personal-finances

Why you should spend all your gift cards by the end of January – The Globe and Mail

It’s time to put our gift cards on the table. All of them – the ones we got this holiday season, and the ones we’ve been hanging onto from way back. By the end of January, aim to have each card spent, sold or given away.

Gift cards are the big problem-solver for birthdays, the holidays and other occasions. What they lack in the personal touch is offset by the way they lighten the financial load on recipients when buying staples or treating themselves to something fun. But gift cards are vulnerable to inflation if you don’t use them immediately.

As every Canadian with a pulse knows, inflation has run hot in recent years. A rising cost of living erodes the purchasing power of your household income, and your gift cards. Imagine you had a gift card for all the goods and services tracked in Statistics Canada’s consumer price index. A $100 gift card received in 2022 bought you a bit less than $97 in 2023. The value of a $100 gift card received in 2020 could be roughly pegged at $85 last year. Food inflation has been particularly bad, which means restaurant and grocery gift cards lose value faster.

If you can’t see a use for a particular card, consider regifting it. Or, offer it up for sale to someone who could use it. A recent post on the Hardbacon website listed five ways to sell gift cards – expect to get somewhat less than the face value.

A challenge with gift cards is not to use them as a down payment for an expensive purchase you wouldn’t otherwise make and can’t really afford. At the same time, you want to avoid buying less than the face value and leaving a bit of money on a card that never gets used. Match the purchase price to the card value as closely as you can.

One more reason to use gift cards right away is to avoid expiry dates or fees that reduce the amount you can spend. The legal firm Osler explains on its website that gift cards are generally not permitted to have an expiry date, but there are exceptions in cases where they’re issued for a specific good or service.


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Rob’s personal finance reading list

One friend is wealthy, the other is not

What happens when one friend is wealthier than another? An advice columnist tackles a question from a 45-year-old who recently sold a company he started and no longer needs to work. A long-time friend isn’t taking it well.

Is your Costco membership worth the cost?

Four questions that will help you decide if the cost of a Costco membership is worth the money. A regular membership in Canada costs $60 a year. While on the topic of shopping, here’s a profile of a stand-up guy in Ottawa who keeps close track of grocery prices and publishes his findings weekly.

Questrade vs Wealthsimple

A comparison of these two digital investing companies, both of which have a lot to offer investors who want to trade stocks and exchange-traded funds.

When your utility bill goes rogue

If you own a home, you’ve likely opened a utility bill and been shocked at a higher than expected amount owing. Here are some thoughts on diagnosing why a water, electricity or gas bill suddenly spiked higher.


Ask Rob

Q: I am a 62-year-old woman and will soon sell my house for up to $700,000. I have no RRSP or TFSA room so the money will all be nonregistered. My intention would be to invest 50 per cent in a high interest savings account and 50 per cent in a bond ETF. I will not need the money for at least 10 to 15 years and the stock market is not an option for me for this part of my portfolio. Does that make sense to you and would you have other suggestions? Also, for the $700,000 or so amount, what would be the best way to protect it with deposit insurance?

A: You say the stock market is not an option, so I won’t belabour the point that dividend stocks can provide tax-efficient income in a nonregistered account. High interest savings accounts come in several forms – conventional bank accounts, or packaged for investors in a mutual fund or ETF format. Returns are in the mid 4 to 5 per cent range right now, but will fall in line with the cuts expected in the Bank of Canada’s overnight rate this year and beyond. Bond ETFs will do well in this environment – the price should rise as rates fall. But as investors learned last year, bond ETFs can deliver sharp losses when rates rise. An additional thought: what about locking in some money in GICs, which can yield as much as 5 per cent or more for terms for one to five years? Don’t delay if you want GICs – yields could easily fall in the weeks ahead. Canada Deposit Insurance Corp. coverage is $100,000 in principal and interest for each eligible account. Provincial credit unions typically have higher limits, and some have unlimited coverage.

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

A review of tax numbers for 2024 – tax brackets, RRSP and TFSA maximums and much more.


The money-free zone

What I love about 1970s-era soul music is that there’s so much to discover, even if you think you’re heard the best of the genre. For example, there’s Syl Johnson’s Could I Be Falling in Love. Sounds a bit like Al Green. For some edgier Johnson, try Different Strokes.


Watch this

Personal finance YouTubers to check out in 2024.


On social media

Why one Instagrammer has already started saving for Christmas 2024. There’s a reference here to sinking funds, a term that just means putting money away for a specific purpose.


ICYMI


More Rob Carrick and money coverage

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