Vansibel

Have you ever gotten one of those offers in the mail, saying that if you sign up to a particular credit card, they’ll give you 25,000 free bonus reward miles. I seem to get those all the time, whether they’re random solicitations or upgrade offers from my current credit cards. While these deals may sound like they’re a great deal at the start, if you have a closer look at the annual fees on the cards, things aren’t always as they seem.

For example, I recently got an upgrade offer from a credit card company saying that I would receive 15,000 cash back reward points if I signed up to their upgraded Platinum card. That would work out to $150 free cash at the end of the year. However, after a closer inspection of the small print, I found that there was an annual fee of $99. If kept the card for just 2 years, and barely used it, I would still end up paying more in fees than I would receive from the bonus reward points.

Another example if the Aerogold Visa offered by CIBC, which happens to be one of the most popular credit cards in Canada. When you signup to it, you receive 15,000 bonus aeroplan miles, which works out to approximately $150 worth of free flights. However the annual fee on the CIBC Aerogold Visa is $149. In just one year, you end up spending just as much for the privilege of having that card, as you receive in bonus reward miles. Definitely not a fair tradeoff if you ask me.

The best thing to do is find a card that offers reward points, without charging an annual fee. There are quite a few cards out there that offer this, and in many cases they offer just as many reward points as the other cards that have additional bonuses attached. Why would you spend $149 to essentially get $150 worth of Aeroplan miles and a new credit card, when you could get a card that provides almost all of the same reward benefits for free. It just doesn’t make sense!. That being said, each year, millions of people are tricked into signing up to new credit cards with the promise of signup bonuses, only to realize later that year, that they’re being charged an exorbitant annual fee, just for the privilege of earning the bank money. Crazy!

The first thing I consider when looking at signing up to any new credit card is the annual fee. If the fee is more than $20, its probably not worth it!

These days almost every credit card out there offers some sort of incentive program. Whether it be some sort of airline miles program, Best Buy rewards points, or simply cash back, its hard to find a credit card that doesn’t offer some sort of bonus program. So the question that most people who are applying for credit cards have is, which program is best? Should I choose a card that gives me air miles, which I can then use on my next vacation, should I get one that gives me free points for gas, or should I keep it simple and go for one of the cash back cards?

For what we have found from our research, almost all rewards programs that are offered through cards result in a bonus of roughly 1% of all purchases. For example, if we compare the CIBC Aerogold Visa, it provides 1 aeroplan mile for every dollar spent. If you look at the rewards on the Aeroplan website, you’ll see that one aeroplan mile is worth roughly $0.01. Therefore for each dollar you spend, you will receive $0.01 back in reward miles. In terms of cash back cards, TD offers a cash back card that gives 1% cashback of all purchases at the end of the year. So essentially, the same thing, however you get to choose how you spend your rewards.

So which should you choose? Well in my opinion its pretty simple, you should probably go for the cash rewards. Why be limited to spending your earnings on airfares when you could just receive cash instead? There are only a few instances where this would be useful

- If you have trouble saving up for a vacation and want to ensure that your rewards are going to be used for a vacation rather than something else, then this might be a good idea.
- If the particular card gives more than the usual 1% value in reward miles. There are some cards out there that give you 2 reward miles per dollar spent, and some other ones that give double or even triple reward miles depending on the type of purchase that you make.
- If you receive additional benefits of having that particular card, such as travel insurance, car rental insurance or other types of benefits

Overall, most reward programs offered by credit cards are essentially the same, and always work out to a 1% bonus on your spending. The most important thing to consider is whether or not you are carrying a balance, and if so, whether or not it would be a better idea to use a low interest rate credit card as opposed to a higher interest rate card that gives bonus points.

In a previous post I discussed various options that people use to send money and remittances to their family. The primary method that is used is Western Union, though more and more people have been considering Paypal due to their extensive advertising campaigns attempting to become a popular choice for remittences.

When you send money through Paypal, Paypal reviews the transaction to determine whether or not they think that its legitimate. If its going to an old account that has been around for years, in most cases they assume its good and let it go through. However, if the recipient is a new user, they often place excessive holds on the funds, resulting in huge delays. The average delay is 180 days, because Paypal feels that 6 months is an appropriate amount of time for people to wait.

Is it an appropriate amount of time to wait? Of course not. If your relatives are expecting to receive a payment, they don’t expect to wait 6 months for it, while still paying Paypal’s ridiculous fees. Whats worse, Paypal often then makes ridiculous demands for ID and other personal information. If you fail to provide that information within a few days, they permanently freeze your account and seize your funds.

To read more about how Paypal scams their customers, I recommend reading an excellent post on a blog that we frequently read: http://prevent-id-theft.org/?p=59

So before you consider using Paypal to send funds to family or friends, be sure that you’re aware that they’ll likely never receive them!

Most of us have experienced it. You go into a bank with a check, hoping to cash it and get the money available in your account that day, only to experience the bank teller stating that they need to put a hold on the check. While this is sometimes reasonable, such as when the check is worth thousands of dollars and you’re a new customer, it happens far to often to those who have been banking with the same bank for years, and have always kept their account in good standing.

Sometimes it makes even less sense than usual. For example, I recently opened a new account at Scotiabank in Canada. I deposited $10,000 into the account and left it there for a few months. I then went in one day (to a different branch than my home branch) to deposit a cheque for $20. Thats right… $20. The teller informed me that because I was a new client, that they would have to put a bank on the check. They also informed me that if I wanted to prevent having holds placed on my checks in the future, I would have to make arrangements with my “home branch.” Of course, this isn’t a usual scenario and isn’t all that common among other banks in Canada and the United States, though most banks will still hold checks for a variety of reasons.

I’ve explored the system further and have determined how you can prevent your bank from holding your checks, allowing you access to your funds faster:

Deposit recurring checks to the same account – For some reason, when you deposit a check on a regular basis, the bank seems to believe that theres no way that its going to bounce. Therefore, if you have a regular payment from your employer, its best to deposit into one account and to continue depositing it into that account. After a few weeks, the bank tellers will start to notice consistency. While it may be tempting at first to take the check to a check cashing store to get access to your funds sooner, if you can just hold off, you’ll be able to prevent checks holds in the future and save tons of money in the process.

Maintain a high balance – While maintaining a high balance is difficult for many, its a great way to prevent checks from being held. Most banks (except the morons at Scotiabank) will not place a hold on checks under $5000 if you have a nice balance in your account.

Ask for a certified check – If someone is paying you with a check, you can prevent it from being held by having it certified. If the payee certifies the check prior to giving it to you, it enables the bank to confirm that it won’t bounce and prevent any risk, thus enabling them to deposit it into your account without placing a hold.

If all else fails, the only other option is to either wait until the check clears, or to visit a check cashing company. While check cashing companies often charge high fees (usually around 3%), its better to cash your check now in order to pay urgent expenses, rather than waiting and letting the bills pile up.

Each and every day, millions of people send money overseas using money transfer or money remittance services. Whether it be sending money home to help out family members, buying something online from a distant country, or paying an employee on the other side of the world, finding a quick and easy solution to transfer funds overseas is an important matter. Its often vital that the funds be available within a reasonable period of time, and that it is convenient for the receiver to receive said funds.

Unfortunately, along with that convenience and reliable comes a high price. If we look at the most popular money remittance service, Western Union, we will see that fees to send money overseas begin at $15 and increase to as much as $55. Now consider someone who sends money overseas to their family members once a week, that $20 per week ads up to $600+ in a year.

Today we will explore some of the alternative methods to send money abroad, and outline the costs as well as the pros and cons of each method.

MoneyGram – Very similar to Western Union, though the fees tend to be 25% to 50% lower. Like Western Union, Moneygram allows customers to send funds overseas, where they can easily be picked up by the receiver.

Pros – Cheaper, fast like Western Union
Cons – Fewer locations, often slow customer service, very poor website

Paypal – An online payment system that allows users to send payments to others, where they can be withdrawn to bank accounts.

Pros – Cheaper
Cons – Very slow, cannot send to many countries, requires a bank account, Paypal has a tendency to freeze accounts without warning or reason. Paypal is also not available in all countries.

Bank Wires – Bank wires are an excellent option , and often the cheapest method to send a payment when the amount exceeds $1000. Wire fees in Canada and the United States are usually $25 to $30. A wire usually takes 2-3 business days to arrive, and becomes available in the recipient’s bank account immediately upon receipt.

Pros – Cheaper, reliable
Cons – Slower, Requires recipient to have a bank account

In addition to the services mentioned above, there are literally thousands of alternate solutions that we will explore more in depth in the near future. These alternate options include methods that are capable of sending only to specific countries, as well as other online payment processors including Liberty Reserve and others. Please keep reading. Vansibel is here to help you with all of your money, loan, financing and fiduciary needs.

Across North America, hundreds of rent to own furniture stores have been popping up over the past few years. In big and small cities alike, people can find stores such as Easy Home, Aarons, and many others. At a first glance, these stores seem great, as they help those who are unable to obtain alternative financing to furnish their homes. Best yet, theres no credit checks, and almost everyone is approved.

A quick look at Easy Home’s website reveals that you can get a computer for as low as $14 per week, a fridge for $18 per week, a new sofa set for $16 per week. This all seems pretty good doesn’t it… wrong. If you look at the total cost of the furnishings that you would purchase at these rent to home stores, its ridiculous… and I would say borders on scamming their customers.

If you have a look at an Easy Home flyer, you’re informed that the weekly rental rates are based upon an interest rate of 29.9%, which seems fair given the high risk nature of the business. However what they don’t tell you is the base rates that they’re using to calculate the 29% interest. The Flyer specifically states 29.9% interest APR based upon “product cost.” However no where are you able to find out this “Product Cost.” If you go into an Easy Home store and ask about a product cost, the employees will beat around bush without ever telling you an accurate product cost (other than a weekly rate).

For example, currently advertised on the Easy Home website is an Acer netback for $14 per week. Doesn’t seem bad… however when you multiply that by the 104 weeks of payments, it is equal to $1456. Now how much does this netback cost in Future Shop or Best Buy… it costs $199. Thats right, you’re paying 700% for this computer, meaning that their base price is something like $1200 before the interest. Other products show similar ridiculous markups.

How do they get away with this? Well basically they prey on the desperation of others and their inability to perform basic math. Is it legal? Thats where there may be an issue. In Canada, it is illegal to charge anyone more than 60% per annum interest. What Easy Home is doing is very similar to the Payday loan stores. By charging ridiculous high fees (in this case, crazy product costs) they’re able to get away with saying that their interest rate is legal.

What do you think? Easy Home or a Ripoff?

Over the past 10 years, Americans have witnessed the explosion of home prices across the country. Subsequently they witnessed the largest collapse in real estate prices of all time. With real estate prices remaining at historically high rates across Canada, many Canadians are wondering if the Canadian marketplace will fall victim to the same collapse as the United States.

To answer this question, we’re going to look at some of the causes of the American real estate collapse

1) Interest Only Mortgages
In the US, interest only mortgages became quite popular early in the new millennium, with many families opting to purchase homes that they really couldn’t afford, with interest only mortgages. Rather than renting, they would spend roughly the same amount on owning their own home. Unfortunately, as soon as the house prices fell slightly, this caused the momentum to continue. With people holding mortgages for more than homes were worth, it was simply in their best interest to walk away from the home and cut their losses. This compounded the problem and drove already falling housing prices even lower.

In Canada: You cannot have an interest only mortgage in Canada. Most mortgages require a 25% downpayment. Therefore, unless housing prices suddenly tumble by more than 25%, this isn’t a risk

2) Failing Economy
There have recently been major issues with the US economy, particularly as manufacturing moves overseas and factories continue to close. The US economy has lagged in recent years and is projected to continue to experience slow growth for at least the next 5 years.

In Canada: While Canada’s economy was impacted by the recession of 2008, the effects have been much more minor than in the US. Canada’s economy is based heavily on natural resources, rather than manufacturing, and therefore isn’t as volatile as the American economy.

3) Failing Banks
American banks have been failing left, right and centre. The financial industry has continued to do poorly since the 2008 collapse. In fact, this is what spurred many of the widespread occupy Wall St protests.

In Canada: Canadian banks are some of the most secure in the world.

If we look at these three triggers for the American real estate collapse, we can see that a collapse in Canada of similar magnitude is highly unlikely. Furthermore, Canada has an incredibly high immigration rate, which continues to push housing prices higher in major centres. For example, in Toronto alone, more than 40,000 new dwellings are needed each year to keep up with demand.

Overall, Canadian Real Estate prices are at an all time high, and it appears that they will continue to rise for the foreseeable future.

Are you struggling to pay your bills, and need a short term loan, but don’t want to pay the extremely high rates traditionally associated with pay day loans and credit card advances? If so, there is the potential for good news, depending on your credit card company.

Recently, credit card companies have been trying to get people to borrow money using their credit cards, rather than using lower interest rate options such as lines of credit, and have been running a variety of promotions to help advance their goal. The most common form of promotion to entice clients to use this type of financing is the Credit Card Check. A credit card check is a regular check, just like you would write from your checking account, but instead of coming out of your checking account, the funds are removed from your credit card in the form of a cash advance. The benefit for consumers doesn’t come from the fact that they’re offering this service, but rather from the rate that is being offered when using it.

Many banks are offering rates as low as 1.99% for the first 6 months to users who opt to use their credit card checks, with rates returning to the regular cash advance rate after the 6 month promotion period.

The question is, should you choose this method of financing over a line of credit?
The answer is Yes, but only if you have the financial discipline to pay back the loan before the 6 month promotional period is up.

Banks are banking on the fact that the majority of customers who use these checks will be unable to pay back the cash advance once the 6 month period is up, and will be able to begin collecting their regular 20+% per annum rate. However, clever consumers use this as an opportunity to borrow money at a rate below prime.

Before taking advantage of this opportunity, there are a few things to consider
- Will I be able to pay off the cash advance balance within the next 6 months
- Are there any hidden service fees (Some banks tack on a percentage or two as a service charge)
- Do I need the money? Theres no point in paying interest on it now if you don’t need it.
- When does the offer expire? If the offer is valid for a few months, hold off using the checks until the cash is needed.

Anyway, for those who are looking to get a low interest loan with no hassle, this is a great idea.

Washiington, DC, United States (AHN) – The ailing housing market in the United States has not been able to recover even with historic low interest rates, bargain-hunting American consumers or U.S. government intervention. So, the Senate is proposing a bill that would give foreigners a part in bailing out the industry.

U.S. Sens. Charles Schumer (D-NY) and Sen Mike Lee (R-UT) have introduced a bill that would permit foreigners who shell out at least $500,000 on U.S. residential property to obtain visas allowing them to live in the United States.

The plan might be the boon the U.S. real estate market needs, especially in states particularly hard hit such as California and Florida, which often attract wealthy Chinese and Canadian buyers.

The National Association of Realtors reported that in the 12-month period that ended March 31 residential sales nationwide to foreigners and recent immigrants totaled $82 billion, an increase from $66 billion in the same period a year earlier.

The bipartisan proposal, part of a package that would make it easier for international tourists to visit and vacation in the United States, is similar to an existing program that puts foreigners on a fast track to a green card if they invest at least $500,000 in an American business that creates at least 10 jobs.

There are restriction in the new proposed bill. The purchase must be in cash, with no mortgage or home equity loan. And, the property would have to be purchased for more than its most recent appraised value. In addition, the buyer must live in the home at least 180 days a year, which would require paying U.S. income taxes on any foreign earnings.

The buyer would be able to bring a spouse and minor children to live in the U.S., but would need to apply for a work visa to hold a job. Neither the buyer nor the dependents would be eligible to receive Medicaid, Medicare or Social Security benefits.

Schumer and Lee, who have already secured backing for the bill from the U.S. Chamber of Commerce, the U.S. Travel Association and the American Hotel & Lodging Association, are working to get support from the Obama administration, which received details of the bill Thursday.

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London, England, United Kingdom (AHN) – The Bank of England’s new Financial Policy Committee recommended on Wednesday for British banks to reduce their bonuses and shareholder dividends to strengthen their balance sheets.

The recommendation was made in anticipation of another financial crisis likely to be caused by the worsening eurozone debt contagion. The BoE also warned the banks to prepare for future shocks.

The bank did not specify how much the financial institutions should reduce their discretionary distributions, but in previous reports suggested that by limiting dividend payouts and constraining compensation ratios, the banks could raise up to $15 billion (£10 billion) a year.

The amount could be used to support $75 billion (£50 billion) of new lending to households and businesses. Although the banks cut their bonuses by 8 percent in 2010, the banks still paid out a total of $10.05 billion (£6.7 billion) to executives.

The committee also recommended cutting staff to address the anticipated strains in financial markets. For banks that have strong earnings, the committee advised them to build capital levels further.

Another impact of a second round of financial crisis is possible tighter credit in the coming months, the Bank of England said in its quarterly credit conditions survey it issued alongside the committee’s report.

The FPC also proposed more measures to improve the banks’ balance sheets, such as setting loan-to-value ratio caps for mortgage borrowers, margin requirements, maximum leverage ratios for banks, variable capital buffers, risk weightings on loans and additional transparent disclosure requirements.

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