Foreign Perspectives

Of the hundreds of people who have stayed with us over the course of this year, only two or three have paid using the Nationwide credit card which is crazy as they’re the only place that doesn’t charge to use your cards overseas.

Perhaps more crazy though is that of the dozen or so couples who live in Spain and have used us as a pitstop on their way to/from the UK, only one used a Nationwide card as they’re spending quite a considerable chunk of their income on bank charges. Quite how much is staggering. For example, a friend who lives in Brussels let drop once that he just used his Halifax card in the same way that he had done when living in the UK ie he would lift £20 or £30 each time he needed some money and likewise when he was paying for the groceries or whatever.

Most people read the bit in the credit/debit card charging information that says “currency exchange 2.75%” and figure that he wouldn’t have run up much of a bill. However, there is a transaction charge on all overseas use of the card of, at that time, £2 (and I gather it’s now £3) PLUS the 2.75% foreign exchange charge. So, that £20 cost him £2.55 ie 12.75% and, yes, he was paying around 12% of his entire income each month on bank charges!!

Clearly it’s quite different if you’re living abroad vs going on holiday but that minimum charge soon mounts up if you lift small amounts of cash. Whilst it’s much better to use the Nationwide card and pay nothing, if you are using a fee charging card you should lift a minimum of £100 or so each time and thereby reduce your costs to 4.25% to 4.75% depending on your bank and, whenever possible, use your credit card for purchases rather than making cash withdrawals.

See our guide at holiday money for more information.

Although many would argue that if Fort Knox accumulates a mountain of gold, then that’s clearly the way to go but it rarely is.

Yes, you can find that gold will appreciate quite substantially from time to time, particuarly when things appear bleak in other financial areas. But, when things pick up again, you’re just left with a pretty lump of metal which doesn’t pay you any interest or dividends.

Shares are obviously risky so if you’re looking for something that’s safe, then you need to avoid them and anything that’s based on them too which means that bonds are out too. Even the banks aren’t really 100% safe. If they’re large enough, the government will usually feel obliged to step in and bail them out, but do you really want to assume that your bank qualifies as being “large enough”?

You might think that I’ve eliminated everything, but there is one totally safe way to hold your money and it’s so simple that most people overlook it. All you need to do is to put your money in the government’s bank.

In practice, few governments allow you to bank directly with their central bank but the central bank normally has a number of offshoots with which you can deposit money and which also have that 100% guarantee. For example, in the UK you can use National Savings (from instant access savings through to fixed term investments) and in America you can buy Treasury bills (a fixed term investment).

What you’ll usually find is that these investments pay a little less than their equivalent as put out by normal banks. For example, at the time of writing, you can get 4.5% from an instant access account for a high street account but only 3.45% from National Savings. That 1% difference is effectively the cost of the 100% guarantee for your money; many depositors with Northern Rock would have been more than happy to pay it.

One of the ironies of the explosion of the various money making schemes available on the Internet in recent years is that it’s come at a time when it’s become virtually impossible to get the ideal type of bank account for these activities namely an American one.

However, recently there’s been a slow but growing number of alternative banks starting to fill in the gaps that the 9/11 security crackdown forced normal American banks to create. Thus far these have been quite limited in capability but that’s starting to change.

For example, Gem writes about one upcoming innovation from Payoneer which is basically creating a virtual bank account linked to the prepaid debit card that they issue on behalf of a number of organisations. It’s currently in the “coming soon” category but will permit you to quote a real bank account number to the likes of paypal thereby making it possible to convert your virtual money into the real kind by way of their debit card.

I suspect that there’ll be more such innovations coming over the next year as already paypal themselves are rolling out a similar, albeit more limited, scheme in some countries.

In big hotels towels and whatnot go “missing” and it’s classed as wastage basically because it would be pretty difficult to identify who’d made off with things as so many different people are involved.

However, in our place which is very much at the smaller end of the scale, there are very few people involved so it’s easy enough to identify the culprits. For example, just this morning a family checked out and made off with four of our towels. Sometimes you wonder why people do that but in this case it’s pretty clear: they had ordered four breakfasts but only ate one. Therefore in lieu of the three breakfasts which we’d charged them for they thought that they’d take two little towels and two big ones.

Net effect? Well, they’ve been charged EUR 40 and received an e-mail letting them know we’ll refund it if we get the towels back next week.

Now, what they’re going to say is that they didn’t do it and obviously it must have been our cleaning person. Well, as it happens I’m the person who both puts the towels into the rooms and takes them out again. I put six in and took two out therefore they took the other four.

When you’ve collected a few domains and are running a number of websites after a while you start getting what can sometimes become a flood of peculiar offers.

Mainly, for us, it’s the peculiar bookings. Nearly always these are from Dr SomeBodyOrOther who represents some Christian organisation and who wants to send a large number of delegates to us for some conference in the near future.

On the more general front there’s the stream of link exchange offers from some incredibly dodgy websites indeed. On the other hand, I’ve just done a link exchange with A Personal Finance Guide which is close to being the American mirror image of Financial Perspectives.

And then there’s the business offers of various kinds. The latest is effectively a franchised dating site. Some of these look quite interesting eg for the dating site it would appear that the only upfront cash required would be to register a domain so I’m thinking about that one.