My wife and I did a bit of time travel while visiting the United States recently.
At the conclusion of virtually every sit-down restaurant meal, we found ourselves back in the days when the server presented the bill in a black vinyl folder. If you’re under the age of 30, you may not have heard about this process. After receiving your bill, you offer your credit card to be taken away to produce a slip of paper where you tally up a tip and then add your signature. With a pen. As in, actual math and handwriting.
Canadian banking never looked so good as on our trip to two U.S. states, Colorado and New Mexico. Back at home, we typically pay for a restaurant meal using a mobile terminal that requires only that you choose a tip and then either tap your card or insert it and key in your PIN. Simple, clean and quick, even if the pre-set tip amounts sometimes come off as aggressive.
Tap-based payments were available on our trip at coffee places, fast food outlets and national store chains. But not always. A few times I asked for tap and was told, “we don’t have that.” In those cases, I had to pull a payment card out of my wallet and slide it through a magnetic reader on the counter. Very old school.
In Canada, banking is dominated by big players like the Big Six banks and electronic network providers like Interac and Moneris. Yes, a Moneris network outage recently affected credit and debit transactions in some parts of the country for a short while. But overall, we have a seamless, modern national payment system that increasingly works on the idea of simply tapping your card.
The U.S. banking system is fragmented into hundreds of small local and regional banks, along with a few larger names. On our trip, we noticed BMO is a big player with multiple branches and ATMs. A familiar name in a banking world still partly operating on 1990s rules.
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Rob’s personal finance reading list
Do RRSPs beat pensions?
I like this blog post because it addresses a phenomenon I’ve definitely noticed over the years – pension envy. There’s no question that a workplace pension provides some financial security in retirement, but registered retirement savings plans offer some benefits as well. In fact, RRSPs can be even better than pensions in some ways.
Costco cart etiquette
I have a lot of respect for Costco as a retailer, but stopped being a member years ago after getting stuck in a traffic jam trying to enter the parking lot of one particular Ottawa location years back. There was too much friction in being a Costco customer, including aisles crowded with carts heaped with stuff. All of this brings us to a list of etiquette points for managing your cart at Costco. Happy shopping, Costo clients.
When you’re the higher-earning spouse
An advice columnist tackles a question from someone who makes more than her husband, but doesn’t want to pay more than half of their bills. Lots of constructive ideas on how to proceed.
FHSAs for students
An argument that money students saved from a summer job should go into a first home savings account, or FHSA, instead of a tax-free savings account, or TFSA.
Q&A
Q: I’ve eagerly awaited opening a First Home Savings Account this year for both myself and my husband. However, with the fourth quarter approaching, I still have no word on when any of my existing financial institutions will have this offering available. I don’t want to open a new account elsewhere but also don’t want to miss the opportunity to contribute this year. Is there any assurance these institutions will provide the FHSA before the year’s end?
A: I’m amazed at the slow pace of FHSA launches in the financial world. I was looking at one online broker’s website the other day and the target launch for an FHSA was 2024. I expect all the big banks to have at least one FHSA option by year’s end, but I think it could actually take until next year for full availability. For now, look to EQ Bank, National Bank of Canada, Questrade, RBC Direct Investing and RBC InvestEase, Wealthsimple, TD Canada Trust, Bank of Nova Scotia. Here’s something I wrote recently on FHSA investing.
Do you have a question for me? Send it my way. Sorry I can't answer every one personally. Questions and answers are edited for length and clarity.
Tools, Explainers, Guides and Charts
A helpful overview of how the Canada Pension Plan works from an investment advisory firm. “The Canada Pension Plan is more than just a mandatory pension scheme. It is a robust system designed to provide a safety net for Canadians during their retirement years.”
The Money-Free Zone
When he died recently, Robbie Robertson left behind a lot of great music and an autobiography that I recently read and enjoyed a lot. It’s called Testimony and it’s one of the better books by a musician that I’ve come across. Bob Dylan’s Chronicles: Volume One and Patti Smith’s Just Kids are two favourites, and I also liked Keith Richards’ Life.
On social media
A handy comparison of the features of the new first home savings account and the long-established Home Buyers’ Plan.
What I’ve been working on
– A guide to starting CPP and OAS benefits when you retire – and yes, it’s on you to do that
– Prepare for five to 10 years of financial disruption from persistent high interest rates
– How much are you giving up in returns when you buy GICs from an online broker?
More Rob Carrick and money coverage
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Even more coverage from Rob Carrick:
- 🎧 Catch up on Stress Test: Why millennials and Gen Z are Alberta-bound for a more affordable life • Rising interest rates brought pain for new homeowners – and opportunity for house hunters • Why more Canadians are choosing to be childfree or delay parenthood • Love in the time of inflation: How to manage rising costs when dating • You're not bad at money – you're suffering from money shame • Retirement might look different for Gen Z and millennials. Here's how to plan for it • Recession-beating tips for the job market, housing, investing and the cost of life • Is the middle class dead for millennials and Gen Z?
- ✔️ The housing file: A house isn’t special. Get your head straight about the reality of home ownership • The good, the sad and the unaffordable: Saving for a home downpayment in Canada’s big cities • Property taxes are popping in some cities – how worried should you be about other tax hikes? • Our other real-estate problem – people have too much wealth tied up in houses • Borrowers and savers, here’s how to time the eventual rollback of interest rates
- 📈 Investing: Canada's top digital broker is TD Direct Investing, with an assist from the TD Easy Trade app • 2023 Globe and Mail ETF buyer's guide part one: Canadian equity ETFs • For the ultimate in cheap investing, check out the Freedom .08 ETF Portfolio • Yes, there is risk in Canadian bank deposits for the unwary and complacent • CDIC covers bank deposits, but who protects your investments if your broker goes bust? • Answers to your questions about the low-risk ETF paying almost 5% • Happy fifth birthday to one of the all-time best investing products for everyday people • An investing strategy that wins cleanly over the long term by outperforming in bad years like 2022
- 💰 Your money: Mortgage holders, savers and GIC investors, it’s time to change your thinking on interest rates • How much debt is each generation of Canadians carrying, and how do you compare? • For the sake of their financial futures, young people should leave Toronto and Vancouver • This practical new spin on a savings account might just peel you away from your big bank • Rental fraud grows amid rise in fake, falsified tenant applications • Are Canadians worse off financially now than in the 1980s? • From groceries to auto loans, here’s how much more it costs to live right now • When saving for retirement, should you change your asset mix over the course of your career? • Do retirement income needs always rise alongside inflation? Not necessarily • When the bank suggests you lock in your variable rate mortgage, it has an angle
Rob Carrick