Best Financial Security Tips For Travel

When you travel it is important to feel safe about your finances.  All sorts of things can go wrong on a trip so it is always best to keep your wits about you.  Instead of learning the hard way it is advantageous to take all the advice you can get before departing.

Make sure that you always follow the attitude, “better safe than sorry” and you will manage to avoid all sorts of problems.  It is important to enjoy your trip and not let fear consume you but it is also ideal to plan ahead and take precautions.  Here are some of the best tips for making sure your financial situation is safe during your trip.

Bring 2 Credit Cards

You should always travel with at least 2 credit cards.  This way you have your main source of money and a backup if anything goes wrong.  It is always good to have a backup because you never know if you could be a victim of theft, loss, or even something as wild as the ATM eating your card.

If you only have one credit card, consider bringing a pre-paid debit card.  This way you can still use it like a card and make payments online, but without any of the worries of interest or fees. This is a great option for people who are trying to build their credit.

Always Have Some Cash

You never know when you will need to take a cab or end up at a restaurant or store that accepts cash only.  This is a common occurrence in places outside of North America.  Many smaller businesses in humble countries prefer not to pay the cost that it takes in order to run a credit card machine so it is common to find that you will need cash.

Instead of carrying a large amount around with you, carry the equivalent $30-$50 and leave $100-$200 back at your hotel in the safe. This way you have a larger stash back in the hotel in case you need to buy a larger purchase in an emergency like a train ticket.

Alert Your Bank Of Your Plans

Make sure that you contact your bank about your travel plans.  This way they will not put a hold on your card and freeze your funds due to suspected fraudulent activity.

This can be a terribly disappointing situation if you are in line trying to pay for something and your card will not go through.  You may have to spend the afternoon on hold with your bank trying to reactivate it.  Instead of dealing with this extra hassle, plan ahead and notify them about your travel plans.

Tax-time 2014 – what a fine way to start 2015!

Wow – another 3 month (and 5 day) push on behalf of the CRA, with more to come when all of the corporate and trust tax returns have to be filed! So, were there any special changes or affects this year – yes indeed? I have exposure to tax returns from several other countries and it is interesting to compare the results (financially) between countries for the same personal and family situations.

I have come the conclusion that while the Canadian Tax System is clearly the most complex, cumbersome and frustrating for taxpayers to use and complete on their own, ours seems to offer the fairest outcome (i.e. lowest taxes) than either the US, Australia or the UK – good for us! On the flip side we kill way more trees – the average Canadian paper-filed return seems to require upwards of 20 pieces of paper, the US version requires 6 – federal and state, combined. This is not trying to say that more complex makes for lower taxes but the time and expertise needed is much lower.

So what did I see this year?
A) Medical expenses that people wanted claimed for the Medical Expense Tax Credit:
a. sorry, Aspirin, Tylenol, Ibuprofen, pain liniment, wrist and knee braces and elective dental and medical surgeries (to make us all bootiful (sic)) aren’t eligible expenses even if your doctor gives you a prescription for an over-the-counter drug – nope;
b. teeth whitening treatments (chemical or laser or both), aren’t eligible and neither are braces for purely cosmetic purposes, nor implants;
c. naturopathic “prescriptions” with no proven and accepted medical efficacy are likewise not claimable – the same applies to herbal remedies from various cultures;
d. healing lodges and residence therein, are not on the list and neither are alternative treatments such as chelation therapy or other type of experimental, non-approved approaches;
e. non-medically approved vitamins and potions, regardless of whether or not you have a prescription or who tells you to take or use them – no again;
f. the same applies for “misracle treatments” performed outside Canada – you can take them all you like, but Canadian Provincial and Territorial plans will not cover them, nor will your group plans and neither will they be permitted as eligible medical expenses; and
g. before you embark on such plans, check with your Provincial and group carriers, along with CRA so you know which costs are all yours!
B) On the flip sides, things that are eligible but were missed included:
a. Incontinency supplies;
b. Batteries for hearing aids and other medically prescribed devices;
c. Crutches, walkers, scooters and wheelchairs when medical prescribed and required – including rental fees and outright purchase in some circumstances plus repairs; and
d. Prosthetic devices – mechanical and otherwise, including hairpieces for cancer patients and breast prostheses.
C) Lots of confusion about the recently announced Family Tax Savings plan, most people thought it meant they would average both their incomes and shift as much as $50,000 into the name of the other spouse and were quite disappointed when they learned that their utopic view had no connection to reality.
D) The Pension Income Splitting opportunity under the tax act is still perceived as more confusing each year. Even when clearly explained, people ask how can adding more money to my spouses’ taxable income, reduce the amount payable? But it does!
E) The Charitable Donation Tax Credit continues to amaze me and frustrate clients. Pledges made are not claimable, only actual donations made and if you have received an approved receipt from an approved organisation (www.cra.gc.ca/charities) . Local fund raisers, regardless of the worthiness of the cause, are not claimable.
F) The Family Care Giver Credit is often missed – and the person for whom you are providing care does not necessarily have to be personally eligible for the Disability Tax Credit.
G) Miscellaneous credits such as the Public Transit Credit, Adoption Expense Credit, Children’s Fitness and Arts Credits and the Home Buyers Tax Credit (not to be confused with the Home Buyers Plan for temporarily withdrawing funds from your RRSP to purchase a first home).

Plan now for 2015. Start a file or envelope into which you put every possible receipt that could entitle you to increased expense or tax credit claims. In early 2016, set aside an hour or so and sort all of them into categories, then let a qualified tax-preparer help you get everything you deserve!

Expectations of entitlement – where do you sit?

This is coming from Panama – Coronado on the Pacific Coast to be exact. We are here for 12 days. An interesting country – some very lovely spots and the people have been universally friendly so far! Lots of expats here – both Canadian and US. They have their own currency, the Balboa – but it is on a par with US currency so both are used interchangeably. Their driving habits rival those of Montreal – glad we are using professional, private transportation.

The expanded canal is the most amazing feat of construction in the world and they are justifiably proud of the work in progress and the eventual result. Apparently will add $6 Billion (over operating costs) to the Panamanian economy each year!

With that said, there are many deficiencies in services that we take for granted. Some of the more interesting gaps is there is no proper ambulance service, and they do not have any paramedics! You phone a private Ambulance, they locate a doctor who is available and then they come and get you – wait times up to 6 hours – yes hours – all are privately operated – cost for pickup ranges from about $300 to over $600 – CASH only – and they stop at a cash machine for you! No postal system as we know it. There is a strange courier/package system that some people use where mail is sent to PO Boxes in Miami, Florida – and sent here by air freight. No bills are mailed – everything is a cash transaction from cell phones to satellite TV to gas – cheap – $.898 per litre for diesel and about $.92 for regular gas.

Lots of stores but overall quality is “dollar-store” level – including groceries and fresh veggies and meat. Fruit is great quality as is the local seafood – the prawns and bass in particular. Meat is a huge disappointment to someone used to high quality everything. Chicken and turkeys are good – the rest – ?????

Residential water service is an interesting mix of on and off. All residences have water storage – where we are staying – 700 gallons (US) – which lasts about 2 days for the 4 of us here – wasteful aren’t we!

So what is the point of all this? First, Canadians are blessed with unbelievable wealth (and I am not talking money) and public and private services that have no equivalents here (or in many other parts of the world of course); second we don’t acknowledge that wealth even to ourselves; third as a group, Canadians have developed a very unhealthy sense of entitlement without appreciation for that which we have and fourth, we have universal access to medical and a social welfare/social services net (no, it is NOT perfect) – Panamanians have none of these.

Now they do have some advantages: there is no personal income tax; property taxes are very low; they have some low-quality grocery products that are price-frozen for low-income people; and the climate is very pleasant, with the exception of the high humidity.

My blogging colleague, Becky Wong, CFP, has done a few excellent blogs on the topic of entitlement in Canada. I am adding another voice to her message. A great many Canadians do not seem to be grateful for all that we have – most clamour for more and more but loathe paying the cost – let the Governments (all 3, or 4 levels if you include the new First Nations bureaucracy).

The ONLY source of Government and First Nations’ revenue is you and I – the people. Let us not forget this key point.

Corporations have never paid any taxes – they are merely conduits down to the people and this has nothing to do with politics either – they are simply hired tax collectors – another branch of Government taxation. This concept applies to property taxes and every other type of taxation. The idea is to hide these extra taxes from us poor taxpayers – not citizens either as Daphne Bramham of the Vancouver Sun tried to make out. Hi Daphne – many non-citizens pay more taxes than many citizens and there are more citizens who do not pay taxes than taxpayers – time to come in from the cold!

Rather than demanding or expecting more or thinking we are entitled to more, let’s think about GIVING more for a change – to paraphrase John F. Kennedy: “ask not what your country can do for you but what you can do for your country.” Shouldn’t we be a country of givers rather than takers?

From loyalty programs to the true cost of credit cards

Moving past the cost of loyalty programs to credit cards

My last blog covered how the costs of all the loyalty programs are passed along to all consumers – even those who don’t belong to such programs. Credit card costs have been in the news a great deal in 2013 and even received a mention in the Speech from the Throne that opened the new Session of Parliament.

Most readers will remember the Competition Bureau finding earlier this year in FAVOUR of credit card fees being passed along to all consumers rather than just those who use the cards. The issuers of the credit cards were, of course, ecstatic with the ruling – merchants not so much and consumers not at all, but then, cynic that I am, did anyone really expect the Bureau to side with consumers over large financial institutions – both national and international in scope?

So let’s do some math (sorry). For simplicity, I will use a card issued in three flavours – a basic, no-fee, no-reward format (Bronze), a fee-based card that also provides extra loyalty bonuses in the form of “points” redeemable for merchandise gifts from the issuer’s pre-selected catalogue (Silver) and the third is a Gold card (also fee-based but at nearly twice the level of the Silver card) that gives points that can be redeemed for travel – allegedly unlimited travel without blackouts and restrictions.

Having operated business that accepted credit cards, I know all too well the costs involved. First the merchant pays a fee to be able to accept each type of credit card. Then they have to rent at least one of those ubiquitous terminals that work at least some of the time. Their banking institution will sometimes charge an additional processing fee to handle the credit card vouchers while other card issuers have a fixed-fee arrangement (as a percentage of the TOTAL amount charged, including tips and taxes!).

A typical fee schedule for this hypothetical card series would look like this:

Card User Charge Merchant Charge
Bronze $0 annual fee 1.75% of total amount charged
Silver $120.00 annual fee 3.15% of total amount charged
Gold $225.00 annual fee 4.65% of total amount charged

I am NOT quoting fees for ANY specific credit card currently in use. These are illustrative only and roughly represent a mid-point of charges currently at work in our economy. Each card issuer and supporting financial institutions are completely free to set (and change) their own fee schedules.

With these fees charged to the merchants and vendors on the total amount put on the purchaser’s card, it is no wonder that the card companies and issuing institutions are raking in obscene profits at the expense of both the merchant and consumers – regardless of their incomes.

If you were a merchant, how much of these merchant costs would you include? 1.75%? 3.15%? 4.65%? Plus somewhere the cost of “buying into” the use of the card and terminal rental has to be included – the merchant can’t afford to take any loss with margins being so tight!

Most users today have either a Silver- or Gold-type credit card so the merchant has to plan for at least the Silver fee and a large percentage of the Gold fee – say 4.15%? On everything. Whether the purchaser pays in cash, uses a debit card (there are fees for these cards too but are usually less than .60% depending on merchant volume) or a credit card. Oh, the merchant also pays GST and possibly PST on top of these fees!

The low and modest income person or family who can’t qualify for any credit card, well, they are all still is paying the fees. Is this fair? This says nothing of the usury interest rates of sometimes more than 24% being charged on any outstanding balances.

Make sure you understand the costs and how they affect you!

Travel Insurance – outside Canada

Greetings once again and I am going to pickup from last week’s topic of the need for travel medical and dental insurance – this time looking at things outside Canada.

First, of course, the quality of emergency medical and dental care varies widely around the world – particularly outside North America, the European Union, parts of the Pacific Rim and Austral-asia areas. With that as a given, let’s look at coverages.

Many plans have exclusions or limited benefits payable if you have a flare up/emergency related to an existing medical condition – such as a history of heart problems, diabetes, stroke, etc. READ THE LIMITATIONS BEFORE YOU BUY! I am not aware of any travel insurance policies that cover costs incurred on a “medical” vacation or for cosmetic procedures or treatments.

The questions on the application must be completed with 100% accuracy – if you are not sure how to answer them, go and see your doctor – do not “guess” at the answers – this can easily result in your claim be denied or severely restricted. Listing of your medications, dosage and duration of treatment or use of that medication will also be required. Check if the plan has a toll-free number for emergency personnel to call and get approval for treatment. Check if you have to pay the bill yourself first and then submit a claim to the insurance company or if the medical providers can bill the insurance company directly.

If you travel regularly out of Canada, you may be better off purchasing a multi-trip plan that gives you coverage for a full year for a number of trips of varying durations.

To quote the Ontario Ministry of Health and Long Term Care: “You are strongly advised to purchase additional health insurance every time you leave Canada and ensure that the supplementary insurance you have purchased provides adequate coverage.”

Travel Insurance – needed in Canada and overseas!

As we approach year-end, many Canadians are planning for trips abroad to escape some of our winter weather and for holiday trips to other parts of Canada. So for the next couple of blogs, I am going to point out some issues and considerations of which people need to be aware. I will start with travel within Canada but outside your Province or Territory of residence.

Many people are under the very mistaken belief that they are fully covered for accidents and illness by their own Provincial/Territorial medical plans – nothing could be further than the truth! While not well publicised, your Provincial/Territorial plan ONLY covers what your home province would pay to their own healthcare providers – NOT what another jurisdication might pay to their providers.

Maybe an example would help here. In Province A, the fee paid to a hospital for admitting someone to an Emergency Ward is $800.00, the fee paid for taking x-rays of a broken arm and having the x-rays read by a radiologist is $400.00 and then applying a cast, using necessary anesthetic results in a payment of $500.00 – total amount paid to the healthcare facility is $1,700.00. If this is your home Province or Territory, you don’t pay anything (although some jurisdictions now have a user-fee for such visits).

But what happens in Province B for the same accident? If Province B’s fee payments are LESS than Province A, then no problem, the healthcare facility bills Province A’s plan and everyone is happy. If Province B’s payments are MORE than Province A’s – you have a problem! You will get a bill from Province B – and you may have to give them a credit card or cash payment while you are being treated!

While the differences in the example may be modest, if you require admitting to hospital – say in the Intensive Care or Cadiac Care Wards, payments can vary widely between Provinces and Territories and the last thing you want is a bill when you check out!

Some group and private extended health plans will reimburse a portion of such out-of-province costs – but there will be limits on such payments.

Most financial advisors, other groups such as CARP and the various branches of the Canadian Automobile Association, together with many travel agents and on-line ticket sellers, offer travel insurance at very modest cost – and it is needed when you travel outside your home province – as the old slogan goes “don’t leave home without it!”

Next blog will discuss the out-of-Canada issues and some tips to consider.