Cents And Sensibilty

Ok, so it's a quiet Wednesday night, there's nothing on TV and I've done the laundry. It's time to blog about Canadian currency. Here are my top 4 favourite monetary quirks:

Penny for your thoughts
Canada's coin denominations consist of $2 (toonie), $1 (loonie), 25c (quarter), 10c (dime), 5c (nickel) and 1c (penny). Fortunately, the Canadian government removed $1 and $2 notes from circulation when the loonie and toonie were introduced, but the 1c coin has only ceased production this year. Coming from Australia, where the 1c and 2c coins were abandoned 20 years ago, this seems a little backward. Allegedly, it costs 1.6 cents to make each 1c coin. Even from my vague recollections of 'Macroeconomics 200', I can tell that this is not a financially sound investment. I've even heard someone say that they just throw pennies in the garbage once they've accumulated too many. Eradicating the penny will actually save Canada $11 million dollars in production costs per year; but to complicate matters, it will cost over $38 million to remove the six billion pennies currently in circulation. This video provides a really interesting take on the equally problematic US penny: https://www.youtube.com/watch?v=y5UT04p5f7U

Hidden HST = Heavy Handbag

Unlike Australia's Goods and Services Tax (GST), the 13% Harmonised Sales Tax (HST) in Ontario is not included in the advertised cost of a good or service. Unless you're purchasing a single item with a round number or you're particularly gifted at mental maths, it's impractical to pay for something using correct change. Inevitably you walk away from most cash transactions with a handful of coins. I estimate that this annoying shrapnel accounts for at least 50% of the weight of my purse at any given time. Coming from a country where the tax is included, this seems like such an unnecessary complexity. A commonly held belief is that consumer spending would decrease if the tax were included in the sale price, but I think this undermines consumer intelligence. Currently there's a Tim Horton's ad on TV promoting $1 coffee, where a series of glum pedestrians reach into their pockets where they unexpectedly discover a single loonie. They immediately stop and raise the shiny coin aloft as their faces light up with the possibility of obtaining a Tim Horton's coffee. Personally, I think the loonie itself is more appetising than a coffee from Tim's, but that's another matter altogether. The reality is, these individuals aren't going to get a drop of the dirty dishwater percolated coffee that they covet, unless they can hand over $1.13.

Just some of the small change we have collected over the past 6 months in Canada.

Void Cheques

Prior to moving to Canada, I could count the number cheques that I have written in my entire life on one hand. So it seems antiquated to me that they are so prevalent in Canada. For example, to pay the rent for our condo we had to hand our landlords a series of post-dated cheques for the year ahead. It seems so impractical compared to an electronic transfer - what if they lost the paper cheques? or we wanted to close that particular bank account? what if we had to terminate the lease? The other request that comes up quite often is for a void cheque (literally a paper cheque that you have cancelled by writing 'void' across it). For example, an employer will usually ask you for a void cheque when you start work with them, so that they can verify they have your correct bank details.

Revolutionary Polymer Notes
Canada has only very recently adopted polymer bank notes. Prior to this, they were paper based like the US. I've read some interesting news articles online that criticize the new notes - largely the concerns are based on whether the material will be able to survive a cycle through the washing machine, being left in the car on a hot day, or if they will be accepted by vending machines.While there may have been a couple of minor teething problems in the initial transition, the change to polymer is certainly worthwhile in terms of increased security and durability of the notes. Here is a somewhat condescending video that describes how to handle the new bank notes: http://www.youtube.com/v/ilmyky7x9XQ?version=3&hl=en_US&rel=0 Perhaps it only comes across as condescending to Australians who developed the polymer note and have been using it since 1988.