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I’m giving Canada’s banks a B+ grade for their handling of customers during what we’ll call Phase One of the pandemic.
The banks made it clear early on in the pandemic that they were going to work with customers and not against them. Most importantly, banks announced from the get-go that they would allow clients to defer mortgage and other debt payments. Thus we were spared the agony of people thrown out of work and forced to decide between groceries and the mortgage.
A Carrick On Money poll shows the banks have done a good job overall of maintaining customer satisfaction levels through the past five months. More than two-thirds of poll respondents rated their bank’s compassion and responsiveness as outstanding or good enough, and 80 per cent said their feelings of loyalty toward their bank were stronger or the same.
Unfortunately, things will get harder for the banks as we move out the first leg of the pandemic into Phase Two. That’s when we come to the end of those mortgage and debt deferrals, as well as the Canada Emergency Response Benefit. CERB, offering $500 per week, will be phased out in the weeks to come. The mortgage deferrals were for up to six months, which means they’ll soon start expiring.
With CERB set to end, Trudeau says Ottawa will create EI-like benefit for gig, contract workers
Banks extend deadline to apply for loan deferrals
The strength of the housing market, the stock market and overall consumer spending attest to the fact that some Canadians are doing fine. The financial pain caused by the pandemic is focused on younger and lower-income households – these are the people the banks will be talking to in the months ahead about debt repayment.
Bankers are always balancing the needs of customers against the wants of shareholders for higher profits and dividends. Expect this to be a fair bit harder for the banks in Phase Two of the pandemic.
Eight charts that explain Canada’s job devastation – and the long road to recovery
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Rob’s personal finance reading list
Break your mortgage?
Falling mortgage rates raise a question – is it worth paying a penalty to break your existing mortgage to set up a new one with a lower cost of borrowing? Some thoughts here on whether you might benefit, including a trick for reducing your penalty. Here are some important things to know about using the federal Home Buyers’ Plan, where you use money in a registered retirement savings plan for your down payment.
Studying KiddieNomics
Every Friday, Stacy Brown and her nine-year-old daughter Miki run a personal finance webinar for kids on Zoom called KiddieNomics. Along with guest experts, they’ve covered topics that include investing, stocks and credit, as well as resume writing and public speaking. Ms. Brown, who has worked in banking and holds a mortgage broker’s licence, said the sessions are targeted at children aged 8 to 13. Are kids that age able to absorb lessons about money? “They’re already learning about finance from [parents] through osmosis,” Ms. Brown said. “They watch how we handle money.” Between 20 and 40 kids watch per week and 207 in total are registered. Viewers are located in India and Brazil, all over America and Canada and in the Caribbean, and it’s not just kids watching. “The inter-generational learning that happens on the platform is phenomenal to see,” Ms. Brown said. “I have grandparents that watch it with their grandkids.” Ms. Brown is also the author of a children’s book about saving and investing called I Will Own A Castle.
Best bank accounts for kids
Some good work done here to compare features and fees on accounts for kids at a wide variety of banks. All have no monthly fees, but here’s an interesting mix of policies on how many transactions can be done without incurring extra cost.
Your electricity bills are higher this year, right?
Spending more time at home means we’re using more electricity. One small way to contain your costs is to stick some water bottles in your freezer to help it work more efficiently. Also, you’ve got ready-made freezer packs for your cooler.
Ask Rob
Q: My 16-year-old son’s grandparents are giving him $5,000 meant to go toward a house purchase one day. We are opening an in-trust account with our adviser. I am just wondering how we should invest it, given the long timeline?
A: I’m sure your adviser will have a view on this. On the assumption that your son won’t be buying a housing for 10 years or more, my suggestion is a balanced exchange traded fund with an aggressive mix of stocks and bonds, maybe 80 per cent stocks and 20 per cent bonds. Something to keep in mind is that your son can have his own tax-free savings account once he turns 18.
Send us your money questions. Globe and Mail personal finance editor Roma Luciw will tackle questions about money and parenting, and I’ll tackle the rest. Sorry we can’t answer every one personally. Questions and answers are edited for length and clarity.
Video of the week
How good is your credit score? How can you improve your score? All that and more is covered in this video from Janine Rogan, a personal finance writer and Chartered Professional Accountant (CPA).
The money-free zone
My favourite escape-the-pandemic TV show is the Netflix series Formula 1: Drive to Survive. Great people stories as much as fast cars.
More Rob Carrick and money coverage:
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Even more coverage from Rob Carrick:
- 🎧 Catch up on Stress Test: How to survive the gig economy • How to get out of debt • Is now the right time to buy a house? • Crisis-proof your finances • Does investing change during a pandemic? • Can you afford to live downtown? • The cost of kids • Should you move back in with your parents?
- ✔️ A 10-point pandemic personal finance checklist: Create a “wartime” family budget; stop worrying about bank deposits; clean out your big-bank savings account; get relief on car payments; get preapproved for a mortgage; WFH? Save $1,000 a month; save, save, save; build resilience by not anxiety-buying; consider the cost of mortgage deferrals; get ready for the second wave of financial distress.
- 📈 Investing: The case for a tight portfolio of big blue chips dividend stocks; robo-advisers beat human advisors (and they’re thriving), why online banks that are better than the branch; is it time to invest your 2020 TFSA; don’t get your mortgage at a bank; why it’s so hard to invest in preferred shares; stock up on stocks to retire early; and are you following the 10-year rule with your investments?
- 💰 Saving: Food waste is wasted money; why you might regret that SUV and find out if CAA is worth it; juice your PC Optimum points; how an ex-Bay Street lawyer got out of debt; blindly easy tweak to your retirement investments to survive economic downturn; should you buy that latte?
Are you reading this newsletter on the web or did someone forward the e-mail version to you? If so, you can sign up for Carrick on Money here.