02.24.25 Protecting Financial Accounts / TRAVEL: Navigating Rising Airfares

Today, Clark recommends a simple measure we can take to help protect our financial accounts, and those of our aging loved ones, from fraud. Also - many are looking to book their summer travel, and the airlines are raising prices. Clark shares strategies to bend that price curve in your favor. Trusted Contacts: Segment 1 Ask Clark: Segment 2 Navigating Airfares: Segment 3 Ask Clark: Segment 4 Mentioned on the show: Why You Should Name a Trusted Contact How to protect yourself against financial exploitation - Vanguard How To Cancel & Get Rid of PMI Earlier What's the difference between PMI and MIP? National Association of Enrolled Agents Best 529 College Savings Plans By State Clark Howard’s Airfare Price Predictions for 2025 Follow Clark Howard's #1 Rule To Travel Cheap NYTimes: Prices: A Mixed Outlook on Flights, Hotels and Cruises Coming to a Tiny Airport Near You: New Airlines Booking a Cruise? Here Are 5 Ways To Do It for Less Tipping on a Cruise: Your Complete Big-Ship Tip Guide InsureMyTrip Review: Why We Like It and How to Use It Clark.com resources Episode transcripts Community. Clark.com / Ask Clark Clark.com daily money newsletter Consumer Action Center Free Helpline: 636-492-5275 Learn more about your ad choices: megaphone.fm/adchoices Learn more about your ad choices. Visit megaphone.fm/adchoices

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• 1:21Speaker 02

  It's great to have you here on the Clark Howard Show. You know, our mission is to serve you with advice and information that empowers you so you make better financial decisions in your life. I'm going back to basics to begin today's show. There's something simple so many of us fail to do on our accounts of money. Could be retirement account, brokerage account, bank account, credit union account, anywhere where you got money stashed that I want you to do. Also...

• 1:57Speaker 02

  What a tragic loss of life in Washington in the American Airlines commuter crash. It just creates fear of flying and people that are naturally that way. I could talk all day long about the reality that flying is safer than most any other mode of transportation. Those are hollow words at a time like this of the tragic loss of life and also the fear that a lot of people have feeling that loss of control there in that airplane.

• 2:34Speaker 02

  And in spite of that, airlines are reporting incredible bookings and airfares after coming down, down, down for a good while are now headed the other way. I'm going to talk later about strategies for you to bend that price curve in your favor with right now, things turning against your wallet. What can you do? So back to basics here. We're an aging population and more and more, we're going to have loved ones, family, friends

• 3:16Speaker 02

  who you see the signs oddly at first and then more common that they're going through some level of what the community calls cognitive decline, which means their ability to reason, make good decisions deteriorates over time. And with an aging population and families scattered all over the country, a lot of times adult children aren't really tuned in to what's going on with mom or dad or mom and dad.

• 3:52Speaker 02

  And before they know it, money escapes being stolen by a criminal or in really weird decisions with money that an aging relative may make because of decline that people in hindsight recognize, but while it's happening, may not recognize the severity. So the 60 million-plus Americans who have Vanguard accounts, if you looked at your online statement or the mailed statement last month, received a notice about what Vanguard is doing about this and about while you're still really solid mentally,

• 4:38Speaker 02

  setting up trusted contacts. And more and more financial organizations are providing some kind of similar thing where if someone notices that, ooh, that's a really weird request I'm getting, that they would then see you have a trusted contact on your account at Vanguard or the equivalent at other organizations, and they contact you and tell you because the owner of the account gave that permission before for you to be a trusted contact. Who, they can change at any time, by the way. But then they notify you,

• 5:18Speaker 02

  and you're able potentially to stop a disaster before it happens. This is something I talked about a couple of years ago where one of the big banks had done this and set up a procedure where when an elderly customer might come in with like a weird thing, like they need to send a wire right now to who knows who, that before they do it, they contact that person who they've set up on their account. This is different than a power of attorney. Because there's nothing about a power of attorney that you would be notified, you would notice later that the money was gone,

• 6:01Speaker 02

  but it would not be an early alert warning system like this. And the big financial houses tend to have now a variety of procedures and interventions designed to protect people. From themselves when their mental faculties are no longer good enough to do that. What I'm asking you to do is today, when everything's fine, think about who is that trusted individual or who are those trusted individuals? And contact the financial organization. Could be a big bad bank, could be a credit union, could be a brokerage house, a mutual

• 6:46Speaker 02

  fund company, whatever it is, and see what procedure they have for you to have that family member who's there to look over your shoulder and be the trusted contact who's reached out to, to make sure that things, when your mental capacity is not what it was, that your money doesn't take a one-way trip.

• 7:09Speaker 03

  Tina in anonymous says, "How do I get rid of PMI? A few years ago, I took your advice, refinanced to a 15-year mortgage for a lower interest rate. At that time, they said I was not able to get rid of the PMI."

• 7:21Speaker 02

  Okay, so Tina, there's a procedure that should be explained in the loan contract. You get out your loan documents, but as a general rule, if you're in an area like so many other places in the country where home values now are so much higher than they were a few years ago, you qualify to get PMI removed from your loan because the value of your home has increased your equity to a point that you have substantial equity.

• 7:54Speaker 03

  PMI is private mortgage insurance.

• 7:56Speaker 02

  Private mortgage insurance, different than MIP, like with an FHA loan or something like that.

• 8:01Speaker 03

  And this required often when you get a mortgage, if you don't have like at least 20% equity.

• 8:05Speaker 02

  20% down, yeah, thank you. So, the PMI thing, so many people are still paying what becomes worthless to you, private mortgage insurance, month after month, when your equity in your home is built up so much. So Tina, there will be a procedure where you get that thrown off your loan. It may require you using an appraiser on an approved appraiser list for your lender. You have that appraisal done, as long as you've been making your payments on time, which is a requirement. You will be able to remove that PMI, the cost of that appraisal, way worth it,

• 8:48Speaker 02

  because of the amount of money you're no longer throwing away on private mortgage insurance. And if you are in this situation like Tina, get it done. Not next year, not the year after, get it done now.

• 9:03Speaker 03

  Tim in Idaho wrote in with this, "I am a new board member at a small 501(c)(3). After joining, we, the new board, found out that the payroll taxes had not been paid for several months during COVID-19. With back taxes and penalties, we are in serious trouble. How can we move forward and get this taken care of?"

• 9:22Speaker 02

  Okay, so, Tim, thank you for your involvement with this nonprofit organization. You're on the board because you believe in the works of this charitable organization, and it'd be terrible for the organization to cease to exist because of this tax liability to the IRS. What I'd like you to do is poll your fellow board members and see who knows a CPA who does tax matters, and see if that CPA has any interest in making a donation of their

• 9:58Speaker 02

  time to the nonprofit, to represent the nonprofit organization in working this out with the IRS. What you're looking for in a situation like this is, this could be Armageddon for the charitable works of this organization, and the IRS is not interested in that. They want the taxes that were due. CPA may, I say may, be able to use their experience and knowledge to negotiate a settlement with the IRS that waives penalties in return for payment of the tax. The tax is due.

• 10:41Speaker 02

  And is owed. It's the penalties that accumulate that could destroy the organization. And the worst-case scenario, the charity would have to take its meager resources and hire an enrolled agent, that's someone who is enrolled with the IRS to represent taxpayers and matters with the IRS cheaper to hire than a CPA who does tax. In a big mess situation, which your organization would not be able to afford, it would be hiring a tax attorney to represent the organization.

• 11:18Speaker 03

  Barry in Pennsylvania says, "I was at a college financial aid presentation from a university director of financial aid. The person said 529 money owned by a grandparent for a grandchild does not have to be reported on the FAFSA. Is that true? And if so, should I move the 529 money I have for children into my parents' name, their grandparent? I completely trust my parent to use the money for my children's college."

• 11:42Speaker 02

  So you can't just do that. You can't just move the owner of the 529 plan. That's not a necessary purpose. So what the financial aid rep was talking about is Congress passed what people refer to in slang terms as the grandparent exception, because a lot of kids' college education is paid for by grandparents. The parents in the weeds raising kids don't have the money to pay, but wealthier grandparents may have the money to pay. So, under the prior tax rules, a 529 account owned by a grandparent for the benefit of a grandchild, the kids

• 12:26Speaker 02

  were discriminated against in financial aid analyses because the money came from a grandparent's 529, not a parent's 529. That rule was changed with this grandparent exception. And so, the 529 no longer is looked at as an asset that makes a child ineligible for financial aid. However...

• 12:53Speaker 02

  Even though the federal rules were changed, an individual private college can ask the question, when they're trying to put together a financial aid package for a kid, they can ask that question, is there a grandparent 529 account? And then they can still discriminate against that grandchild on financial aid. It's not done commonly, but that is allowed. And I hope that helps clarify. It's just fine you having a 529 account as a parent for the benefit of a child. The way it calculates for financial aid is very favorable.

• 13:37Speaker 02

  Coming up ahead, unfavorable. Airfares moving up. And it's simple supply and demand I'm going to fill you in on.

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• 16:04Speaker 02

  I love to travel. I mean, it's a constant negotiation with my wife, Lane. How often we get to go somewhere? And the airlines didn't have enough passengers last year. And airfares kept getting better and better and better and better. And then, something's happened of late. And airlines, cruise lines, are reporting great advanced bookings from leisure travelers looking through 25. People are booking, they're buying. And so the airlines all use what's known as dynamic demand pricing

• 16:47Speaker 02

  that sees, oh, wow, wow, our advanced bookings are really good. I mean, you look at, they know, a year ago, two years ago, three years ago, they know how many advanced ticket sales they had for such and such date, on such and such flight, in such and such market. And they're seeing all those trends as their friend, moving their way, which means ticket prices... Move up higher and quicker than the passenger demand. And when passenger demand softens, the fares come down quicker than the demand comes down. It's very sensitive to small movements and the demand for travelers.

• 17:30Speaker 02

  So how do you save money? One thing is if you'll travel the Clarkway where you go where the deal is and then figure out why you want to go there. This is a year there's going to be a lot of deals in a specific sector. Lot of airlines are adding new markets. Flights to cities they didn't fly to before, islands they didn't fly to, countries they didn't fly to before. And it takes a while for an airline to establish themselves in a new market. They'll say, hey, we're now, good news, we're going to be flying to so and so starting April 24th or whatever.

• 18:13Speaker 02

  Those are opportunities for people sitting on bunches of frequent flyer points to get a redemption that may be hard at a good price otherwise in points. And for travelers who are paying for a ticket to get a real good deal on these introductory routes. Also, using tools like Hopper and Google Flights is really, really helpful because you'll see airlines and flights that you didn't expect to see. My wife and I are flying later this month on American Airlines on a non-stop we didn't even know existed that I saw on Google Flights.

• 18:56Speaker 02

  It was so crazy cheap on that non-stop versus what was available on non-stops on Delta, and it was cheaper than Spirit's non-stops on the route. So it just happened that I happened upon a flight I didn't know was there and got a much better deal. That's why instead of searching a particular airline's website, you start with a broad search. At a multi-airline search that's price oriented like Google flights and Hopper, and the more flexible you can be about day of departure, time of the day, and airline you fly, you will push back the price increases the airlines are pushing right now. Cruises

• 19:41Speaker 02

  are a whole different thing. There's never a cruise that somebody has to go on. And cruises have enormous differences, even on the same ship, depending which week you sail. There will be weeks that sell very well. There will be weeks that are selling really soft. And the cruise line systems automatically adjust the price of those cabins up and down based on that. There are a number of sites that specialize in the cruise industry, and you'll see lists of the cruises where there are really good deals. Again, not specific.

• 20:23Speaker 02

  It can be specific to the ship, but it's not the ship itself. It's the week that that bargain is for, in addition to the ship that you might want to go on. One place, if you love cruises, but you're not that experienced about how to find deals, a good place to start is cruise critic.com. And the deals are out there. You're just going to have to work harder for your travel this year to find those deals. Krista?

• 20:55Speaker 03

  All right. This question came in from Gail in Arkansas. My question's about cruise line gratuities.

• 21:01Speaker 02

  Oh, man.

• 21:02Speaker 03

  The cruise I'm planning to sail with in a few months states that gratuities are optional, but asks for them to be paid upfront, or they will charge your credit card near the end of the cruise at a set rate. From the information I've been able to glean while reading on their website, the fee that they refer to as gratuities isn't actually divided up between staff members, but goes into the company coffers to pay for bonuses and other rewards at the discretion of the company. Why don't they just pay their employees instead of deceptively charging me for gratuities that don't necessarily reward the folks who actually served me?

• 21:36Speaker 02

  Okay. Thank you for asking this question from Gail. I was just talking about cruise critic. And it's so fun on cruise critic to read the fierceness of the message boards. Do we still call them message boards?

• 21:49Speaker 03

  Sure. Communities, whatever.

• 21:51Speaker 02

  Yeah, where people argue about gratuities. Now, as a practical matter, cruise lines try to treat it as just part of your fare and bill it to your credit card in advance. You can refuse that. Then, when you arrive on the ship, you can go to guest services and refuse them charging them to you on the cruise. And you need to do this early in the cruise because they'll start, most cruise lines will start charging you a daily gratuity. And then what you do instead is, once you've told them no, you pay tips in cash directly to the people on that cruise that you've appreciated.

• 22:34Speaker 02

  Whether it's your cabin attendant, a bartender, if you like to drink and there's the same bartender you go to again and again, in the restaurant, the server who serves you, trying to think who else it would be. And that way, you know that money is actually going to the individuals that are performing the service. There may be a cruise line or so out there that gratuities are absolutely mandatory. I'm not aware of that. Usually, it works out as essentially mandatory because of the way they're collected. But for the cruise line you're interested in, go on Cruise Critic or another site and read how people handle the automatic posting of gratuities on that line.

• 23:18Speaker 03

  And I know you are a very, we joke around about how thrifty you are, but you're a very generous human being, and I know you tip well, but I bet you're right in that line at that desk when you start a cruise to tell them not to charge you that daily fee, right?

• 23:31Speaker 02

  Well, it depends on the cruise that I've been on. But yes, I do take, yup, yup, come and rob me at the port because that's one time I have a wad of cash to give out tips. Although, we're suspended from going on cruises right now.

• 23:50Speaker 03

  Really?

• 23:51Speaker 02

  Yeah, because we went on all these cruises for our son Grant. And now that Grant's older and can go on cruises now, some of the lines on his own.

• 24:01Speaker 03

  Okay.

• 24:02Speaker 02

  We're uh.

• 24:02Speaker 03

  You're done with that.

• 24:03Speaker 02

  That manic phase of our lives going on two or three cruises a year is maybe over.

• 24:09Speaker 03

  Jason in Michigan says, when going on vacation, we park our vehicle with a company, names the company near the DTW airport.

• 24:17Speaker 02

  Detroit, for people who don't know what DTW is.

• 24:19Speaker 03

  We pull into a heated garage, that's important in Detroit, park, check in at the desk, give them the car key and catch the provided shuttle to the airport. They then take our vehicle to another lot two miles away where it's parked until we return. Then they drive it back to the garage and have it waiting for us when we arrive. I've used this service many times. My question is, what kind of risk am I subjecting myself to, if any?

• 24:42Speaker 02

  Yeah, great question. So what is the risk using any valet service? Is that they have an oops with your vehicle and they say, oh, no, no, that already had whatever dent or whatever in it. Yeah, it's already been backed into a pole somewhere, whatever it is.

• 25:00Speaker 03

  I always think of Ferris Bueller's Day Off, that movie.

• 25:03Speaker 02

  With the Ferrari or something?

• 25:04Speaker 03

  Have you seen that? The dad's Porsche, I think, maybe it's, I thought it was a Porsche.

• 25:08Speaker 02

  Oh, okay.

• 25:09Speaker 03

  They go on a joyride, like the valets go on a total joyride with this car.

• 25:13Speaker 02

  I've had people mention that to me again and again, but I've not seen the movie.

• 25:17Speaker 03

  It's pretty awesome. There's like a slow mo of the valet driver going off this huge hill in the air with the car, like so happy.

• 25:26Speaker 02

  So what are you supposed to do? Like before you arrive at the lot, you get out in the cold in Michigan and you do, just as I tell people with a rental car, you shoot a video walking around your vehicle of it. And that way you have proof of the condition of the vehicle before you turned it over to the valet parking service. And then if you come back and there's an oops to your car, you've got the video that's time stamped just before you arrive there that shows that the vehicle was good when you got it. But that's really the biggest risk. So the. Other risk that a lawyer would say is wow, you have somebody driving your vehicle on

• 26:11Speaker 02

  public streets, going to an off-site parking lot, and they have a wreck at that point, then you could yourself have potential liability risk with it. But I'm really getting out there now with that.

• 26:26Speaker 03

  Martin in Colorado says, I may be renting a vacation home this summer for two weeks. The rent is $8,000 and it's non-refundable.

• 26:33Speaker 02

  Oh.

• 26:33Speaker 03

  I'm thinking I should take out some trip insurance to cover the rent if I had to cancel for any reason. Any recommendations on how I should proceed?

• 26:41Speaker 02

  Yeah, Martin, this is a great question. And as you may be aware, I don't like these non-refundable vacation rentals where you've got to pay a huge amount of money upfront, and it's not available to you till months later, as we've had time and again, properties sold by the owner before you're supposed to come. And then what happens, all that happens is you get your money back, you don't even get to stay there, but it was non-refundable for you if your circumstances changed. I don't like strict cancellation policies on vacation homes. Martin, you make your own decision on that. But with that being the

• 27:24Speaker 02

  case, if you go to one of the shopping sites like insuremytrip.com, and they have competitors as well, you see what's available for cancel for any reason insurance. Some of those policies will only cover a common carrier, meaning airline, they would consider a cruise line to be part of that, something like that. You have to be certain that a policy you buy covers you for a vacation rental. And so you've got to look at the terms and conditions of the policy. And they don't pay you back 100%. These policies pay 50, 60, or at most

• 28:04Speaker 02

  75% of the cost of the trip, allowing you to cancel for any reason. So at a minimum, you will still face exposure loss of 2,000 of your $8,000. The reason why, think about it from the insurer's perspective. If they allowed people to buy cancel for any reason insurance. And somebody has no skin in the game. Somebody could say, ah, well, yeah, yeah, I just don't feel like going there. And then the insurer faces too much liability. They know though, that if you have to pay anywhere from 25% to 50% of the loss, that you're only going to cancel if you've got a really good reason to do so, that

• 28:48Speaker 02

  you're willing to walk away from that much of the money of the trip. And I hope that is of help to you in planning this journey this summer. Two weeks at a vacation place, that's pretty great. And thank you for being with us today. I hope that you are finding information wherever you listen or watch, watching our YouTube show or podcast. If you see me on a TV station near you, you hear me on radio near you, you go to our websites, Clark.com, Clarkdeals.com. Subscribe to our newsletters, follow us on social media. The idea is to be wherever you want, that you receive information whatever way you

• 29:33Speaker 02

  prefer, that empowers you so that you can save more, spend less, and avoid getting ripped off. And we'll see you Wednesday.

• 29:47Speaker 05

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