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We all know that cash is slowly fading in popularity – just watch the people in front of you at the grocery or drugstore checkout line. The clear favourite cash replacement? Credit cards.

It should be debit cards. They function like cash in that money comes out of your account when you buy something, but offer more convenience because you don’t have to carry coins and paper money. But debit cards don’t offer the kind of loyalty points that credit cards do. And so, credit cards have become the preferred way to pay for everything but small purchases, the Bank of Canada says in a report called How Canadians Pay for Things (see chart below).

Credit cards made up 39 per cent of retail transactions and 56 per cent of the total value of goods and services purchased by Canadians in 2017, the most recent year for which there is data. They’re especially popular for purchases over $15, the Bank of Canada reports.

Cash rules for purchases under $15 – coffee and a muffin, for example. Debit cards have a significant market share of all types of purchases, but they’re not the preferred payment method in any spending category.

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Bank of Canada

The problem with credit cards is the potential to overspend and then not be able to pay your bill in full. Carrying a balance on your credit card? Park it and use your debit card instead. Collecting loyalty points is a pitiful excuse for paying interest at rates around 20 per cent.

Note: I am going to do a column on loyalty points you can earn by using your debit card. If you’ve had a good experience doing this, drop me a line at

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Rob’s personal finance reading list…

This is what worries investors…

A multi-generational look at the top worries of investors. Interesting to see lack of trust topping the list for people 50 and older.

…and this is what investors don’t worry enough about

In a word, it’s risk. A respected investing columnist says low returns have stoked demand for riskier investments.

The black hole of personal finance

It’s insurance, says longtime personal-finance writer Ellen Roseman. Part of the problem is that there’s too little unbiased information to help people buy insurance. But insurers have also somehow been insulated from the disclosure requirements the investment industry must meet.

A $6 way to better organize your freezer

Use plastic file-storage boxes available at any office supply store. Of interest to anyone who keeps freezing leftovers and then throwing them out after freezer burn sets in.

Ask Rob

Q: What is the best way to invest funds in my grandchildren’s RESP? Right now the funds are in a balanced fund that is not earning very much.

A: A good balanced fund is actually a fine option for RESP accounts, but it sounds like you may have a dud on your hands. Consider switching to a low-cost balanced exchange-traded fund, which is a fully diversified portfolio in a single ETF. You’d need to open an online-brokerage account to buy a balanced ETF and pay commissions of $5 to $10 for each purchase. Here’s some additional information on balanced ETFs.

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.

Today’s financial tool

An inventory of the financial-literacy tools offered by Chartered Professional Accountants Canada. An unbiased source of information about money because no investment or banking products are sold.

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