Canadian Tire Bank is offering a 1% bonus on the interest rates they pay on high-interest savings accounts (HISAs). For the first 90 days for new customers, the regular HISA currently pays 2.5% and the TFSA HISA pays 3.5%. But, how much is this bonus interest really worth? If you put $5000 into one of these accounts, the extra 1% interest over 90 days will earn you a bonus of a little over $12. After the 90 days are up, the interest rate will return to normal, which is currently 1.5% for HISAs and 2.5% for TFSA HISAs. Getting an extra $12 is better than a kick in the head, but the important thing is to compare the regular interest rates offered on savings accounts by different banks. Unfortunately, the banks tend to trumpet introductory rates and downplay regular rates. If you're thinking about taking Canadian Tire Bank up on their offer, a couple of points in the fine print to consider are that the bonus 1% has a balance cap of $100,000 and that interest rates are subjec...

The Ontario Lottery and Gaming Corporation has more marketing trouble as two Toronto convenience store owners are accused of orchestrating a multi-million dollar insider lottery win. The OPP are holding back details until they give a press conference later today. It’s not clear at this point whether this is simply a case of a store owner telling a winning customer that the ticket wasn’t a winner as in previous cases or whether the scheme is more elaborate. Either way, this is further embarrassment for OLG. I’d like to think that this means that OLG executives won’t be getting bonuses this year, but I’m not holding my breath. If you needed another reason to avoid lottery tickets, you’ve got it. Update:  Further information indicates that this is just a case of a convenience store owner telling a customer who won that the customer didn’t win.

Warren Buffett’s partner, Charlie Munger, is a very smart and well-informed guy with strong opinions on a wide range of topics, financial and otherwise. He recently commented on several subjects including investing in gold. Munger believes we have a “moral obligation to become rational,” that hoarding gold is irrational, and that “even if it works, you’re a jerk.” It sounds like Munger won’t be getting any Christmas cards from gold bugs. On other subjects, Munger believes that our best option for alternative energy is solar and that running cars on corn is crazy. He believes that stocks are a better bet than government bonds at current rates. A good quote was his reference to “the nutcase that runs North Korea.” It must be great to feel comfortable enough to say what you really think.

Warren Buffett says that the U.S. is still in a recession despite the fact that by the usual standard, the recession is over. He claims that his definition better reflects the economic realities of average people. To understand what Buffett is saying, consider the following chart of a hypothetical history of Gross Domestic Product (GDP), a measure of the output of an economy. GDP starts to drop at time A, begins to increase again at time B, and recovers to its previous high at time C. By the usual definition, the recession lasted from A to B, and the recovery started after B. But Buffett says that people are still suffering while GDP levels are depressed. He says that the recession is from A to C and that the period from B to C is just a “technical recovery”. Just because things are improving, we can’t conclude that things are great. At some point in the winter it starts to get warmer, but it is still cold. Winter is over when it warms up, not when it stops getting cold...

Want to read about an accounting trick that will make you shake your head? Some U.S. states are booking savings now for cuts to the pensions of workers who haven’t been hired yet . In a similar vein, I just saved thousands of dollars by deciding not to buy clothes in the decade after I die. Preet Banerjee thinks that HXT, the new Canadian ETF covering the S&P/TSX 60, isn’t all that risky and prefers it to XIU. Big Cajun Man is shocked by the prices of recreational vehicles. Tom Bradley thinks that even with the higher capital requirements for the world’s banks, they’re still not high enough.

My wife and I each have a car. My son who recently went away to university was listed on our car insurance as an occasional driver of both vehicles. We pay a hefty premium for this. When he went away to university, I thought this would reduce the premium considerably, but the reduction is less than I thought it would be. Just to be clear, our son did not take one of the cars with him. He attends school about 500 km away. We expect to see him between terms for a week or two, possibly a weekend during each term, and possibly for the summer depending on where he finds a summer job. Our insurance covers him to drive our cars when he is home. For his change in status, our insurance company reduced the part of the premium specific to my son’s coverage by 40%. I suppose that this is better than nothing, but it’s less than I had hoped. He clearly won’t be driving the cars 60% as much as he did when he lived at home. If any readers are in the same type of situation we’re in, I’d b...

I tend to avoid talking about politics because I tend to dislike all of the political parties for one reason or another, but I was struck by one of Jack Layton's remarks in an interview on CBC radio. He said that he wants to limit credit-card interest rates to 5% over prime. This sounds good, but he doesn’t mention the likely consequences. Whether we like it or not, banks are in the business of making money. They offer credit cards because they make money from them. The high interest rates offset the losses from a fraction of credit-card holders who default. If interest rates are capped, banks will only offer credit cards to more credit-worthy people. If this 5% over prime cap came into effect and the banks could find no loopholes for replacing the lost interest charges, they would cancel hundreds of thousands or possibly millions of credit cards in Canada. Even people with steady jobs would have difficulty getting a credit card if their pay level is too low. In princip...