Thursday, 27 September 2012

Avoid Bank Fees when Travelling Overseas

by Rob d'Apice
When travelling overseas, it's easy to cop a bunch of unnecessary bank fees when trying to access your money. And it can be substantial - depending on how you managing it, you could be paying more than $10 in fees for every $50 dollar you withdraw. Not cool!

Today, we look at 4 different methods for getting access to your cash overseas - from worst to best.

The worst: Exchange at an airport

Avoid exchanging cash at the airport altogether. Generally the exchange rates you receive are particularly bad. They can do this because they have a stranglehold on a captive market - once you're at an airport and you want money changed, you don't really have another option!

Another downside to exchanging all your cash in advance is that you're then carrying around a lot of currency, and you're putting yourself at risk of losing it or getting it stolen.

The bad: Using your ATM Card

A.K.A. the I-forgot-to-do-anything-about-my-money method.

So, you chuck your ATM card into a foreign bank and pull out some money? You'll generally cop a ~$5 fee from your Ausralian bank, plus a 3-4% currency conversion fee with each withdrawal. You may also pay a small fee to the foreign bank for using their ATM.

If this is your only option, you're best bet is to take out as much money as possible with each transaction to minimise the fees. If you're in a group, considering taking out a large amount in turns and splitting it between the group. Make sure you store any excess cash you've withdrawn somewhere safe - like back at your hostel or hotel.

The good: Use a preloaded cash card

Many of the banks now offer a preloaded travel cards. Before you leave, go to your bank to get a card, and transfer in some of your balance. You can transfer in your spending money and convert it to the necessary currency you'll need for your trip (meaning you 'lock in' an exchange rate when you load the card). The card itself can hold a bunch of different currencies at the same time.

You'll (generally) still get charged a fee for ATM withdrawals by your Australian bank, but you will avoid a large currency conversion fee with each transaction.

Note that there is sometimes a setup fee for the card, depending on the bank. If you're a student, you may be able to get this fee waived.

The best: Use a zero international transaction fee credit card

The 28 Degrees Travel Card, offered by GE Money, has no annual fee and no international transaction fees. It also doesn't charge anything for cash withdrawals (although you won't get an interest free period, so you'll start accruing interest on this withdrawal straight away). Note that you may be charged a fee by a foreign bank for using their ATMs - but this is hard to avoid.

I suggest you 'pre-load' the card with money - transfer some of your holiday spending money to the card so that your credit card is in the black. That means that when you withdraw cash from a foreign ATM, you won't be 'borrowing' on the card and you won't pay any interest.

Wednesday, 19 September 2012

6 Things That Gina Rinehart Could Do

by Rob d'Apice
Gina Rinehart, Australia's richest person and the world's richest woman, has a networth of over $29b at time of writing, according to Wikipedia.

Thus far, she hasn't proved particularly popular with the average Australian. Her recent press coverage has revolved around her praise for Africans, "willing to work for less than $2 a day", and her public battle with her children through the Australian courts over their share of inheritance.

Oh, and her poetry.

So we ask ourselves: what could Gina Rinehart do to win some serious public favour? $29b goes a fairly long way. How long? We put our financial detectives on the case and found 6 options.

1. Colonize the moon.

Discovery Channel's website estimates that the cost of setting up a small colony of 100 people would be about $15b in transport costs. After accommodating the costs associated with training, support, etc, we think it would be well covered by Gina's chequebook. She may even have some spare change left to send herself up for a visit or two.

2. Solve world hunger for one year.

The Food and Agriculture Organisation of United Nations reckons solving world hunger costs $30b a year. That means Gina could help a billion people eat for one whole year.

3. Buy an iPhone 5 for every Australian.

At a retail price of $799, every Australian man, woman and child could be the proud owner of a new iPhone 5, instead of having to deal with Gina Rinehart. On top of that, you'd still have a couple of hundred dollars leftover to blow on useless apps, or expensive adapters to work with all your old iPhone 4 appliances!

4. Employ every person in Africa for 3 weeks.

Gina Rinehart assures us Africans are ready and willing to work for $2 a day. By her math, she can employ Africa's whole 1 billion person population for 15 days - or three working weeks. Perhaps she could start by outsourcing her poetry?

5. Fulfil every loan on - 10,000 times over.

As a martyr for free market capitalism, Gina Rinehart might prefer loans over handouts? No problemo! Gina has enough cash to fund every single loan on Kiva, a website that facilitates charitable micro-loans to small businesses in developing countries to help support local enterprise. In fact, she could fund 10,000 websites the same size as Kiva.

6. Invest in an High Interest Savings Account.

We can confirm that, at time of writing, Gina Rinehart is not a member of Prosple. This is a great shame, because if she had compared online savings accounts using Prosple, she'd be scoring up to 5.71% interest on her $29 billion. Assuming they accept her larger-than-average balance, she'd be netting $1.7b in interest every year!

In other words, she'll be netting 6.8 billion African man-hours every year!

Monday, 17 September 2012

HECS Debt. 3 Tips on making it work for you.

by Rob d'Apice
HECS Debt. 

Also Known As: HECS-HELP Debt.

Also Known As: that-money-you-owe-the-government-for-your-degree-but-you-don't-really-know-how-it-works.

How does HECS Debt work?

In Australia, if you're a Commonwealth-supported student (ie not a full-fee paying student), the government pays for most of your tertiary education. There's a small amount that your expected to pay, though, called student contributions. It's between $4k to $10k per year, depending on the courses your studying.

The government provides you with an loan to cover your student contributions, and it is now called HECS-HELP. Here's the scoop:

  • Amount. Depending on what you study, and the length of your course(s), you'll probably wind up with a debt somewhere between $10k and $50k. The average would be somewhere around $20k - $25k. You can check your current loan using MyUniAssist. You'll need your CHESSN number - it'll be in your 'Commonwealth Assistance Notice' that you receive each semester, buried somewhere in your inbox!
  • Interest. You aren't charged any interest on the loan, but the loan is adjusted to inflation - which is roughly 2 to 3% per annum. That's a much better deal than Home Loans (6 to 7%), Personal Loans (10 to 15%), or Credit Cards (up to 30%).
  • Repayments. You don't need to make repayments until your income reaches about $50,000 (this threshold is also adjusted upward each year). You'll then get 4% of your total salary docked to go toward debt repayments. As your income increases, the % of your income getting docked increases too - up to 8% for salaries around $90k or more. The repayments automatically come out of your pay and are processed as part of your tax return.

Basically, it's the best debt you'll ever have: no (real) interest, automatic repayments and no repayments required when you're a low income earner.

So what's the best way to make sure you get the most out of your loan? Here's our 3 piping hot tips:

1. Don't pay upfront or in advance. 

The government gives you a discount on repayments made upfront (at the beginning of semester) or voluntarily (after you've studied but in advance of compulsory repayments). For each of these payment types, you'd receive 20% and 10% discounts respectively for payments over $500, but have just been decreased to 10% and 5% respectively starting this year.

While there was a tangible advantage to paying off you debt quicker in the past, we think that the new discounts aren't enough to justify the difference that money makes to a student as compared to a young professional. In other words, having $1,000 at your disposal as a student is more important than $1,100 as a (hopefully) gainfully employed 30-year-old.

Want another incentive to hold onto your HECS Debt? If you migrate to another country later in life, you won't earn income in Australia and won't be required to pay off your debt. When you die, your HECS Debt will be forgiven, meaning your estate and/or your relatives won't be required to pay it back. The disadvantage, of course, is that you'll be dead.

But hold up: there's a strong counter-argument to this. Debt is generally a bad thing, and we'd never argue against someone choosing to pay off debt quickly. If you do pay off HECS quicker, you'll end up getting out of compulsory payments quicker - which means more take-home salary later in life. All we're saying is that you're not hurting yourself by paying off the debt at the minimum required rate.

2. Are you eligible for a benefit?

Did you study Maths, Science, Education or Nursing? Are you now working in a related industry?

You may be eligible for the HECS-HELP Benefit. If you're eligible, the government will contribute up to $2k per annum on your behalf to pay off your HECS-HELP debt.

You DO need to apply for this! It isn't automatic. Make sure you don't miss out, because the HECS-HELP Benefit counts toward your annual compulsory HECS repayments - this means that you could be getting more of your income in your pocket right now. More details on how to apply for the benefit.

3. Get Special Considerations.

Have you had to withdraw from a course after the census date?

Unfortunately, you'll still cop a bill for the course. If there were extenuating circumstances, like a serious illness or personal difficulties, you may be able to apply for special considerations so that you do not have to pay for the course.

The government has more information on this process, but you'll have to apply through your university. This process is generally different to the similar academics process (ie getting a fail removed from your transcript), so make sure you know that both are being sorted out if you go through this process.