maximum for the year will be $2,217.60 which will apply to anyone making $48,300 or more.  This amount is 4.95% of ($48,300 –  $3500).

Self-employed persons have to pay both the employee and employer contributions so their CPP rate will be 9.9% and the maximum contribution for someone earning $48,300 or more will be $4,435.20.

Here are the EI premiums for 2011.


Canadian Employment Insurance (EI) Premiums For 2011

The EI premiums have gone up for 2011 (no surprise) so I thought it would be a good idea to go over the new amounts.  Here are the 2007 EI premiums if you want to compare.

First of all the maximum insurable annual earnings has gone up from $43,200 to $44,200 which means that for someone earning more than $43,200  – a larger part of your income will be covered by employment insurance.

The way it works is that for any income up to $44,200 you are charged a premium which is 1.78% of your applicable earnings up to the maximum insurable amount.

The maximum amount of EI premiums for 2011 is $786.76  ($587.52 for Quebec).

This premium is not pro-rated throughout the year so even if you make $90k a year – the EI calculation will be applied to your entire pay cheque starting in January even though this means you will reach the maximum limit before the year is half over.

If you change jobs then the EI contributions start all over again for that year so you will probably end up over contributing.  You will get this over payment back at tax filing time.

The maximum weekly EI payment will be $468 per week.

Here are the 2011 CPP contribution limits.


TurboTax Review – Get Some Help With Your Taxes Preparation

TurboTax is a popular software program that allows users to easily fill out their tax return forms. There are a variety of versions of the program available, each offering options to suit the needs of specific users. Each version is consumer friendly and walks you through the forms you need to fill out, step by step. Once you have completed your return TurboTax users can e-file their federal tax return for free.

Here is a more complete review of TurboTax.

TurboTax encourages e-filing for a variety of reasons. E-filing your tax return versus paper filing has its benefits. First, there is a much less chance of error over paper filing. Once you have filed your return you will receive a confirmation that it was received. You won’t need to worry if your return got lost in the mail. Finally, you will receive your refund quickly, in as soon as eight days after filing.

If you are ready to get started in your tax preparation with TurboTax, but are unsure of which version will be best for you, here is a look at the different options and what they offer.

TurboTax Basic

The Basic program is easy to use walking you through each step. It is recommended if you are filing and easy return, one with no deductions. All forms that are needed are included and the program checks for accuracy.

TurboTax Deluxe

The Deluxe version offers all the same benefits as the basic. It also helps you find all of the deductions and credits you are entitled to. It asks you questions along the way to be certain that you have not missed anything. The program works to ensure you get the maximum refund you are entitled to. The Deluxe version is also set up to help reduce the risk of being audited.

TurboTax Premier

The premier addition offers users all the benefits of the basic and deluxe. In addition this version provides users with guidance on their investments and is recommended especially for those consumers who own stocks, bonds and mutual funds. Another great feature of this program is the guidance it offers to those users who have investment or rental property.

TurboTax Home and Business

This version offers all the great benefits already listed in the other versions with additional guidance to those who are sole proprietors, contractors, consultants or single owner LLC.

TurboTax Business

TurboTax business is tax software for corporations, partnerships and multiple owner LLC’s. This version walks business owners through the forms they will need to fill out to get the best tax savings. With this version up to five federal tax returns are included for free e-filing.

As already mentioned, all TurboTax versions come with free federal e-filing. Free State filing is also included when you purchase on line federal and state TurboTax products. With each on-line version purchase you can file up to three state returns for no additional cost. If you choose to purchase the TurboTax CD or a down loadable version of the program your state return will be just $19.95 for the first three state returns.  Here is a discussion of the differences between the online version vs desktop version of tax software.

More resources

How to organize your tax paperwork

How to file your federal tax online for free


How Many Years Should You Keep Tax Paperwork

A common questions asked by taxpayers is how many years tax records must be kept. The answer to this question is not cut and dry and varies depending on the documents in question. The general consensus is that seven years is a safe bet however the actual amount of time required by law may be fewer than seven years and in some cases longer. Here we look more closely at the length of time tax records should be saved.

If you thinking about buying tax preparation software then consider software programs such as TurboTax or TurboTax Canada (formerly QuickTax).

According the the Internal Revenue Service (IRS) the specific length of time depends on the period of limitations for the particular return. The period of limitations is defined as the length of time that you are allowed to amend your tax return or the amount of time the IRS can audit your return. As a general rule the period of limitations begin on the day your taxes were filed, unless you filed your taxes early at which point the period of limitations would begin on the due date. The IRS recommends keeping tax records not just for legal reasons but also to help prepare future returns or when filing an amended return.

This information is critical to filling out your tax return.  Especially if you are using tax software such as TurboTax.

The following time table will help you determine how many years tax records must be kept:

Three years– Anyone owing additional taxes must keep their records for three years. If you have filed a claim for a credit or tax refund after you have filed your return you must keep records for three years from the date you filed your return or the date you paid taxes.

Four years– Employment tax records must be kept for a minimum of four years from the date the tax was due or paid.

Six years- If you have filed a tax return the did not include reportable income (more than 25% of the gross income reported) you must keep your tax records for six years.

Seven years– When a claim has been filed for a loss from securities or bad debt, all records must be kept for seven years.

Indefinitely– If you have not filed a tax return or file a fraudulent return, you must keep all records for that period of time indefinitely.

In addition to the guidelines listed here for tax returns, the IRS also recommends that you consider whether or not tax records are connected to assets or non tax purposes which may require you keep them for a longer period of time. Tax returns and associated documents may be needed to determine depreciation, amortization or depletion deductions when the time comes to sell property.

There are other situations which may require a taxpayer to retain tax returns and other documents beyond the period of limitations set by the IRS. Insurance companies and creditors in some cases require tax return records past the standard period of limitations. To avoid disposing crucial tax documents you may want to consider your own maximum period of limitations to ensure you are not destroying records that may be needed at some point down the road. It is also important to remember that the IRS destroys your original tax return three years after the maximum period of limitations, making it even more important to ensure you will not need any information associated with a tax return before destroying the documents.

More resources

Federal taxes free online filing

Popular tax software – TurboTax review


What Happens If You Lose Your W2 Form?

During tax season, there is a lot of hustle to make sure you have the right documents, forms, and information that will allow you to file taxes in a timely manner. Taxpayers must often wait to receive this information in the mail before proceeding to their tax preparation office or preparing their own files using tax software. One document vital to the tax filings is the W2 form which employers provide to their employees to prove wage earnings and tax statements for individual returns. The employers are required by law to send out the W2 forms before the end of January. Many times the forms can arrive late or not at all. It may also be a possibility that your W2’s were received fine but subsequently lost before filing taxes.  The information on your W2 form is key to completing your tax return especially if you are using tax software such as TurboTax.

Get a New W2

Since time is of the essence and taxes must be filed before the April deadline, it is important that you make the effort immediately to have a new W2 sent to you. You can start by contacting your current or past employer who would have issued the W2 from. Explain your W2 was never received or accidentally lost and request that a new one be mailed to you. Many times as people move, their tax documents will not be forwarded correctly so be sure your employer has your correct mailing address.

If you are unable to contact your employer, which may be the case with previous employers or closed businesses, you can contact the IRS directly. You will need to provide the representative with your employment information, current mailing address, and an estimate of how much money you earned for the tax year. The IRS will be able to guide you based on the information they have received from your employer.

Filing Taxes Without Your W2

If the deadline is approaching, you should still file your tax return on time without the W2. You can complete Form 4852, which is a substitute for the W2 form. You can use past pay stubs to help guesstimate how much money you earned as well as the amount of taxes withheld for the tax year. After you have filed your tax return and you receive a copy of the lost W2, you must amend your federal return as soon as possible.

It can be very easy to lose or misplace an important tax document such as the W2. At the start of each year, you can prevent this from occurring again by establishing a file folder and placing all relevant tax documents, receipts, and paperwork into it for the rest of the year to make tax filing easier. You should also remember to create a list of people and places to contact should you move to a new address within the course of a year. Include on this list current and former employers so you’ll remember to advise them of the changes before tax time rolls around again.  Keeping your tax paperwork organized can make your life a lot easier around tax time.

More resources

2009 Income tax changes

Check out a comprehensive review of all the editions of TurboTax tax software.