I didn’t post to my blog last week because I was on vacation in another country. It was really refreshing even though the weather wasn’t 100% cooperative. Now, here are some random personal finance related notes from my vacation.
Exchanging money. The best way to get the local currency is still using the ATM card, as long as you don’t pay a foreign ATM surcharge. Banks and money exchange services post two rates — a "buy" rate and a "sell" rate. The lower "buy" rate is used when you exchange US dollars into the local currency. The "sell" rate is used when you exchange the local currency back to US dollars. My Fidelity mySmart Cash account does not have any surcharge for using the ATM card overseas. Visa charges 1% extra on top its wholesale exchange rate, which is better than the retail rates posted by the bank branches. The all-in exchange rate I received from using the ATM card was close to the "sell" rate posted at local banks and money exchange counters. If I exchanged my US dollar bills at a bank, I would get the "buy" rate which is 2-3% less.
I charged a hotel bill to my American Express card. American Express charges 2% for foreign transactions. But because American Express also gives me a rebate for using its card, it evens out to a wash between the exchange rate surcharge and the rebate.
Crazy prices for convenience. Although I was in a developing country, I wouldn’t know it if I just looked at the prices. Hotels know it well. They’ve got you on their premise and you don’t have many choices. If you want convenience, you’ll have to pay dearly. $4 for a small bottle of water in their restaurant. $25 per person for a breakfast buffet. $1 a minute for *local* calls. $25 a day for Internet access in your room. $10 per day per person for using their gym. All these services are optional. The prices are disclosed up front. If you don’t like the prices, you don’t have to eat there or use their Internet access or gym. But it still leaves a bad taste in my mouth. They may call you guests but they really see you as trapped profit generating subjects. What are you supposed to do? Bob Sullivan in his book Gotcha Capitalism suggested that before you make a reservation, you should call the hotels you are interested in and ask about their prices for the services you will likely use, such as parking, Internet access, fitness gym, breakfast, etc. You then add up all the prices and compare the bottom line between hotels. It’s too bad you have to go the extra mile like that.
Taxes included in prices. I really like how other countries show the prices. The sales taxes are included in the price on the tag. What you see is what you pay. There is no surprise. The United States and Canada are the only two countries I know that add extra sales tax at checkout. If the sales tax is mandatory, why not include it on the price tag, like the way gas prices are displayed at the gas stations?
No evidence of consumers clamming up. I read and heard in the news media about American consumers being hit hard by foreclosures and high food and gas prices, but I didn’t see any evidence of their clamming up from my casual observations. Most of the tourists at the place I went came from the U.S. The flights were full. I saw many happy middle class American families at the airport, in the hotel lobby and pools, at restaurants, on the streets wandering about, and at tourist attractions. Perhaps there are fewer tourists than before, but there are still more than plenty. Don’t believe the doom and gloom. American consumers are still kicking alive and well.
Refinance Your Mortgage
Mortgage rates are still low. I saw rates as low as 3.625% for 30-year fixed, 2.875% for 15-year fixed, with no points and low closing cost. Let banks compete for your loan. Get up to 5 offers at LendingTree.com.