You've made it to Europe, and the air is fresh. You have your whole itinerary figured out, you've somehow gotten a cab, and you've pulled up to your hotel. But one question infects your mind—How much do I tip the driver? This list of foreign money tips can help when you're in a pinch.
1. Know the updated exchange rates.
As the economy shifts, exchange rates change all the time. This means, a scarf that might look like the equivalent of $20, could actually be $25, or $30. Here, you can find the exchange rates of just about any currency, plus other fun details like the recent trends.
2. When in doubt, use your credit card.
According to Trip, having a credit card with you to pay for transactions is usually a safe bet rather than carrying loads of cash. Some people get carried away when exchanging their money because they're overwhelmed by the coolness of a new currency. But hold on there. The more cash you have, the more vulnerable you will be.
3. Don't get burned on ATM fees.
While credit cards are a safer option, it's still essential to be aware of high ATM fees. It could cost around $3 every time you have to withdraw cash. (Some places will be cash only, so it's wise to have a little cash.) Use actual banks for any withdrawals, not that sketchy machine on the street.
4. Know the tipping policies.
Every country has different tipping policies, but leaving huge tips is not necessary. If you're in Europe, adding a euro per person for a restaurant or an extra euro or two for a driver will be sufficient. For more on tipping, check out what our buddy Rick Steves has to say.
5. If you're going out in groups, here's how to split the bill.
Sitting at a restaurant for an hour trying to figure how much money everyone owes each other will just cause a lot of frustration. We recommend using any number of apps to split expenses, whether it's for dining, lodging, or activities. Here are some of the best from The Muse.
Traveling is exciting! You shouldn't be stressed about it. For more on how to handle your money abroad, check out this great resource.
When you take out a loan for a car, charge something to your credit card, or get a personal line of credit, there is going to be an interest rate that applies to your loan.
A lot of different factors go into what you will be charged, including your own personal credit score. But even those with flawless credit still see a minimum charge that they can't get around. That all goes back to the Federal Funds Rate.
One thing consumers rarely realize is that all of our banks are lending money to each other every night. Banks are legally required to maintain a certain percentage of their deposits in non-interest-bearing accounts at the Federal Reserve to ensure they have enough money to cover any withdrawals that may unexpectedly come up. However, deposits can fluctuate and it's very common for some banks to exceed the requirement on certain days while some fall short. In cases like this, banks actually lend each other money to ensure they meet the minimum balance. It's a bit hard to imagine these multibillion-dollar financial institutions needing to borrow money to tide them over for a bit, but it happens every single night at the Federal Reserve. It's also a nice deal for those with balances above the reserve balance requirement to earn a bit of money with cash that would normally just be sitting there.
The Federal Reserve
The exact interest rate the banks will charge each other is a matter of negotiation between them, but the Federal Open Market Committee (FOMC) (the arm of the Federal Reserve that sets monetary policy) meets eight times a year to set a target rate. They evaluate a multitude of economic indicators including unemployment, inflation, and consumer confidence to decide the best rate to keep the country in business. The weighted average of all interest rates across these interbank loans is the effective federal funds rate.
This rate has a huge impact on the economy overall as well as your personal finances. The federal funds rate is essentially the cheapest money available to a bank and that feeds into all of the other loans they make. Banks will add a slight upcharge to the rate set by the Fed to determine what is the lowest interest that they will announce for their most creditworthy customers, also known as the prime rate. If you have a variable interest rate loan (very common with credit cards and some student loans), it's likely that the interest rate you pay is a set percentage on top of that prime rate that your lender is paying. That's why in times of low interest rates (it was set at 0% during the Great Recession), a lot of borrowers should go for fixed interest rate loans that won't increase. However, if the federal funds rate was relatively high (it went up to 20% in the early 1980's), a variable interest rate loan may be a better decision as you would be charged less interest should the rate drop without the need to refinance.
The federal funds rate also has a major impact on your investment portfolio. The stock market reacts very strongly to any changes in interest rates from the Federal Reserve, as a lower rate makes it cheaper for companies to borrow and reinvest while a higher rate may restrict capital and slow short-term growth. If you have a significant portion of your investments in equities, a small change in the federal funds rate can have a large impact on your net worth.
Whether you're leaving a job involuntarily, departing for something new, or just want to prepare for the unknown, it is smart to understand all your options regarding your 401k.
Frugal gifting often gets a bad reputation. However, this shopping method does not make you cheap — it makes you practical. Frugal gifts often avoid waste and overspending and can be just as meaningful (if not more so) as any other present.
With the National Retail Federation predicting each consumer this holiday season to spend upwards of $1,000 on holiday gifts amidst an economic recession —this year might be the perfect time to reconsider your spending budget. We've formulated the ultimate list of frugal gift-giving ideas to get you started.