Saturday, March 23, 2013

Are credit card charges too high?

19 March 2013

Forum Page,
Straits Times

You have printed three letters on 19 March regarding credit card
surcharge, "Cab firm right to take a stand", "Enforce fair trade
practices", and "Budget carriers profiteering via convenience fees".

They continue arguments on the party that should bear the credit card fees. 

I like to ask the question, "why should the credit card charge be 
as high as 3 to 5% of the transaction ? " For an transaction of $500, the 
charge can be $25.

I know that the card issuer, which is usually a bank, carry the credit risk. 
But they do have the means of checking which customers have
sufficient balances in their bank account, and do not merit this charge.

Perhaps these banks are profiteering at the expense of the
merchant and their customers?

I understand that the Association of Banks (ABS) is introducing the Online
Giro by the end of this year. I like to ask if this new facility allow 
customers to make online payment, without having to incur this high
charge for use of credit cards?

As the ABS is an association representing the interest of the banks, I 
like to ask the Monetary Authority of Singapore to give their comments 
as well. 

Perhaps MAS should also comment on whether they have a 
role to ensure that credit card charges are fair to consumers?

Tan Kin Lian
Financial Services Consumer Association

Wednesday, March 20, 2013

Free entry to museums

16 March 2015

Editor, Forum Page
Straits Times

The National Heritage Board collects an annual admission 
revenue of $2 million and spends $151 million to maintain 
the museums during the last financial year. 

The Acting Minister of Culture, Community and Youth has
announced that his Ministry plans to provide free entry to 
museums for Singaporeans and permanent residents.

I suggest that free entries should be provided to everyone, 
including tourists and non-residents.

I suspect that the amount of admission fees that can be 
collected from these sources will probably not cover the
cost of the employees who are involved in collecting and
accounting for the revenue. 

Tourists spend a lot of money when they visit Singapore. 
Why ask them to pay a few dollars in admission fees?

Many countries provide free entry to museums and do not
attempt to differentiate between residents and non-residents.

Tan Kin Lian

Tuesday, March 19, 2013

Paying road tax electronically

This letter is sent to LTA, DBS and MAS. It shows my experience in paying road tax electronically. The process is extremely troublesome. To use a crude word, IT SUCKS.

Cost of medical treatment

The cost of medical treatment may not be as expensive as most people feared.

Why life insurers make so much profit

A former colleague went to work for an international insurance group that has a successful operation in Singapore and other countries in Asia. 

He told me, "Mr. Tan, the business of this company is so profitable, that you will be surprised. They can make a profit in one year what you made in NTUC Income for 30 years. "

Just think. How does a life insurance company make its profits? Especially after they paid tens of millions in commission to its agents each year. Where does the money come from to pay the commission and the large profits?

Yes. It comes from the policyholders. The unsuspecting people who are told that life insurance is the best way to protect your family and to get your money back

This is a bad solution. This is why I try hard to pass the message to young Singaporeans. If you put your savings in the investment linked policies or other policies of these insurers, take a look at the benefit illustration. It will take you 15 years to break even, i.e. for the cash value to pay back the total premium that you have paid.

If you invest the same premium in an index fund, your savings is likely to grow by 50% AFTER ALLOWING FOR THE COST OF TERM INSURANCE.

Do you want your savings of $6,000 a year to reach $90,000 in 15 years (i.e. break even) or $135,000 (50% more)? The difference is $45,000.

Tips on buying insurance

Here are some tips about buying insurance ....

1. Buy insurance for the risks that have a severe impact that you or your family cannot bear. Do not buy insurance for small losses that you can afford to bear.

2. Make sure that you pay a fair rate of premium, relative to the expect cost of the loss, and are not overcharged.

Rule 1 means that you should insure the major risks, such as loss of life, property or car. You do not need to insure for small losses, such as $500 for the loss of a baggage, as you can afford to bear this loss on your own.

Rule 2 means that you do not pay $100 for a risk that should cost only $10. If you have a 0.1% chance of incurring a medical bill of $50,000, you should pay not  more than $100 (i.e. $50 for the expected loss and $50 for the expenses and profit of the insurance company). You should not, for example, pay $500 to cover this risk.

To apply rule 2, you have to find out what is charged by a few insurance company for the same risk. You have to find out for yourself.  You should not rely on the agent alone, as the agent want you to buy the policy recommended by him (for obvious reason).

You should never buy a product where it is difficult for you to understand and to compare. (Most people make this mistake. This is how the insurance company make so much profit).

Monday, March 18, 2013

Lost & Found Portal

I saw this poster at the bus stop opposite Thomson Plaza. The owner is offering a reward of $500 for the lost dog. The dog was lost in Yio Chu Kang, so the owner had to go quite far to put up this poster. 
I will be rebuilding the lost and found portal, to help people to post lost items online ...

Sunday, March 17, 2013

Managing risk and uncertainty

Michael Lee asked:
Mr Tan, wad do you mean by taking risk ? Wad kind of risk are you referring to?

Risk means uncertainty. We have to accept some risk and have a sensible approach to manage risk. We cannot eliminate all risk and pay a lot of money to eliminate risk totally.

There is a 1 in 5 million chance of being killed on the road each day. One person die in a road accident. We accept this risk, and don't stay at home ...

There is a risk of being sued for defamation, especially by rich and powerful people. if we express our views. We still give our views and accept the risk.

There is a risk of being sued for copyright infringement if I copy an image from the internet. I accept the risk and see if anyone make a claim. So far, none.

If we invest in shares, there is a risk that it can go up or come down. We accept the risk. We don't just ask for "guarantee". People who want guarantee, end up losing all their money when they were misled. This happened with the mini-bond type of investments.

There is a risk of losing your baggage or missing your flight when you travel. You can accept the risk and avoid paying $30 for each trip. It is not worth buying insurance for small losses.

If you want to buy insurance, make sure you pay a fair price. If the insurance should cost $200, don't pay $2,000, just because the agent exaggerate the likelihood of the loss.

Seminar on Population White Paper is organising a seminar event focusing on the 6.9 million population white paper and other matters that affect Singaporeans. 
Date:     23 Mar (Sat)
Time:    2pm to 5pm
NVPC seminar room,
             6 Eu Tong Sen Street #04-88
             The Central Clarke Quay S(059817).

Update on Instant Car Pool

More information about the Instant Car Pool 

Demo site:



User Guide

Letter to LTA

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