Bank of Canada Raises Interest Rate – How Does This Affect You?
The Bank of Canada raised its interest rate 25 basis points to 0.75 per cent. Many of Canada's commercial banks followed suit by raising their prime lending rates.
This even after the BOC acknowledged the economy is weaker than initially believed. Of course the BOC's statement went on to highlight how a "greater emphasis" on budget cutting among governments and households would slow the pace of the global recovery.
Let's face it, at least in Ontario; the cost of living has gone through the roof especially with the recent implementation of the Harmonized Sales Tax that was recently imposed by the Ontario Provincial Government. It's hard not to think about reducing spending and tightening ones budget under these circumstances.
What can a home owner do when the result of the BOC announcement is that at least three of the big chartered banks matched the BOC's move, increasing their prime rate by 25 basis points to 2.75 per cent? If you have a variable rate mortgage you may be thinking that it might be time to lock in.
Each time a new tax or fee is introduced or mortgage rates go up Canadian families feel it big time. Here are three ways that you can balance your budget and find new cash flow to offset the ever increasing cost to live in Ontario:
Tighten your budget. While economists think that this hurts the economy, it makes great sense for a Canadian family trying to make ends meet. Try buying generic versions of over the counter medications and other generic products sold in the grocery store or pharmacy. Little thing like this can make an immediate difference to your bottom line.
Consider consolidating credit card debt. If you have accumulated so much credit card debt that you are making only minimum monthly payments, it may be time to consolidate. You can do this by obtaining a low rate line of credit from your bank or by refinancing your mortgage.
Pay off your debt. Remember that any debt you are carrying is subject to interest. You pay the interest on this debt each and every month. Depending on the amount of debt you are in this interest could total from hundreds to thousands of dollar per/month. We always recommend that you make paying off debt a first priority. As your debts are paid off you will see increased cash flow because you won't be making those interest payments.