The Bank of Canada announced this morning that interest rates will remain unchanged for the 11th consecutive time over the past 15 months.  The last time the BOC made a change to the overnight lending rate was in September 2010 with a moderate increase of 0.25 per cent.

The overnight rate currently sits at 1 per cent. The Bank Rate is  1.25 per cent and the deposit rate is 0.75 per cent.

The news is really no news at all, given that nearly all industry professionals and top economists were anticipating no change. But what should be of interest to consumers is the justification behind the decision.  Here’s why the Bank of Canada is keeping interest rates where they are.

Europe

• The outlook for the global economy is getting worse.
• The recession in Europe is expected to be deeper and last longer than originally anticipated.
• The BOC was coy in suggesting they had faith Europe could get a handle on the situation: “although this assumption is clearly subject to downside risks”.

The U.S.

• The U.S. grew more than expected at the end of 2011, although this is not likely to last.
• The U.S. recovery will be more modest going forward due to continued household deleveraging and negative effects from Europe.

At Home in Canada

• When it comes to the Canadian economy, little has changed.
• It is estimated that GDP grew by 2.4 per cent in 2011 and is expected to grow by 2.0 per cent in 2012 and 2.8 per cent in 2013.
• Similarly to the U.S., we experienced slightly better growth in the second half of 2011 than anticipated, which is expected to be more modest going forward.
• Little is expected from net exports in 2012, due to moderate foreign demand, increased competition and a strong Canadian dollar.

Inflation

• In 2012 inflation should remain level.
• Total and core inflation is expected to reach 2 per cent by the third quarter of 2013.
• The BOC recognizes that several significant upside and downside risks are prevalent in the inflation outlook for Canada, but they believe they have a handle on the risks and will be able to maintain their key mandate of keeping inflation under 2 per cent.
• With inflation in check there is little reason to believe that we will see a rate increase any time in the near future.

Consumer Debt Levels

One of the more worrying comments made by the Bank of Canada at today’s announcement was their forecast for consumer debt levels. With rates near all time lows more and more Canadians are taking advantage of the very favourable financing conditions.  This is expected to continue and grow.

“Household expenditures are expected to remain high relative to GDP and the ratio of household debt to income is projected to rise further.” says the BOC.

A Note of Caution to All Home Owners

Today’s announcement means that your bank’s Prime lending rate will not change, which in turn means that variable mortgage rates will not change.  If you are on a variable rate mortgage, take advantage of this low rate environment and pay down more of your mortgage principal now.  You will be glad you did when rates increase in the next few years.

It’s the time of year when we shake off the old year and look ahead to guess what the new one will bring. 2011 was a mixed bag of economic drama: real estate, stock market, jobs and other indicators seemed down as often as they were up. It was an uncertain year money wise.

What about 2012? The verdict is mixed, the debt crisis in Europe being the pivotal factor. If these nations can get a grip on their monetary problems, the rest of the world should see gradual growth. If things slip into meltdown, we could be looking at a global double-dip recession.

In Canada, the numbers over the last month or so look promising and predictors seem to be leaning towards the former, more positive, scenario — with the debt crisis worsening in early 2012 but improving by mid-year. Here’s what’s up for the year:

Economic Growth

Our economy is going to grow this year, but not by leaps and bounds. Expect about 1.9% growth in GDP, according to the Bank of Canada. RBC is forecasting as much as 2.5% growth.

At the end of 2011, the BOC had expected GDP growth in Canada for Q3 to hit 2.0%.  Actual growth turned out to be 3.5%. And in Q4 they expect 0.8% growth, while most analysts think Q4 growth in Canada was about 2%.

Only time will tell if we will once again surpass the forecasts.  And if so, for how long can  it go on?

Interest Rates

Low, low, low! With all this uncertainty, and inflation numbers looking very low, there are few plans here or south of the border to raise rates. Some are saying we won’t see a rise in the overnight rate of 1% until 2013.

Until the worldwide economy has truly stabilized, you’ll be able to get those dirt-cheap mortgage rates and loans, so enjoy them a little longer.  Experts predict that once rates start to raise at the end of 2012 or in 2013, the increase will be slow and steady, going up 1-3% by the end of 2013.

To keep on top of interest rate changes, check out the Mortgage Rate Outlook Panel for a monthly prediction on whether or not rates will go up, down or stay the same in the short term.

Real estate

The predictions, of course, depend on where you live. Experts are saying the high-flying Vancouver and Toronto markets are overvalued and we should see a correction. But with high gas prices and job growth focusing on cities, there’s still a lot of interest in living in our biggest centres.

One thing the experts seem to agree on is the oversupply of condos in these cities. They’re expecting a dip in prices and buyers getting pickier about location, square footage and outdoor space.

Check out Melanie’s post from yesterday to find out more about what’s in store for Canadian’s when it come to home prices, home sales and housing starts in 2012.

Currency

With ongoing problems in the US and overseas, economists are predicting weakness in the US dollar and the Euro throughout the year. As a result, the Canadian dollar is expected to stay high in 2012.

Employment

The jobs story has been much worse in the US than it has been here. Already in late 2011 the US jobless rate moved down and is around 8.6% right now. Experts are predicting a modest descent through 2013 to around 8%.

Here, our situation is better, and we’re hovering around 7.4% unemployment right now. It’s predicted Canada will see a jobless rate of about 6.9% by mid 2013. Better news still: those experts think wages will start to rise and skills shortages will make looking for a well-paying job easier for some.

Regions

The prairies are so hot right now. Alberta and Saskatchewan have low employment rates and high growth, and those are expected to continue into 2012.

All in all, I’d say it’s not quite time to break out the champagne over the economy. 2012 promises to be another roller coaster ride of ups and downs, but those who can manage their money wisely and keep their debt to income levels in check, will come out on top.

First things first, I hope everyone had a fantastic Holiday with family and friends.  I know I did!

This week, as 2011 comes to a close, I wanted to pull together my thoughts and observations from the year – and what a year it has been!  Let’s start with mortgage rates.

If you’ve been carrying a variable rate mortgage, 2011 has been a great year for you.  The Bank of Canada held their target for the overnight rate at 1% all year long and subsequently none of the major banks changed their prime rates, currently steady at 3%. This resulted in no change to monthly payments for variable mortgage holders, and those of you on Prime – 1% are very lucky!

Fixed mortgage rates also decreased in 2011, with the benchmark 5 year fixed mortgage rate hitting an all-time low of 2.99% in November, as mortgage lenders became more competitive and the bond markets responded to the global financial crisis.  As a result, the spread between the 5 year fixed rate and variable rate dropped to a mere 0.45%. This is giving Canadians shopping for a mortgage a lot to think about as they lay out their five-year financial plans.

The European debt crisis and the dire global economic outlook is bearish and that is putting downward pressure on longer-term bond yields. It means its likely fixed mortgage rates will remain low or even drop further in early 2012.

The Fixed Versus Variable Debate

History shows that 90% of the time going with a variable mortgage rate will save you money. But with fixed and variable rates so close together during the second half of 2011 this may be the one of those times when a fixed mortgage rate is a better deal.

Another phenomenon we saw in 2011 is that less and less banks are offering prime minus on their variable rate products, sending the signal they are not willing to offer money at such a deep discount if rates are going to remain low. They’re simply not making the profits on mortgages as they have in the past.

The Canadian Economy Sits and Waits

Canada’s economy is doing better than the U.S. and certainly is much healthier than any European nation, but the Central Bank can’t move and raise rates to “normal levels” unless there’s more confidence that the global economy is recovering.

In 2011, Greece asked for two more bailouts. The leaders of Italy and Greece stepped down and currently the future of the Euro hangs in the balance. This year made it clear that the European debt crisis is far from over.

This is why we are seeing a standstill in Canada’s overnight lending rate. Economists say we can expect these lower than normal rates to stick around until at least mid 2012 at which time the Bank of Canada Governor Mark Carney will need to decide if the country is ready for a rate hike.

Carney finds himself walking a tightrope as he tries to balance what’s best for the country compared to what is happening around the world.  If Canada was an island-economy that remained uninfluenced by outside problems, by now, interest rates would be higher. But we depend heavily on our foreign partners for trade and our interest rates will lie dormant until the world economy starts to wake up.

Mortgage Rates in 2012

If you’re looking for a mortgage right now you should take a good hard look at fixed rates. 3 year (2.89%) and 4 year fixed mortgage rates (2.99%) are currently available below Prime, and 20 – 30bps lower than the popular 5 year fixed rate, you could be locking in real savings over the next few years. If the Bank of Canada raises rates in the next couple of years, your fixed rate will look like a bargain.

If you’re considering a variable rate make sure you calculate your affordability taking into account possible rate hikes (assuming the economy recovers slowly and gradually) over the next 2-3 years.  A good assumption is that rates will be 2 – 3  percentage points higher then where prime is right now. Even better, base your current monthly mortgage payments on this higher interest rate to protect your budget from being affected if rates start to rise faster than what you expected.

Remember, 2011 was not a normal year. Rates should not remain this low for the whole of 2012.  Expect slow, incremental increases in the second half of next year.

The ease in which Canadians can get their hands on borrowed funds is astonishing.

Once we have the money in our wallets the temptation to buy and spend is all around us, especially during the holidays.  Look better, feel better and be better  – by spending more money. That’s the message we’re continually bombarded with.

My Interesting Phone Call

When I sat down to write this piece, I wanted to talk about the newest Statistics Canada report on Canadian debt levels, which are extraordinarily high.

As I started writing my phone rang and the conversation that ensued blew my mind. I was experiencing first hand how easy it is to get into debt.

The lady on the line introduces herself as Tracey, a Financial Advisor from CIBC.

Go on…

She is offering me a no questions asked $18,000 line of credit. The first words I heard were “we are offering you this money with no credit or employment check. You can have this money right away.”

What I’m hearing is Tracey (and by extension CIBC) aren’t concerned about my financial situation, they merely want to lend me the money, at the premium rate of prime plus 3 per cent.

I kindly turned her down, after all she is just doing her job and now I have to do mine.

The Buck Stops at You!

When it comes to debt management we’re on our own. If banks could have it their way we would live our lives in debt – FOREVER.

How many homes did Tracey call after me? And how many people took her up on her offer unknowingly dragging themselves into debt they didn’t  ask for.

No matter how healthy you are financially, borrowing  $18,000 that you don’t need can destroy your economic situation in months. There are always ways your debt can get out of control by making a few bad decision.

A luxury vacation you don’t need, a new car you weren’t planning for or expensive presents to friends and family that you paid for from you newly borrowed funds.

Debt Levels Hit a Record High

We’re in more debt and are worth less then 3 months ago.  Statistics Canada reports the average household debt in Canada hit a new record high of almost 153 per cent to disposable income in the third quarter. That’s a leap from 150.7 per cent in the previous quarter.

Household net worth has declined by 2.1 per cent to $180,100 from $184,700. It’s the steepest drop in almost three years as the value of pensions and stock investments declined.

As Canadians are getting poorer they are taking on more debt to bridge the gap between their incoming money and rising expenses. Governor Mark Carney is again asking Canadians to slow down on the borrowing and realize interest rates are not going to stay this low forever. In fact as soon as Carney can raise them he will, it would be the responsible thing to do.

The problem is money has been too cheap for too long and banks and other financial institutions are happy to keep doling out the cash to any addicted consumer who will take it.

It’s sad to know that despite our country’s top banker pleading to the country to stop that nobody, including the banks are listening to him.

Let’s Get Some Perspective

Here are some numbers that put things in perspective.

If I took Tracey up on her offer of the $18,000 line of credit and spent the money in two months, I would be spending $199 per month to service my debt if I planned to pay if off in 10 years.   It would cost me  $6000 in interest.

If rates climb to more normal levels and prime reaches 6 per cent, my monthly payment would jump to $226 and it would cost me more than $9000 in interest to pay off the loan in a decade.

Canadians debt levels are higher than the Americans and for some reason we have not learned in the last three years how debt can destroy us quickly.

No one cares about your money as much as you. Live within in your means, pay off your debt more aggressively and don’t take on more. Don’t get addicted to the cheap money because it’s a hard drug to wean off. If the phone rings and it’s the bank, don’t accept borrowed money that you didn’t ask for, it clearly means you don’t need it.

The phrase “The rich get richer, while the poor get poorer,” has never been truer for Canada.

A report by the Organization for Economic Co-operation and Development finds, the gap between Canada’s richest and poorest people is widening.The survey conducted in 2008 found, the top 10 per cent of Canadians earned 10 times as much as the bottom 10 per cent. This 10-1 ratio is above the OECD average of 9-1. The U.S ratio is 14-1. In Germany, Denmark and Sweden the ratio is  6-1.

We’re not the worst, but we certainly aren’t the best.

Why is the Gap Widening in Canada?

In 2008 Canada’s richest people made on average $103,500 a year compared to Canada’s poorest who made $10,260 a year, the OECD said.  Two factors explain Canada’s growing gap: a widening disparity in labour earnings between high- and low-paid workers, and less redistribution. Taxes and benefits reduce inequality less in Canada than in most OECD countries, the study said.

In my opinion if this survey were conducted today, the gap between rich and poor would be even wider. Here’s why I think that way.

The report was conducted the year the global financial crisis started. In December 2008 Canada’s unemployment rate was 6.6 per cent, currently the national rate is 7.4 per cent

On top of this, between October 2008, and July 2009, the Canadian labour market lost a stunning 503,000 full-time jobs and a total of 588,000 permanent jobs. That’s worse than any rate of job loss in a nine-month period since before the Second World War.

Canadians Looking for Work.

There’s proof the labour picture is not improving.

Canadian job creation declined unexpectedly for a second consecutive time in November 2011, the first back-to-back loss since the recession. Overall, 18,600 net jobs were shed in November following the huge 54,000 loss in the previous month, the worse in almost 3 years.

The meager recovery has been fueled by self-employment, temporary work and part-time positions. Many Canadians who lost their job in the last 3 years are back at work but with lower pay, fewer benefits and in many cases no job security.

The Winners and the Losers

Amidst all this Canada’s financial industry has continued to thrive.  As early as last week, four of Canada’s biggest banks posted higher-than-expected fourth-quarter profits.

Banks continue to make money because of wealth management fees and by lending more money, albeit at smaller margins, to Canadians already in record debt.

To make matter worse, Canadians doing the right thing and saving are being punished. Canada had the highest mutual fund costs of 22 countries surveyed, according Chicago-based Morningstar Inc., an independent investment research company.

Bank fees in general are disproportionately higher for those who carry a smaller balance. Whether it’s a chequeing or savings account or an online trading portfolio,  the less money you have in it the more likely you’re to pay fees to keep it open.

Ways to Shrink the Gap

So what can we do to help shorten this gap?

Canadians need to be more proactive when asking for a raise in their job, they need to be aware of how much their work is worth and demand a salary that reflects it. Part of the problem is employers are trying to get away with paying their workers the lowest possible salary for the greatest amount of work.

If you are suffering from a longer than expected period of unemployment this is the time to get out and learn a new skill or update the ones you already have. I know many people reading this will say, easier said than done, but the change in the labour force has to come from each and everyone of us, we can’t be discouraged.

Make eduction a priority for your kids. Research shows the benefits of learning and higher education levels include higher earnings and lower unemployment risks. Both contribute to overall financial security.

And for goodness sakes, stop paying bank fees, clearly those guys are doing okay. Find an institution that offers no fee banking it will help put some money back in your pocket.

Variable mortgage holders can rest easy knowing that their mortgage payments are not expected to increase any time soon.  Once again the Bank of Canada announced that they will leave the target overnight lending rate constant at 1%.

This means that Prime rates will also stay the same and therefore variable mortgage rates.

The Bank of Canada stated the following reasons for holding the course:

• The debt crisis in Europe is intensifying
• The recession in Europe is expected to be worse than originally thought
• This will dampen global growth and particularly expansion within the US.
• The US housing market is showing no signs of recovery

On a positive note, the Bank of Canada announcement also referred to slightly better than expected growth in the US due to consumer spending and business investment.  Growth in China and other emerging-market economies continues to be strong.

Here in Canada, things are surprisingly good.  Economic growth in the second half of the year is expected to be slightly higher than forecasted.  But we are not immune to the activity going on across the ocean and only time will tell just how much of an affect the crisis in Europe will have on Canadians.

The Bank of Canada meets again on 17 January 2012 for the next interest rate announcement.

RateSupermarket.ca’s Expert Mortgage Rate Outlook Panel Thinks They Can

TORONTO, Dec 2, 2011… With fixed mortgage rates near historic lows in Canada, one might think they can’t possibly get any lower.   Wrong.  According to RateSupermarket.ca’s Mortgage Rate Outlook Panel for December 2011, we may see fixed mortgage rates decrease in the short term.

The panel also believes that variable mortgage rates will stay at current levels given that no change is expected in the upcoming Bank of Canada rate announcement on December 6^th.

Fixed mortgage rates: Down

With no quick fix on the horizon for the European debt crisis, the global economic outlook continues to be pessimistic causing downward pressure on longer term bond yields.  Couple this with decreased demand for home loans during the busy holiday season, and it is likely that fixed mortgage rates will stay low or even drop further over the next 30-45 days.

Variable mortgage rates: Unchanged

Recent GDP numbers were surprisingly strong, inflation is near the target range, and a global economic meltdown could be on our door step. The last thing Governor Mark Carney wants to do is shock consumers during the busy holiday buying season with news of an interest rate increase. As a result, our panel members agree that the Bank of Canada will hold rates steady at their next meeting.

To read all the detailed commentary from our Panel Members, please visit:
http://www.ratesupermarket.ca/mortgage_rate_outlook_panel/

About the Mortgage Rate Outlook Panel

The Panel includes some of the country’s top mortgage experts, and helps Canadian consumers make informed decisions by offering a short-term outlook for fixed and variable mortgage rates.

This month’s panel members:

• Mark Kocaurek, Senior Vice President, Treasury & Lending (Chief Lending Officer) of ING DIRECTCanada
• Dr. Ian Lee, Director of MBA Program, SprottSchoolofBusiness,CarletonUniversity
• Dan Eisner, MBA. AMP. President,  Verico True North Mortgage
• Stella Cellucci, Mortgage Agent, Centum Mortgage Professionals

About RateSupermarket.ca (www.ratesupermarket.ca)

RateSupermarket.ca is the largest impartial rate comparison service for personal finance products in Canada.  Founded in May of 2008, their easy to use comparison engine provides much needed transparency to the Canadian mortgage market and allows visitors to quickly find the best mortgage rates.  Their new Mortgage Tool App for the iPhone also allows house hunters to compare mortgage rates using their Smartphone. Over 1.5M Canadians have turned to RateSupermarket.ca to save money on their mortgage, insurance, credit cards and GICs.

Are you worried about your job security and well-being? You should be because no one else is. The increased pressure corporations are under to produce and perform with less staff, is creating a nation of exhausted employees saddled with to much work.

Is it fair?  No.

Can we do something about it? Absolutely.

We work hard

A staggering 89 per cent of Canadians say they’re overworked. A recent study by Towers Watson, reveals excessive workloads, lack of work-life balance, unclear or conflicting job expectations and inadequate staffing as the top sources of workplace stress. This inevitably means less time to eat healthy, spend time with family or get any exercise. What’s most surprising is the number of people feeling run off their feet at work is up 26 per cent since a similar report was last conducted in 2009.

This is costing corporations.

In 2011, health and productivity expenses as a percentage of payroll totaled just over 17 per cent in Canada, up from 12.6 per cent in 2009. This year 1 out of 4 companies in Canada say they will financially award employees who take proactive steps and enroll in company administered health management programs.

But is it enough?

Times are tough

The main driver is the potential of another recession. A lack of security in the economy is translating directly into “you could lose your job at any time.”   Who can blame a worker for feeling that way, last month Statistics Canada announced our unemployment edged up to 7.3%, debunking the attitude that our labour picture is improving.

Workers feel they have no choice but to bow to their boss’s demands. Who’s going to request vacation time if the company’s recently fired part of its workforce. And, how can anyone ask for a raise if the earnings reports continue to show the company is making dismal profits.

But there are a number of social factors that also contribute to why we are stressed. The need for bigger, better and right now, is keeping us in jobs we don’t want.

What are you going to do about it?

The first step is recognizing that you’re in a situation that’s is making you feel overworked. It’s the only way you’re going to make any real change. Then it’s about understanding what about your job makes you feel stressed. Long hours, to much work, less pay- it’s probably a combination of all three.  The next is to set a timetable to get out and actively seek a way to change your lifestyle.

A friend of mine quit her high-powered corporate job in Toronto to start a business in Niagara-on-the-Lake, Ontario’s wine country. The process did not happen overnight she had been thinking about it for years. But after taking the leap of faith and opening up a Bed and Breakfast she confesses she feels much more in control of her life.

Now, reading this you’re thinking it’s not realistic for you to quit your job and start a business in another town. But the time to start making a change is today. Envision where you want your life to be and how you want to get there.

I’m amazed by the number of people who say they’re stressed and keep long hours, but when I investigate what’s giving them anxiety; it’s actually their daily commutes. Or, how many people say they hate their boss, but really they hate what they are doing at work. Their boss is just a constant reminder that they don’t want to be there.

Another study found Toronto had the longest average commute in Canada. It takes Torontonians on average 80 minutes roundtrip to get to and from work.  Montrealers commute is only four minutes less. Stress levels also increased with commute times. Some 36 per cent of commuters who need more than 45 minutes to get to and from work each day said their days were “quite or extremely stressful.

Could this be part of the problem?

The truth behind the stress

Our addiction to bigger homes, bigger cars and more things means we’re working more hours and taking longer to get from home and back. If you change where you live you will change your life. Moving to a smaller home means a smaller mortgage and less stress to pay it. Moving closer to work means a shorter and cheaper commute and more time and money to spend on what we really care about. We have to start being a community again and spending more time taking care of family and ourselves, rather then the bottom line of corporations.

After nearly plunging the world into the deepest recession it has ever seen, in a matter of a week the leaders of two European nations have resigned. The reason, they can no longer handle the economic issues in their countries that are spiraling out of control.

Greek Prime Minister George Papandreou was the first to step down and only a few days later Prime Minister Silvio Berlusconi handed in his resignation.  Both men are probably halfway to a beach destination to drown their sorrows in drinks with fancy umbrellas. With so much extra time, I’m sure Berlusconi’s bunga- bunga parties will be in high gear.

But in the meantime, this is what the two men have left behind.

Two countries with unsustainable debt levels, years of government over spending and continued pressure by the European Union to impose even stricter austerity measures to shore up countries debt problems. In both countries borrowing costs have risen to record levels as investors fear the two nations will be unable to pay their debts.

It’s no easy task for the new leaders of Italy and Greece.

So who are these guys?

The New Greek Prime Minister Lucas Papademos is a hard-nosed economist and former vice president of the European Central Bank, in my opinion exactly what the country needs, a man who really understands economics. By all accounts he has an immaculate reputation, and already has the support of Greece’s political heavyweights.

The new Italian Prime Minister is Mario Monti. He’s the former EU competition commissioner and also an economist.  He is well known to be anti- Berlusconi. Dubbed “Super Mario,” he’s already formed a new government filled with ministers with backgrounds in finance, law and academia and few politicians.

Sounds good to me. It’s a stark contrast to the former flamboyant leader, who was as close as you could get to a dictator in a democratic country. Monti’s reserved nature is breath of fresh air.

But can these two economists save the European Union?

I think they can. Both men are due to table new austerity programs that will outline how the two countries plan to get their fiscal houses in order.  Papademos also recognizes how important it is for Greece to stay in the Euro Zone. He wants to start by reducing the Greek debt burden by $100 million Euros and working with the EU partners to stabilize the market jitters.

Monti has a bigger job, as he is the leader of the second largest economy in the EU, an Italian default would be much worse than a Greek default. The affects would be widespread and not contained just to Europe.

So the new leaders give me hope that there is progress in the European debt crisis. The world is still heading towards a recession because it took to long and too much money to make these changes in leadership. But the future is brighter and in many cases much more clear I am trying to optimistic by saying the world is still heading into choppy waters but this shift in power gives me hope that we are better equipped to navigate our way to safety with these two men at the helm.

For Papandreou and Berlusconi I wish you both the best. But as you lie on the beach enjoying your fancy drinks may the choppy waters ruin your afternoon seaside naps.

With the economy fluctuating and increasingly uncertain, so are holiday shoppers. According to an online survey conducted on behalf of Deloitte, faith in the Canadian economy is declining. While 29% expect it to improve in the coming year, 33% expect it to decline further. For this reason, Canadians are planning to cut their Christmas budget in half and focus on new ways to save money instead.

According to the same poll, this year’s average Christmas shopper plans to spend $477 on gifts. Of those who intend to shop, 45% plan to shop online. Rather than spend this season, the survey found that Canadians’ highest priority this year is to pay off debt.

Online shopping in Canada compared to other nations

It’s funny; on a global scale, Canadians spend more time online than any other nation. While other countries shop predominantly online (Germany, South Korea and the UK), we buy less online than any other nation. A recent poll, which questioned 10,000 consumers from 10 different countries, found that approximately 82% of Canadians have bought goods online, compared to the global average of 93%.

Why aren’t we shopping online?

Some of the factors contributing to lower online sales in Canada include:

1. Shipping costs – since our country is vast and sparsely populated in areas, shipping costs tend to be higher than those in other nations.
2. Competition – Competition between traditional and online retailers have helped create more desirable prices in store – helping consumers avoid the additional shipping costs.
3. Taxes and tariffs – Companies often stick the consumer with the extra taxes and tariffs for goods coming over the border.
4. Restrictions – Some companies have restrictive distribution agreements. For instance, you cannot order Burton products online from the U.S.

For the above reasons, Canadians tend to window-shop online only to compare prices, and then head to the store to purchase goods in person.

Online shopping on the rise in Canada

Interestingly, according to a poll conducted by PRWeb, online holiday traffic is outpacing 2010 figures. September/October traffic is up 45% from last year and retailers are trying to catch up. As consumers gravitate toward online shopping, retailers will start selling more online. In the past 30 days alone, online retailers have increased by 10%. Goods that have traditionally held the online market include music, books and DVDs, but consumers are now purchasing everything from pet supplies to baby products from online retailers. In the last two months alone, the sports category has doubled its web-based sales. While online shopping isn’t nearly as popular as it is in the U.S., it’s becoming more and more popular in Canada.

Tips for online shopping

Shopping online is different than shopping in person – and in some ways, much easier. Here are a few tips to help save you some money this holiday season.

• Always look for an online coupon or promo code. Simply Google search the product you’re looking for with the words ‘coupon’ or ‘promo code’.
• Compare prices and shipping costs on different sites. Although prices might seem lower on one site, they might make up for it in shipping costs. Know what the final cost is before purchasing.
• Plan ahead. Most retailers offer discounts or free shipping for larger orders. If you can get several presents from one site you could end up saving a bundle in shipping costs.
• Join deal sites like Groupon, WagJag and Ethical Deal. They offer great daily specials at discounted rates. They can save you a ton in holiday spending.
• Rack up the points.  If you plan on doing a lot of your purchases online this season, make sure you’re using a credit cards that offers some kind of reward, like the MBNA SmartCash Mastercard.

Making sure it gets there on time

This year, FedEx expects to deliver more than 260 million packages globally. This number is up 12% from last year. Last year, Canada Post delivered over one million cards and packages during the holiday season alone. If you want to avoid disappointment, get those cards and packages in the mail as early as possible. Here are the deadlines you’ll want to watch for:

• Priority Next A.M. will be accepted as late as December 22
• Regular parcels (to be delivered within Canada) need to be sent by December 12
• Out-of-province greeting cards need to mailed by December 15; within the province by December 16
• Local greetings should be in the mail no later than December 19

Although there was no information available for incoming deliveries, you might want to add an extra week onto the times listed here, depending on where it’s coming from. Most sites will let you know what the before-Christmas shipping deadline is, but it’s always better to be safe than sorry. For a more comprehensive list of global delivery deadlines, visit canadapost.ca.