Credit cards, debit cards, and cash when in Europe

Twelve European countries—and about 300 million people—now use the euro currency. The major holdouts in Western Europe are Britain, Denmark, Norway, Sweden, and Switzerland (but Swiss ATMs give euros, prices are listed in both Swiss francs and euros, and travelers can get by in that country with euro cash). When you cross a border into Eastern Europe, forget about euros and learn about Polish zlotychs, Hungarian forints, Croatian kunas, Slovenian tolars, and more. Although 10 more countries (mainly in Eastern Europe) are joining the EU this year, none will adopt the euro immediately.

Cash Machines (ATMs) and Currency Conversion Fees

Throughout Europe, cash machines are the standard way for travelers to change money. Confirm with your bank (or credit card company) that your card will work in Europe and alert them that you’ll be making withdrawals while traveling. Otherwise, the bank might freeze your card if it detects unusual spending patterns in, say, Marseille instead of Miami. You don’t have to give them specific dates—just tell them you’ll be in France in July.

Many banks add a two to five percent conversion fee, a commission of about one percent, and a transaction fee each time you use an ATM. And the ATM you use might charge its own fee, too. To limit fees, make fewer visits to the ATM and withdraw larger amounts.

Note that some cash machines won’t let you take out more than a specific amount (don’t take it personally). The machines have a transaction maximum, forcing you to make several withdrawals and incur several fees to get the amount you want. When choosing how much to withdraw from a cash machine, request a big amount in the hopes you’ll get it.

ATMs are short on instant documentation. Few ATMs or their receipts list the exchange rate, and some machines don’t dispense receipts at all.

Debit and Credit Cards

More versatile than ATM cards, debit cards can be used to purchase items from stores, as well as to get cash. And in case you run across a nonfunctioning cash machine, debit cards issued by Visa or MasterCard can be used for over-the-counter cash advances (with a fee) at banks that accept those bank cards. When you use a debit card, the money you withdraw comes directly out of your account. This is great if you want to avoid paying interest, but it can be downright scary if a thief gets your card (see Theft Prevention below).

Credit cards work fine throughout Europe, although you'll need to pay hefty interest charges (around 18 percent) on your purchases.

Don't count on charging everything with your bank card; many merchants require a minimum purchase of about $30. Visa and MasterCard are more widely accepted than American Express.

Pre-Paid Debit Cards

Prepaid debit cards are the new kids on the block. You can load up your card with cash for your trip, then reload it online or by phone as you travel. The card works in ATMs just like a regular debit card but provides more security. Prepaid cards generally work only in ATMs, so the thief would have to know your PIN code to get at your money.

But prepaid debit cards have disadvantages. As with any other card, fees add up—for buying the card, reloading the card, overdrawing your account, "cashing out," and canceling the card at the end of your trip. And if the card is lost, it's virtually impossible to get a new one on the road in Europe—so bringing some form of backup is wise.

Many credit card companies sell prepaid cards, but AAA and American Express seem to offer the best deals with fewer fees. Either card can be reloaded with more funds ($5 fee each time).

AAA's Cash Passport is more convenient since it has a Visa logo that allows it to work in most European ATMs (www.aaa.com). If the card is lost or stolen, AAA will arrange for you to get cash in Europe (by wire or at a bank), but stolen cash will not be refunded.

Holding on to Your Money

Your bank cards can be stolen as easily in Europe as in the U.S. There is no surefire protection, but you can take some precautions.

Minimize spreading your numbers around. When booking a room from home, you don’t need to send your bank card information in your initial email or fax. Wait to see if a room is yours, then send your information as a deposit.

When on the road, use your debit card only for withdrawing funds from cash machines and use cash or your credit card to make purchases. (If you use a debit card for everything, you increase the risk that an unscrupulous salesclerk will use your number to order goods off the Internet without your signature.)

Take a minimum number of bank cards with you (but bring at least two—one to provide a backup if the other is demagnetized or munched by a machine). Keep your cards safely in your money belt or neck pouch, hidden out of sight.

Scams are commonplace. Beware the “friendly” bystander who helps you use the ATM and learns your PIN code while a thin plastic sheath or gummy substance in the slot grabs your debit card. After you walk away to report the loss, the thief retrieves your card with a tweezers. He could conceivably empty your account. You’d likely lose only a small liability fee, but why take unnecessary risks? Don't let anyone know your PIN code. Memorize it—you’d be surprised at how many people foolishly write it on their card.

Consider asking your bank to set a daily withdrawal limit for your ATM or debit card (but note that a daily limit applies only to cash machine withdrawals, not purchases). In case of problems, carry the phone numbers of your bank and credit card company in your luggage. Upon returning home, call your debit and credit card vendor to verify your balance and bill.

Bouncing Back if You Lose Bank Cards

You can stop thieves from using your ATM, debit, or credit card by reporting the loss immediately to the proper company. Call their 24-hour U.S. numbers collect.

Providing the following information will help expedite the process: the name of the financial institution that issued you the card, full card number, the cardholder's name as printed on the card, billing address, home phone number, circumstances of the loss or theft, and identification verification: Social Security number or birthdate and your mother's maiden name. (Packing along a photocopy of the front and back of your cards helps you answer the harder questions.) You can generally receive a temporary card within two business days in Europe.

If you promptly report your card lost or stolen, you typically won't be responsible for any unauthorized transactions on your account, although many banks charge a liability fee.

Cash

Whatever type of bank card you bring, it’s smart to carry several hundred U.S. dollars in your money belt for emergencies. I’ve been in Greece and Ireland when every bank went on strike, shutting down without warning. But hard cash is cash.

Paper money of any Western country is good at banks anywhere. The currencies in the more established Eastern European countries—like the Czech Republic, Poland, Hungary, and Slovenia—are stable and easily exchangeable. But the currencies of countries at the easternmost fringes of Europe—Bulgaria, Romania, the Baltics, and Turkey—are still soft. Don't plan on exchanging soft money elsewhere in Europe. Blow it on souvenirs, splurge dinners, and all the ice cream you can eat. It's the kind of challenge that makes travel fun.

RICK STEVES (www.ricksteves.com) is the host of the PBS series Rick Steves' Europe and the author of over 30 European travel guidebooks, including Europe Through the Back Door, all published by Avalon Travel Publishing.

New home sales in USA plunge 33%

Alan Zibel, AP Real Estate Writer, On Wednesday June 23, 2010, 10:37 am EDT

WASHINGTON (AP) -- Sales of new homes collapsed in May, sinking 33 percent to the lowest level on record as potential buyers stopped shopping for homes once they could no longer receive government tax credits.

The bleak report from the Commerce Department is the first sign of how the end of federal tax credits could weigh on the nation's housing market.

The credits expired April 30. That's when a new-home buyer would have had to sign a contract to qualify.

"We fear that the appetite to buy a home has disappeared alongside the tax credit," Paul Dales, U.S. economist with Capital Economics," wrote in a note. "After all, unemployment remains high, job security is low and credit conditions are tight."

New-home sales in May fell from April to a seasonally adjusted annual sales pace of 300,000, the government said Wednesday. That was the slowest sales pace on records dating back to 1963. And it's the largest monthly drop on record. Sales have now sunk 78 percent from their peak in July 2005.

Analysts were startled by the depth of the sales drop.

"We all knew there would be a housing hangover from the expiration of the tax credit," wrote Mike Larson, real estate and interest rate analyst at Weiss Research. "But this decline takes your breath away."

Economists surveyed by Thomson Reuters had expected a May sales pace of 410,000. April's sales pace was revised downward to 446,000.

The government offered an $8,000 credit for first-time buyers. Current homeowners who buy and move into another property could receive up to $6,500.

New-home sales fell nationwide from April's levels. They dropped 53 percent from a month earlier in the West and 33 percent in the Northeast. Sales in the South dropped 25 percent. The Midwest posted a 24 percent decline.

Builders have sharply scaled back construction in the face of a severe housing market bust. The number of new homes up for sale in March fell 0.5 percent to 213,000, the lowest level in nearly 40 years. But due to the sluggish sales pace in May, it would still take 8.5 months to exhaust that supply, above a healthy level of about six months.

The median sales price in May was $200,900. That was down 9.6 percent from a year earlier and down 1 percent from April.

New-homes sales made up about 7 percent of the housing market last year. That's down from about 15 percent before the bust.

The drop in new-home sales means fewer jobs in the construction industry, which normally powers economic recoveries but has remained lackluster this time.

Each new home built creates, on average, the equivalent of three jobs for a year and generates about $90,000 in taxes paid to local and federal authorities, according to the National Association of Home Builders. The impact is felt across multiple industries, from makers of faucets and dishwashers to lumber yards.

In USA, 500 people arrested for mortgage fraud

Nearly 500 people have been arrested in a U.S.-wide crackdown on mortgage fraud since the operation began March 1. Federal officials found that Las Vegas was one of the major centres where scams were situated to falsley inflate house prices.

"I heard this many times," said Scott Hunter, a Las Vegas FBI agent who has interviewed hundreds of people lured into buying homes by crooked real estate agents, brokers and loan officers, to the Associated Press. "They said, 'Don't let your good credit go to waste. You can purchase these properties. This is how you acquire wealth.'

And when the party stopped and they were not able to keep inflating the prices on these houses, the whole thing collapsed."

Daniel Bogden, Nevada's U.S. attorney, said 123 defendants were charged, convicted or sentence within his state since the crackdown, named Operation Stolen Dreams, began. According to AP, Bogden estimated the losses in Nevada at almost $250 million.

Canadian household net worth hits $6 trillion!

Canadian household net worth hit $6 trillion in the first quarter of 2010. It increased by 1.3 per cent, and is the fourth consecutive quarterly improvement in household net worth. This means 96 per cent of net worth lost during the economic crash has been recovered, according to David Onyett-Jeffries, economist with RBC Economics, as reported on Muddy York's Toronto Real Estate blog.

Other numbers from RBC show a strong Canadian housing market. Non-financial assets, where real estate contributes 85.5 per cent, is up 0.8 per cent to $24.9 billion from the previous quarter.

Mortgage debt increased by $16.4 billion in the first quarter, signalling continued growth in the real estate market. Over all, household liabilities rose by 1.5 per cent to $1.4 trillion.

Money Top Source of Stress for North American Couples

Money Top Source of Stress for North American Couples, Survey Finds 

Partners go to extremes to avoid fighting about finances 

American Express 6/16/2010 

What do American couples fight about most? It's not so much about the kids, the in-laws or who's in charge of the remote. It's about how they handle their finances. That was the finding of the May/June American Express Spending & Saving Tracker, which surveyed consumers about the role finances play in their personal relationships. The research sample totaled 2,008 adults, broken down into two categories: the affluent (defined as having a household income of $100,000 and up) and young professionals (those under 30, college educated, $50,000 in income). Finances triggered the most relationship angst (30 percent of respondents), followed distantly by intimacy (11 percent), children (9 percent) and in-laws (4 percent). Money is such a sensitive subject that the vast majority (91 percent) of couples find reasons not to talk about it. The survey unearthed plenty of other nuggets about couples and money:   Avoiding conversations about money is so common that couples are more likely to know their partner's weight than their salary.     Subterfuge: Whether it's guilt or fear of triggering a fight, 27 percent of respondents have lied about what they paid for something, and 30 percent have hidden purchases from a disapproving partner. Avoidance: “Conversations about finances seem to be avoided like the plague by most couples,” said Pamela Codispoti, American Express senior vice president and general manager, Consumer Card Products. Only 43 percent of the general population remember discussing money before getting married. (Among young professionals that number jumps to 81 percent.) Twelve percent of the general population says they’ve never talked about money with their spouse. The other one is worse: Forty percent believe their partner spends more money than they do. The same number (40 percent) consider themselves more diligent than their partner when it comes to saving money and budgeting. My money, not our money. Young professionals are more likely to maintain individual checking, savings and retirement accounts than older generations. Debt? What debt? One-third (31 percent) of respondents do not know how much debt they carry as a couple.       Share and share alike—or proportionally alike. Most couples (66 percent) share all monthly expenses, while the remaining 34 percent divide their bills each month, with methods ranging from paying certain bills individually (as in, I'll pay gas and electric if you pay cable) to splitting household expenses based on income ratio. Rules for big-ticket spending: Most Americans set a dollar threshold for major purchases. Anything above that amount, and the buyer is expected to consult with their partner before buying something. The average threshold: $275 ($395 for affluents). Regrets: More than half (56 percent) of couples feel they have made a financial mistake in their relationship, ranging from spending too much on their wedding to buying a house at the top of the market. Exactly half (50 percent) say they would do something differently to manage their financial situation if they could go back in time, including putting more into savings and investments, spending more responsibly (27 percent) and discussing financial goals and expectations earlier (17 percent). Strife: Discussions about household finances lead to arguments among 45 percent of the general population. The rich don't fight more than the average couple; but the young do; 72 percent of young professionals argue over money versus 44 percent of affluents. Admissions on Facebook When American Express fans were asked on Facebook if they ever hid an expensive purchase from their partner, nearly 100 people came out to confess that yes, they had. Ramon Perez described passing a $3,000 triathlon bike off as "a $89.99 K-Mart Special," while Kathleen Banko Freihofer explained how she gets away with it: "Yup!! Just take off the tags and hang it in the closet like it's always been there...guilty." Others, like Chris Whatshappening cautioned against spending deception, "Lying to your spouse is a slippery slope (yes, even with larger than normal purchases). I've done it a few times, and the short and long-term consequences of lying have always been far worse than simply telling her what I am doing."