November 19, 2010
I have been beyond swamped at work trying to cope with massively multiplying problems that seem as though they’re only a week away from becoming a pandemic of the sort that takes out an entire system. I’d started the research for this post a month ago, and then fell off BlogWorld. But it’s time to get this wrapped up!
Before the year is out, I’ll have to take a trip to Europe for business and the first things on my mind are: Will I die of the freezing cold and how do I make sure I pay the absolute minimum in fees?
The first question was partially tended to in this and that post, but the second is my biggest priority.
My goals
I want to avoid foreign transaction fees, and I want to get the best exchange rates on any cash I have to withdraw during my travels.
Initial thoughts: Should I open a Capital One credit card so that I have a credit card with no foreign transaction fees, and should I also have a banking relationship with an international bank like HSBC so that I can withdraw cash without extra ATM fees ?
Answers: Probably not, Cap One has developed a poor reputation for ethical business practices as I discovered via SingleMa’s discussions on her blog and I’m not so hard up as to support a business that is known for unethical behavior.
Maybe. Maybe not, I’m not thrilled with the stories I found about HSBC online either. But this could turn out to be like every other time I research electronics. By the time I’m done researching, I’ve just discovered that everything ever created was crap and I should save my money.
Phase 1 – Examining my current cards
AMEX charges 2.7% foreign transaction fees on all of their cards so that’s two cards (Amex Gold, Hilton HHonors) I won’t be using.
Chase charges 3% foreign transaction fees on their cards. Three (Cash Plus, Sapphire, Free Cash) cards down.
Citi charges 3% fees on their cards as well. Getting grouchy, three more cards down.
Phase 2 – Calling the banks
SingleMa’s mention of seeing ING while in Paris and London got my brain ticking so I picked up the phone and called them. It turns out that with ING, I can use any ATM in Europe with a 2% international transaction fee. For the purposes of accounting and claiming expenses, the CSR confirmed that the fees should print on my receipt which is all I’m willing to share when I turn in expense forms. No way they’re getting statements!
Nearly ten years ago, my bestie and I used American Express traveler’s cheques when we went overseas together. I think we purchased the cheques via AAA here, and then cashed them as needed in Italy. It’s been years since I used AAA as an insurer or their membership benefits so I don’t know if they still offer that benefit. I’ve emailed them to see if this is the case. It’d be a handy and safe way to go with some cash in my pocket as they’ll replace any lost or stolen traveler’s cheques.
Citi has branches in the cities I’m traveling through but there’s a 3% foreign transaction fee that won’t show up until it’s posted to the account which is less than ideal.
***This is where I had to leave off the research, running off to purchase my ticket in a tizzy before prices skyrocketed and accountant heads exploded.***
Tentative conclusions: PiC is a AAA member so I may ask him to pick up a couple hundred in traveler’s cheques to cover the cash portion for me, and then off to evaluate more card options.
Then [cue: dun dun duhhhhh] Frugal Scholar posted this fantastic tidbit that dovetailed perfectly with … well, you’ll find out! 😉
September 12, 2009
These are permutations of this question: How do you help others help themselves? Turns out, the answer can be quite simple: identify the appropriate resources and let them help themselves.
With the wealth of information and financial knowledge available online, I don’t buy financial advice books. There are a few “classics” or commonly discussed books that are constantly referenced, but they’re available at the library or through Paperback Swap, so it seems pointless for me to pay money for basic financial wisdom.
(Ramit would dispute this vehemently. But that’s not the point. The point is here, I’m agreeing with his premise that sometimes you should spend money to save money. Point also made on Consumerism Commentary’s podcast. So I guess you could read his post, listen to his commentary and skip this post. But you shouldn’t! Embarassing story ensues.)
This (perpetual and time-consuming) willingness to root for information, however, isn’t for everyone.
For those who are only interested in avoiding the biggest potholes but don’t yet know how to identify them, the exhortations of an exasperated PF blogger to “know your budget, understand your spending, run your numbers!” just doesn’t translate as constructive advice.
To fill that need, those black and yellow Guides for Dummies are good resources. I spent last weekend previewing the Mortgage for Dummies book because as an English major, I was skeptical of what seemed to be the Cliff Notes to money. The alternative, if the book didn’t pass muster, was to go dredge up more mortgage advice links and posts which weren’t terribly appealing in the first place. Plan B wasn’t looking too hot.
Happily, I was impressed at the concise and engaging writing. It wasn’t just my natural nerdiness and affinity for the material, either. After a few chapters, my non-blogger friend was moved to ask me questions about concepts raised in the book! Normally, this friend’s eyes sort of glaze over a bit when I start in on my really involved financial diatribes. You know, the “I’m watching football lalalaaaaa” kind of look?
For the record: I got to explain why people pay for points when shopping for a loan. In some situations, if you’re staying in the house long enough that your total interest paid is less than without paying for points (after factoring in the point cost) it’s worth it. That summary is pretty ok, but my original example didn’t clear things up, so I explained how I used the concept in a totally wrong and financially detrimental way.
When I bought my car *cringe* I made just about every mistake. I did negotiate and worked with the Fleet salesman instead of the floor salesman but that was about the only thing I did right.
Sensing blood, they presented a “pay for percentage” situation that only a total newb would fall for, and I did. *more cringe* They offered to knock a full percentage point off my interest rate, financed through a credit union they worked with, if I would pay an additional $1000 for GAP insurance. Since the car purchase was under duress (see Mistake #7) I wasn’t prepared for the cash expenditure, thus, easily freaked out about the prospect of having to make up the difference between my drive off the lot value and appraised value if anything happened to the car early on.
They preyed on my ignorance and created fear of a situation that actually isn’t impossible to bear. (Which is, btw, how most of them sell extended warranties and such.)
I should have considered the time horizon. The loan was written for 60 months even though I had no intention of taking that long. On the other hand, with all the financial turmoil at home, I also didn’t know how long I’d stay in that loan. Predictions would have been wild guesses. I signed the paperwork, went home, and privately committed to paying $500/month instead of $370. It was PIF in 3 years – that reduced one percent was not worth it. I don’t have the paperwork anymore, but roughly speaking, because I was dumb enough to roll that 1k into the loan, I paid 1k for the privilege of saving about $200. Yay me!
Back to the point: it’s good to know that there are smarter folks than I out there writing guides to help those who just don’t have the time for this kind of obsession. Simple writing is often the smartest writing.
There’s something to be learned there.
September 3, 2009
*Slightly edited for public consumption. This was written for a young relative who had never before evinced interest in the financial world, not even in the spending of money. Said relative approached me asking for some guidance on which credit card to get as the age of 21 was fast approaching and, ambivalently, “perhaps it’s time.” *
Dearest Relative,
Once upon a time, I used cardoffers.com to earn extra bonuses when applying for new credit cards; if you applied through their site, they’d offer to pay you an extra amount of cash (from $10-$75) depending on the card. I’ve gone through it and I don’t see any good cards with an extra freebie this time so I’m going to say, for your purposes, the Citi Forward card is good.
Read the two following posts on the cards for more on what is offered, what you need to do, and how to max out the benefits of the card:
Jonathan’s guide to $100 bonuses from credit cards (accessed 08.15.09)
Jonathan’s review of the Citi Forward card
If you were willing to take the extra time (probably 30 minutes total over the life of the deal), I would suggest applying for the AMEX Starwood at the same time as the Citi Forward. If you get approved: activate it, make a tiny tiny purchase of a dollar or two to generate the bonus points, cash the points out, and call to cancel the card a few months down the road. It’ll nab you an extra $100 of spending money right off the bat. Not a bad thing to have in the wallet since gift cards don’t expire in CA.
As you get older and start using cards more regularly (and responsibly! I have to add that, you know that), I would recommend that you pick a second and third back-up card just in case there are problems with your original card.**
A few reasons this is worthwhile: as long as you are responsible with your spending, it’s a fantastic back-up for purchase protection. If you were overcharged for something, and discovered it when you got home, you can be outta luck if you paid cash and the store refuses to acknowledge the mistake.
Building your credit history with just a few cards (you just have to have them, pay them in full, on time, don’t believe that BS about having to carry a balance to build history) is useful. And the longer your credit history is, the better it is. It takes years, so this is a long term issue.
Another side of purchase protection: safety! It’s not safe for you to carry tons of cash, and checks can very easily expose you to the risk of identity theft/fraud since your name, address and sometimes phone number are all printed on the check. If it can happen to Bernanke’s wife, it can happen to you! When you’re making a big purchase, you can put it on your card and pay it off when you get home.
** For example, my go-to credit card was out of commission when I was on my cross-country trip, I had to wait 7-10 business days for them to send the new card. I had other cards I don’t use as much but ready to go in my wallet so I didn’t have to withdraw a ton of cash or carry a debit card and lots of cash on me while traveling in the city. The great thing about American Express cards, at least before the recession, was that they would always overnight you a replacement card free of charge. I don’t know if they still do now, but it was a cool and handy perk.**
As always, the key tenets to using credit cards responsibly is to make sure they work for you by not carrying a balance and being subject to interest charges, always pay on time to avoid late fees and two-cycle billing (to be explained at a later date), and be certain you have the cash to cover the charge.
When you’re ready for more financial basics, let me know. I’m more than happy to whip up more cool sensible advice you want to hear. 😉
January 4, 2008
While formulating my financial plan for 2008, I said that I ran into a series of walls and needed a break. I’d crunched the number every which way to Wednesday, and still couldn’t stretch my income to cover my savings AND expenses. Know why? Because I was turning a blind eye to what I was really doing: ignoring the expensive drain on my cash stash.
The huge barrier to my ability to save and plan a new year is my inaction regarding selling the truck. It was identified as a problem months ago, but the convenience of a third car, especially after Ma bashed in the front of the second car, has been luxurious and I let myself get complacent.
Well, no more o’ that nonsense!! I’m running short a full $400 per month just because of a danged car payment that I didn’t want in the first place, and it’s stupid to let it affect my plans for the year and then get in a funk when the numbers don’t work. Of course they don’t work, dummy, it’s time to get rid of that thing! Hmph!
This year, I’m taking the financial planning back to the basics.
Part 1: Reduce Expenses. Part 2: Increase Savings.
Stay tuned.
