Tag Archives: finance

Need to Send Money to a Foreign Bank Account? Try TransferWise

I’m currently planning a trip to Malaysia this summer. One of the primary purposes of this trip is to spend a couple of days on a durian farm where I’ll just gorge myself on durian. I’m excited. (I’ve also got flights booked on Qatar’s and Etihad’s A380s in first class, so those reviews will eventually appear on this blog).

But to confirm my stay at the durian farm, I needed to transfer money to the durian farm’s bank account. It’s just a guy and his family running this place, so they don’t have any infrastructure to take credit cards or do online payments.

At first, I was at a bit of a loss about how to accomplish this. I initially thought of wiring money, but wiring money is generally pretty pricy, much less wiring money internationally. I use a credit union for my primary banking purposes, and they charge $35 for an international wire. I looked into money transfer services like Western Union, but they too were not cheap.

And then I came across TransferWise (warning: that’s my referral link). TransferWise is a relatively new company that gets around some of the traditional fees associated with sending money across borders by making it so that no money actually crosses borders. If you want to send money from bank account A in the US to bank account B in Malaysia (as was my case), rather than directly sending money from bank account A to bank account B, they find other people who want to transfer money in the opposite direction (i.e. from Malaysia to the US) and just transfer the money within each country individually to settle everyone up. Pretty ingenious, if you ask me.

Because the money doesn’t actually cross borders, they can offer much lower rates, and I was able to send my money at the prevailing exchange rates for a fee of only $3. Pretty good if you ask me! The fact that you get the actual exchange rate is a big deal, as many money transfer services advertise low fees but gouge you on the exchange rate.

Anyway, if you find yourself needing to move money across borders, you might want to consider TransferWise. If you sign up with my link, you get your first transfer for free (up to $750).

Why You Should Follow The Money

Whenever I’m trying to understand why things are the way they are, I often find it useful to try to follow the money, so to speak. By following where money goes and to whom, it often becomes clear why people/companies act the way they do.

A prime example in the points/miles blogosphere is why there are so many posts talking about certain credit cards on a subset of the blogs. The answer? Because these bloggers get paid money when people click on their links and apply for the credit cards that they advertise. Money is flowing from the credit card issuers to the bloggers. Thus, when evaluating the content of said blogs, it is often useful to ask yourself whether or not these bloggers have your best interests at heart, given that they make money when you apply for credit cards using their links.

On the flip side, most of the points/miles blogs out there don’t make money from credit card affiliate links, largely because they don’t drive enough traffic/applications to them. Does this make those blogs inherently more trustworthy? No, not necessarily, but I think sometimes people unfairly attack these blogs under the pretense that they’re making money via credit card links when they’re actually not.

Another example: a couple of years back (in 2010/2011), there was a company called Envaulted that offered 1% cash back if you gave them access to your credit card purchasing history (by providing your credit card website login credentials). This was in addition to whatever rewards your credit card already gave you. Supposedly, they were going to use that information to then sell to advertisers which advertisers would pay premium dollars for since they would be super targeted since they knew what you already spent money on.

A lot of people were skeptical, but I milked as much as I could out of it at the time because the flow of money was venture capitalists to Envaulted straight into the pockets of customers. I also knew that this business model wasn’t sustainable, so the company probably wouldn’t last in its original incarnation (they did pivot to other sorts of offers for a while, but then they shut down their website abruptly while lots of people had large balances of unredeemed cash back). Essentially, they ran out of funding and weren’t able to prove out their business model, so they had to call it quits.

Compare this to Amazon Payments. Amazon Payments was the goose that kept laying golden eggs, and people were quick to blame bloggers when it finally died. Honestly, bloggers weren’t the problem. The consumer product of Amazon Payments was a money loser for Amazon for years, but they didn’t really care because they’re Amazon. The money flowed from Amazon’s coffers straight to people like us, but 1) the losses were relatively constrained because of the $1,000 per month per person limitation and 2) Amazon is such a behemoth and they’re notorious for losing tons of money on new products that even a “big” blogger posting about Amazon Payments and getting lots of people to sign up isn’t enough to materially make Amazon change its strategy. In fact, I’m pretty sure that a large part of the reason why Amazon Payments was shut down was because it wasn’t popular enough, so it didn’t make sense for Amazon to keep losing money on a product that wasn’t reaching the kind of adoption that they wanted.

This tactic of following the money is often useful in our hobby because our hobby is now so dominated by credit cards and financial institutions, but it’s also a good tactic for understanding things like politics. But beware that you shouldn’t believe everything that you read on the internet, so even if people are writing about money flows and it seems reasonable, it’s entirely possible that they got everything wrong (like my examples in this post could be completely false, but obviously I don’t think they are).

No More MoneyPak Cards from Green Dot

As per this NYTimes article, Green Dot will stop selling MoneyPak reload cards, and the cards are expected to be out of stores by the end of March. While these cards haven’t often been used in MS schemes given the stringent cash-only requirements for loading, I think this is a good reminder that there are many forces beyond miles/points enthusiasts that lead to product shutdowns.

The article discusses the use of MoneyPak cards in scams–for example, Green Dot MoneyPaks (and bitcoin) are often the preferred sources of payment to ransomware–given that the cards are anonymous and allow for quick transfer of funds. This is one of the cited reasons why Green Dot is discontinuing the cards.

As much as people like to blame bloggers for revealing secrets, here’s an example of a product that is in many ways similar to Vanilla Reloads and is also being shut down, in spite of having no real value to MS. Fraud and money laundering are much bigger concerns for these products than people trying to get points (albeit some aspects of MS can look like money laundering, but using credit cards is not particularly useful for introducing dirty money into the financial system).

2016 Changes (Devaluations) to Chase Freedom Rewards with Chase Checking Account

This morning, I got an email detailing changes coming to Ultimate Rewards for people with Chase Checking and Chase Freedom accounts. I have both: the Chase Freedom was my second rewards credit card ever, and I got a Chase checking account last year to get a sign-up bonus.

Essentially, there will no longer be a benefit to having a Chase checking account in addition to a Chase Freedom. No more extra 10% per $1 spent, and no more 10 bonus points for every purchase.

Screenshot of the email that I got this morning

Screenshot of the email that I got this morning

I’m not sure how decreasing points earning meets my evolving needs as a customer, particularly as my need for points increases over time, but at least they’re giving a very lengthy advanced notice of the changes.

This doesn’t materially change much for me, except for the fact that I’ll now definitely be canceling my Chase checking account since I currently have to keep a $1500 minimum balance to avoid monthly fees (seriously, who pays checking fees nowadays?). The 10% bonus was nice but not that meaningful, although it did mean that the Chase Freedom was a better card for earning on unbonused spend than the Chase Sapphire Preferred.

The extra 10 points per transaction, however, was/is awesome and potentially very lucrative, although there are reports of people getting shut down for abusing it. But as an example, you can buy an Amazon gift card for a minimum value of 50 cents. At a conservative valuation of 1.25 cents per point, that’s like getting 25% back on Amazon transactions. Or if you prefer cash back and don’t spend much on Amazon (like me), you can pay 3 cents to charge $1 through a certain mobile reader and earn roughly 9 cents per swipe. Not that I’m necessarily recommending either of these avenues.

How to Choose a Bank

Here’s another post based on reader request. I’ll be upfront and say that I don’t know nearly as much about banks as I do about credit cards, but I figure that it might be useful to start with what I have for myself.

I currently have three bank accounts: one credit union, one online bank, and one major national chain. I use the credit union for most all everyday banking activities, I use the online bank for free ATM withdrawals, and I don’t do anything with the national chain except accrue rewards.

My credit union is Boeing Employees Credit Union (BECU). I highly recommend credit unions because they often have lower to non-existent fees (e.g. there’s no monthly fee or minimum required balance to have no monthly fee), they can give better (if only marginally better) interest rates, and they’re not some impersonal behemoth that’s trying to squeeze fees out of you. You’re a part owner with a credit union, there are no external stockholders to appease, and I generally feel good about supporting a credit union.

I can do almost everything I need to do with my credit union (which is mostly just online banking, online bill payment, and paying other people), but credit unions often don’t have as many physical branches or a huge network of ATMs, which can be problematic when you’re traveling or if you need access to cash frequently. But most credit unions have reciprocal agreements with other credit unions, so you can use the branches or ATMs of other credit unions without fees. This benefit is great for me since I currently live in SF but BECU is based in Washington.

From my other posts, it’s clear that I use credit cards as much as possible, but for the times when I need cash, particularly when traveling, I use my Charles Schwab High Yield Investor Checking Account. I feel a little bit guilty every time I use this card at an ATM since they reimburse all ATM fees, and I know they can’t be making money on the paltry amount of money I keep sitting in that account. As far as I know, this is one of the best bank accounts for frequent travelers given that they reimburse all ATM fees, so I never have to worry about using airport ATMs that charge ridiculous fees.

Finally, I have a checking account with Chase that I don’t use. I opened it because they offered me $200 to do so. But as soon as I’ve met the 6-month requirement of keeping the account open, I’m going to close said account since I don’t think I have any real reason to keep the account open.

Thus, my recommendation would likely be to find a credit union that you like for your normal banking needs and to open a Charles Schwab account if you travel. Please let me know in the comments if you think I’ve overlooked something!

How to Avoid Foreign Transaction Fees

…or why you should never exchange your money at a exchange bureau (unless you need a lot of cash immediately).

I’m rather shocked that exchange bureaus exist since they provide horrid exchange rates for minimal convenience. And yet many people make an exchange counter the first place they stop after landing in a new destination.

Whenever I need cash in a foreign country, I always stop by an ATM to withdraw money. Your bank likely gives you the market exchange rate, which can be several percentage points better than what an exchange bureau will offer. And you can avoid fees by withdrawing money from partner banks (e.g. Bank of America cardholders can withdraw money without fees from Barclays in the UK, Scotiabank in Canada, BNP Paribas in France, etc.).

Or, you can do one better and just get an ATM card that will reimburse you for all ATM fees, including international withdrawals. I highly recommend the Charles Schwab High Yield Investor Checking Account, which does exactly that. Using this card, I don’t worry about whatever fees the ATM is charging since Schwab will reimburse me for everything at the end of the month, and I don’t need to spend time searching for a specific bank’s ATM. This also enables me to pull out cash just when I need it, so I’m not left with large sums of unspent foreign currency.

I’ll do a later post about no foreign transaction fee credit cards. Until then, what are your tips for getting cash in foreign currencies?

How to Use Your Credit Card’s Concierge Service

…or how to get someone to do your bidding for free.

I love credit cards (see my post on using trip delay insurance). One perk of credit cards that I take advantage of frequently is their concierge services.

Any card with the Visa Signature logo comes with a free concierge service, as do Amex Platinum and Centurion cards, Mastercard World Elite cards, and Discover cards (I’m not quite as certain regarding Discover cards, but the Discover card that I have comes with a concierge service, and it’s just the basic no annual fee Discover More card).

For the most part, I’ve used the Visa Signature concierge to make restaurant reservations. Want a table at Gary Danko? Instead of calling exactly 2 months in advance yourself, just send a request to your concierge, and they’ll do the calling for you. Want a reservation at a restaurant in Paris but you don’t speak French? Have your concierge deal with it.

Concierges can also do things like make travel recommendations, get concert tickets, send gifts, etc. I once was looking for a place near work to get my pupillary distance measured in SF for free, and instead of calling up optometrists and shops myself, I sent the request to the concierge, and they emailed me back a list of places where I could get this done. This saved me at least half an hour of research.

Granted, the quality of concierges varies greatly. I’ve used the Visa Signature concierge to make pretty much all of the restaurant reservations for my upcoming trip to Europe, but in some cases, they told me that tables weren’t available because they requested them for the wrong dates (for April 2nd instead of February 4th because they forgot that Europeans put the day first) or because they didn’t know how to dial an international number correctly. But overall, I’ve been quite pleased with the service that I’ve received from Visa (less so with Discover and Amex).

Have you ever used your credit card’s concierge service? What things have they done for you?

How to Slim Down Your Wallet

This is my wallet:

my_wallet

I love my binder clip wallet. It’s frugal, and it forces me to carry as few things as is reasonable. My wallet contains the following:

  • Clipper card
  • Driver’s license
  • Credit card
  • Work badge
  • Gym membership

That’s it. Occasionally, I’ll carry $20 clipped to the back if I know I’m going somewhere where I need cash (like the farmer’s market), and I often switch out the credit card depending on my spending requirements at the time, but I try not to carry anything else.

If you want to slim down your wallet, for each item in your wallet, ask yourself the following:

  1. Did you use this item in the past week?
  2. If not, would it be really, really bad if you were caught without it?

If you answered “no” to both questions, take it out of your wallet. This means that you definitely don’t need to carry receipts around, you probably don’t need more than two credit cards, and most of your membership cards can be removed.

I use every single thing in my wallet at least 4 times a week, except for my driver’s license, but I figure it’d be really, really bad if I didn’t have my license in some situations. I used to carry around a debit card as well, thinking that there might be situations where I would need cash since I usually don’t carry any cash with me, but after months of never using it, I determined that it wasn’t necessary. And if I’m ever really desperate for cash, I can always get a cash advance on my credit card. For everything else, I stash them in a drawer at home, or if I use them at least once a month, they might find a place in my day bag. I only put things into my wallet as needed.

What do you carry in your wallet? Do you have any favorite tips for slimming your wallet down?

How to Haggle Effectively

I hate haggling. It makes me anxious, and I often feel like I get ripped off. But I have a new strategy that I effectively used on my last trip abroad: figure out how much I’m willing to pay before I even ask for a price, and then stay firm to that price. Why does this help?

By coming up with a price before you even ask how much something is, you prevent yourself from being biased by anchoring. Here’s an experiment: ask someone if the Mississippi river is longer or shorter than 5000 miles. Then ask him how long he thinks it actually is. Then try it again with a different person, same questions, except instead of 5000 miles, ask if the Mississippi river is longer or shorter than 500 miles, and see how the answer to the second question changes. If you ask enough people, you should find that people usually guess around 3500 miles for those who are anchored with the 5000 mile number, while those anchored with 500 miles usually guess around 1500 miles. This effect is particularly potent when we have very few other data points to help us shape our answer, like in the case of estimating the length of the Mississippi river or when we’re trying to buy a wooden animal figurine as a souvenir in Greenmarket Square.

If I wait until after hearing a price to determine my maximum willingness to pay, then I subconsciously allow myself to be biased, which means that I’m likely to overpay and regret my purchase. By coming up with the figure before engaging in any haggling, I know that if I end up buying the item, I should be happy, since I paid no more than my maximum amount that I had predetermined, and if I don’t end up with the item, then I’m still better off since I wasn’t willing to pay any more than I had predetermined.

Of course, this all relies on the assumption that you can accurately gauge how much you’re willing to pay for something. This is often hard, so sometimes it’s easier just to say how much you’re willing to spend on someone (in the case of a souvenir), and you’ll only buy it if you think the person you have in mind would really enjoy it.

My real-life example: in Korea, I saw a hoodie that I wanted. Before I even started haggling, I had predetermined that I would be willing to spend 20,000 won on it (roughly $20). When I asked the price, the first number the salesman showed me was 40,000 won, twice as much as I was willing to pay. I said that that was too much, and he dropped his price to 38,000. Again, I told him it was too much for me, so he dropped to 36,000. When I refused again, he said that he could give it to me for 33,000 won if I paid in cash, his final offer. Since it looked like we wouldn’t come to an agreement, I just started to walk away. He then asked me what I was willing to pay, so I told him 20,000, and he accepted. I walked away happy.

What have been your experiences with haggling? Do you have any favorite tips that I didn’t cover?

How to Use Your Credit Card’s Trip Delay Insurance

…or why you should read the terms and conditions of your credit cards.

I love credit cards. One reason why I love credit cards is because they often come with tons of benefits that most people don’t know about.

On my way back to SFO from a recent trip to Austin, my flight was delayed due to weather at SFO (i.e. there were clouds, so planes couldn’t land). Since it was the last flight out, they kept on delaying the flight, until they eventually canceled it altogether and rebooked passengers on flights the next day. Unfortunately, this meant that I had to overnight in Austin.

Since weather was the cause of the delay and subsequent cancellation, the airline didn’t offer any sort of amenities to the passengers; the most they could offer was a number to call that would get me a distressed traveler rate at a nearby hotel. But luckily, I had booked my airline tickets with my Discover card, and, lo and behold, my Discover card offers trip delay insurance.

For Discover’s trip delay insurance to apply, your flight needs to be delayed for at least 6 hours before being cancelled. If it does, they’ll reimburse you for up to $150 per day for lodging and meals for up to 3 days. This meant that my hotel room that night and breakfast at the airport the next morning were completely reimbursed by Discover. Once I got back to SF, I faxed in some paperwork, and a check arrived a couple of weeks later. Awesome!

Other little known travel benefits to credit cards include trip cancellation insurance (they’ll reimburse you if you have to cancel your trip for covered reasons), lost or damaged luggage insurance (you get paid for whatever your airline doesn’t pay for if they lose or damage your luggage), and baggage delay insurance (like trip delay insurance; you’ll be reimbursed some amount per day for certain expenses if your bags are delayed more than a certain amount of time). Together, these benefits can mean that buying travel insurance isn’t necessary since your credit card will cover the same things (similar to how it often makes sense to decline purchasing additional insurance when renting a car).

Not all credit cards have all of these benefits, and sometimes the benefits might not apply as you would expect (e.g. Discover’s trip delay insurance doesn’t apply if your flight is cancelled within 6 hours), so I would advise you take some time to read the terms and conditions of your credit cards. It might save you some money and provide some peace of mind the next time your trip gets derailed.

Have you ever used a little-known benefit of your credit card? What was your experience?