December 30, 2013

Best Travel Credit Cards (Canada)

We wrote previously about the benefits of using credit cards when traveling abroad. The main drawback of that strategy were the fees associated with foreign transactions. In Canada most banks charge a hefty (usually around 2.5%) foreign exchange fee on all transactions that are not denominated in Canadian dollars (and sometimes on CAD-denominated transactions originated from outside of Canada). On top of that, if you draw foreign exchange from any ATM, locally or abroad, you will be charged a Cash Advance fee, which is usually at percentage of the amount (usually around 1%) with a min ($5) and/or maximum ($10).

To better evaluate the benefits of the cards we devised a simple scenario, where a cardholder spends $1,000 in foreign exchange and draws an equivalent of $500 from an ATM in two transactions.

Moneysense publishes an annual ranking of credit cards. Unfortunately all of the top 8 travel cards carry standard foreign exchange fees coupled with cash advance fees. Our scenario will result in total cost of somewhere between $47.50 and $52.88 (and that’s on top of their already high annual fees).

Luckily, Chase has a small portfolio of cards that carry no foreign exchange fees. They still charge cash advance fees, so the total cost of our scenario would be $10. You get to choose from:

  • no-fee Visa, which offers 2% return at Amazon and 1% everywhere else
  • no-fee Sears Financial MasterCard with 2 points at Sears and 1 point for $1 elsewhere
  • $39 Sears Financial Voyage MasterCard with 3 points at Sears Travel, 2 points at Sears, 1.5 points for gas, groceries and travel and 1 points elsewhere
  • $120 Marriott Rewards Premier Visa Card with 5 points at Marriott, 2 points for flights and 1 points for $1 everywhere else

  • Unless you are getting 3% or more points return on your spend, the “top” travel cards are no bargain. To us, Amazon is the clear winner, if used only for travel and cross-border shopping – it’s hard to argue with no fee and 1% back is plain icing.

    As always, be careful with cash advance, as the interest fees start as soon as your transaction posts. The only way to beat this is to pre-pay the expected amount prior to the trip / shopping spree.

    October 31, 2012

    ...futility of nation-wide opinion polls in US elections

    2012 electoral map no tossups
    image: Real Clear Politics

    "Obama dominates Romney". "Romney is leading by a slim margin in nationwide polls". We hear these and similar headlines from the mass media. But these are completely irrelevant pieces of information. The reason for which is simple. The US elections are not determined by nationwide voting but rather by electoral college, which is by its very nature is state-based. In terms of predicting the outcome of the election it is necessary to determine state based polls and weigh their results by the college's weights. And those results have to be binary, meaning either one or the other candidate has to be crowned a winner (with a few marginal exceptions). This is a reason why it is critical to follow the mood of the few swing states, which have enough electoral weight, and where the preference is not clear. In this election it is all about Ohio and Florida, for example. And the polls there are the only ones that are worth watching.

    The only site that seems to be getting this is Real Clear Politics. Despite their conservative bias, they combine most statewide polls on the national maps showing various degrees of dominance of one candidate over the other. And according to their data, despite narrow nation-wide polls, Romney never overcame Obama throughout this campaign.

    There are two ways to look at their data: either by assigning a degree with which each state leans one way to the other (1) or plain assigning the state to the current leader (2). As we said earlier, Romney is yet to lead. Currently, they are calling 281-257 for Obama, even though Romney is currently leading in Florida.

    February 17, 2012

    ... traffic lights, congestion and pollution

    Traffic circles or round-abouts are fairly common all over the world except for North America. Basically, they allow two or more roads to intersect while conducting traffic in a circle. Rather than having to stop and wait for other cars to pass, in a traffic circle cars merge into a circular road that aggregates and disburses cars as their respective roads come along. As the result, cars do not have to come to a complete stop rather only to slow down to merge into the circular traffic. While traffic circles could be somewhat difficult to navigate especially for novices, they have a number of interesting benefits:

    • there is no need for a traffic light, which, on its own, is a significant cost to power an maintain
    • traffic does not have to come to a complete stop, thus reducing the probability of traffic jams
    • since cars do not have to stop, there is little idling and hence much lower emissions
    • even though traffic does not stop, it does slow down causing reduction in dangerous driving
    • it is easier to manage intersections of more than two roads since there is no longer any need to determine priority, order and turns
    • finally, presence of circles makes otherwise straight roads look more natural and pleasing to the eyes.

    The aversion to traffic circles in North America is difficult for us to understand. Even in a such a cosmopolitan city as Toronto we were able to find only two of them - both in the posh neighborhood of Rosedale. And one of them had stop signs on all approaches thus defeating the main advantage of the circle.