More than half of Canadians don’t know the benefits of using a tax free savings account. And they’re missing out on big savings.
In a recent study by ING Direct, 53 percent of Canadians surveyed said they hadn’t opened a TFSA – and 42 percent of those said they had no intention of doing so in the next year.
That’s unfortunate, says Silvio Stroescu, head of investments and savings at ING Direct. He says more Canadians should invest in these specialized accounts.
“In addition to not paying tax on earnings on TFSA investments, another benefit is the flexibility of a Tax-Free Savings Account – no penalties for withdrawing money and the ability to carry over contributions,” Stroescu says. “For Canadians finding it difficult to start saving, a TFSA is a great option, since there is no minimum contribution required and you can begin saving in small, regular increments.”
Why are Canadians so reluctant? The survey found 31 percent don’t use TFSAs because they don’t understand how they work.
Jeffrey Schwartz, executive director of Consolidated Credit Counseling Services of Canada, says people should take advantage of TFSAs -because they don’t just save money.
“These accounts are great for saving money, but they’re also helpful in limiting debt,” Schwartz says. “When you’re already in debt but are planning for the future with a savings account, you don’t want to deal with going into further debt while you’re also trying to save.”
If you’re interested in saving for the future, visit the Personal Finance page on Consolidated Credit’s website for smart saving tips that are very simple to understand. And if you want a free debt analysis, call 1-888-294-3130.