1. What is considered a good credit score?

In Canada, credit scores range from 300 to 900. A good credit score typically falls between 660 and 900.

In the USA, credit scores range from 300 to 850. A good credit score is generally considered to be 670 or higher.

2. How many credit cards should I have?

While there isn’t a set number of credit cards you should have, having too many to comfortably manage could result in missed payments and drag your credit scores down. 

Credit scoring formulas won’t punish you for having too many credit accounts, but you can have too few. Credit bureaus usually suggest having five or more accounts (which can be a mix of cards and loans) as a reasonable number to build overtime. 

3. What is compound interest?

In simple terms, compound interest is when you earn interest on the money you’ve saved and on the interest you earn along the way.

Here’s an example of how it works:

You can amplify the power of compound interest in these ways: increase the compounding frequency, find a higher interest rate, and adding to your principal amount.

4. How do reverse mortgages work?

Canada and USA: A reverse mortgage is a type of loan available to homeowners aged 55+ (Canada) or 62+ (USA) that allows them to convert part of the equity in their homes into cash.

Here are some Pros & Cons of a reverse mortgage:

Pros:

• Various payment methods available. For example: lump sum, monthly payments, line of credit.
• No down payment or monthly payments required. 
• Funds can be used to pay off the remaining mortgage balance. 
• Provides retirement income for property taxes and repair costs. 
• Income from a reverse mortgage is tax-free. 
• Any excess proceeds from the home sale go to you or your heirs. 
• You can live in your home indefinitely. 

Cons:

• Risk of outliving funds, especially with lump sum or line of credit. 
• Accumulating interest charges as long as you live in the home. 
• Home must remain your primary residence or be sold within a year if you move. 
• Additional costs such as insurance, closing fees, and other charges increase loan size. 
• Risk of foreclosure for failing to cover insurance, maintenance, or property taxes. 
• Could affect your eligibility for social/old age security or other government benefits.

5. How do I start investing?

Investing your money doesn’t have to be overly complicated. Here’s how to start as a beginner:

First Step: Decide Your Reasons For Investing:

For example, many people start off by investing for retirement. In fact, this goal should rank pretty high on your list of reasons for investing. But you could have other goals too. No wrong answers here, just decide why you want to invest.

Second Step: Decide an investment type.

This could be a retirement account, a brokerage account (to invest in stocks, bonds, mutual funds, etc.) You could also invest in real estate, or a combination of all of these things.

Third Step: How much money will you invest?

There isn’t a single magic number for how much money you should start investing with or add each month. The ideal amount will vary based on factors such as your income, budget, risk tolerance, and other financial obligations you’re managing.

Fourth Step: Make the buy.

Research and planning are great, but sooner or later you’re going to have to take action.

Fifth Step: Monitor your investments.

Congratulations! You’re now an investor! You can relax a bit now but do keep an eye on your investments. It’s normal for there to be fluctuations, but over time there should be steady growth.

Bonus Step: Hire a pro.

It’s always a great idea to bring in a pro if you feel lost or unsure about what to do. Many people avoid this because they think it’s too expensive, but there are low-cost options out there too.

6. What is a checking account?

A checking account is a deposit account that can be opened at a physical bank branch, online bank, or credit union. Checking accounts allow you to deposit money that you can then draw against to pay bills or make purchases. Banks and credit unions offer many different types of checking accounts depending on your specific needs and goals.

7. When are student loans due?

In both Canada and the USA, the repayment of student loans typically begins six months after you graduate, leave school, or when you’re no longer a full-time student.

8. What is overdraft protection?

Overdraft protection is a service offered by banks that allows you to overdraw your account up to a certain limit to cover transactions when you don’t have enough money in your account. It can help prevent declined transactions but often come with fees charged against your account by the bank.

9. What is debt consolidation? Should I consolidate my debt?

Debt consolidation involves combining multiple debts into a single loan or line of credit with a lower interest rate. It can simplify debt repayment and lower monthly payments, but it’s important to consider the fees and interest rates involved.

You can consolidate most every type of consumer debt, including medical debt, personal loans, credit cards and student loan debt. However, consolidation loans aren’t a quick fix. You still have to pay them off, and terms sometimes can last several years.

Here are a few pros and cons to consider:

Pros

• Potentially lower interest rate.
• Organize your debts.
• Depending on your term, could pay down your debt faster.

Cons

• Typically need good credit for a lower interest rate.
• Upfront fees and costs.
• Another credit check on your report.

10. How Do Personal Loans Work?

A personal loan is a type of installment loan that’s usually unsecured. An unsecured loan doesn’t require collateral. This means your credit score, credit history, income, and current debts are used to determine your eligibility. They’re usually repaid in fixed monthly installments over a set period of time.

You can use them to pay off outstanding debt, like medical bills, or make upfront payments on a big purchase, like a house or a car. Personal loans are commonly offered by banks, credit unions and even online lenders.

There you have it, 10 of the most Googled financial questions! If you didn’t see your most burning financial question on the list, please send it to me!