Credit Cards

Choose the Right Credit Card for Your Business

June 1, 2018 By Twila Van Leer

Business Credit Card — Don’t begin using your business credit card without being firmly conversant with the card’s interest rate, payment terms and fees

A credit card is a handy tool for your small business, but you first need to study the options and choose the card that best fits your needs. It provides a convenient way to establish credit, manage cash flow and keep your business and personal expenses separate.

According to the Small Business Administration, there are numerous possibilities, including teaser rate cards (among the most popular), low interest rate cards, rewards cards, airline or frequent flyer cards, unsecured business credit cards, secured cards and prepaid cards.

Start by analyzing how you spend money in your business. Do you want to pay the charges monthly or over time? What grace period does the card you are considering allow?

Expect a credit check when you apply for a business credit card. In most cases, a personal check will be conducted as well as your business credit. Find out if you will be personally liable for outstanding debt on the card. That may depend on whether the card carrier offers commercial liability, joint or several liability.

Don’t begin using your business credit card without being firmly conversant with the card’s interest rate, payment terms and whether it requires fees. Do the benefits offered outweigh the fees? Fees may be charged for cash advances, late payments and foreign transactions. If you expect to carry a balance, what is the annual percentage rate? Create an action plan for using the card, including payoff limits on the balance.

If you will use the credit card for company travel, you might look into a card that offers airline-mile rewards. Look at other awards a card offers, such as internet and phone services, shipping services, gift cards and discounts to selected retailers or simple cash rebates. If your business spends consistently in particular categories, compare cards and get the most benefit for the way you spend company dollars. If you tend to carry a large balance, you could pay more in interest than you earn in perks.

Know Your Credit Score

April 5, 2018 By Twila Van Leer

Your credit score is an essential facet of your personal finances. Even so, a great number of people don’t ever know what their credit score is or how to affect it in their favor.

It makes a difference. Your credit score is one of the factors that lenders look at when they consider whether to loan you money for a home or other big-ticket item. A lower score could mean a higher interest rate or otherwise affect the mortgage agreement. Your goal should be to have a score above 760.

So find out what your score is and then apply these five steps to upgrade:

• Know your risks. You can learn what your current credit report contains by contacting one of the three main credit reporting agencies, TransUnion, Equifax and Experian. Once a year they are obligated to provide a free report. It won’t include your overall score and you usually will have to pay a fee to see that bottom line. Usually, the score will come with a list of risk factors. Study them as a starting point for improvement. There can be as many as 300 risk factors. If you choose not to pay one of the reporting agencies for a score, many credit card companies will include it on statements and there are third-party websites that provide a simulated score. They include credit.com and creditkarma. Their scores may not exactly match those of the reporting companies, but it is close enough to set you on a correction course.

• Pay your bills on time and every time. The biggest factor in determining your credit score is how faithfully you pay your bills. Obviously, no potential lender wants to hand its resources to someone who has a patchy record of repaying. Even a few days late matter. A single missed payment can drop your score by 100 to 300 points. Start by refusing to allow yourself to add to your debt. Charge only what you can afford to pay off every month in full.

• Manage the debt you have. Keep your balances low to build your credit score. Debt utilization – how much of your available credit you actually use is an important part of how you score. Your balance should never be more than 30 percent of the credit limit on any single charge card or on the total of all your cards. If your balance now exceeds that goal, plan to get them paid off as soon as possible. Add as much money as possible on each payment. Decide if you want to concentrate on the smallest balances first or whittle away at those with the highest interest.

• If you don’t have a credit card, open one. A wallet full of credit cards isn’t necessary, but one or two, carefully managed, can help you establish a good score. Don’t just apply without a plan. Know how much credit you need and how you plan to repay it. If you opt not to have a credit card, open a credit account and faithfully pay it. You need some evidence that will get back to the credit reporters to enhance your score.

• Be patient. Good credit is not built in a day. It may take a few months of faithfully paying bills, keeping credit lines tidy and controlling your spending to produce the results you are looking for. But it will all be worth it when you face a mortgage lender across the desk or have other credit requests to make.

Don’t Overlook These Credit Card Benefits

December 6, 2017 By Twila Van Leer

Wisely used, your credit card could help with your holiday expenses. The trick is to control your spending and to use your credit card “extras” to make your credit go farther.

First off, consider “zero liability.” Identity theft is a serious problem today and protecting your information is imperative. A credit card or cards that offer zero liability can be one step toward that goal. They allow you to quickly freeze your account if you have any hints that things are not right. With some cards, this protection is built in if the issuer detects purchases that seem out of step with your usual practices. The inconvenience that you might suffer if they are wrong in refusing a purchase on your card is nothing compared with the damage that can be done by a thief using your card.

If travel is part of your holiday plans, you can get collision damage insurance on a rental car at no cost. It is included if you use your credit card to pay for the rental, according to the Department of Insurance, Securities and Banking. Otherwise, you may be charged $10 to $20 per day for the insurance. Consumer Reports notes that rental companies can hold drivers liable for anything that happens to the vehicle during the rental period. If something happens to the vehicle after you have returned it to the rental company but before they have done their inspection, you could be charged for that damage. Using a credit card to complete the transaction before driving off the lot prevents such an event. Decline the rental company’s collision damage waiver coverage.

Visa credit card holders also have a pay-per-use option for roadside dispatch in the event of a problem. If you are stranded while traveling, you’ll save money with this option. For $69.95, you are assured towing, tire-changing, jump-starting, lockout service, fuel delivery or winching services.

Most credit cards offer perks such as a rewards program. That’s especially attractive during the increased shopping that most people do during the holidays. Look for such perks when you choose a charge card. Caution: Don’t let the fact that you get a small cash rebate on credit card purchases push you into buying more than you had planned. It’s too easy to let the shopping get ahead of you.

Helping Small Businesses Go Cashless

September 18, 2017 By Twila Van Leer

Small Business Cashless — “We’re declaring a war on cash”

There are advantages to small businesses, particularly restaurants and food sellers in going cashless. Visa has undertaken a project to help them in the process, providing $10,000 each of 50 American businesses that are willing to commit to converting to digital payment technology.

“We’re declaring war on cash,” said Visa spokesman Andy Gerit.

After assessing the results of the first year of the program, Visa representatives said the company expects to expand the program into other industries and countries.

Cash is still king in many industries around the world, despite the proliferation of credit and debit cards. To make the transition to cashless, it is necessary to upgrade their current point-of-sale systems, which hampers some small businesses that want to make the change.

That’s where Visa’s offer of assistance steps in. The businesses that are considering the shift to a cashless environment have to assess how they currently use cash, what effect a change would have on customers and how workers would be trained to make the transition.

Visa’ contribution could be used to upgrade point-of-sale equipment or toward marketing and other efforts to promote their small businesses.

Obviously, Visa stands to benefit over the long haul. The company already is the world’s largest processor of credit and debit cards. It charges a small fee from every payment it processes. The more companies that convert to cashless business practices, the more Visa stands to profit.

Visa’s promotion is based on information from a study conducted recently that calculated the effects if the businesses in100 American cities converted to cashless. The prediction was that the net benefit to those cities would total some $312 billion per year. The benefits would come through savings in labor costs. New York City alone could save more than 186 million hours in labor, the study suggested.

Later this year Visa says it will release a report titled “Cashless Cities: Realizing the Benefits of Digital Payments” to summarize the effects of the project.

Building A Good Credit Score

October 8, 2016 By Twila Van Leer

Use card responsibly and pay each month's bill on time. — Use card responsibly and pay each month’s bill on time.

Building a good credit score doesn’t happen overnight. There are steps you can take to assure good credit from the outset and establish yourself on a positive note. They include:

Credit Reports

Check to see if you have a credit report. You could have established credit without being aware of it. For instance, if you have been authorized to use a family member’s credit, you might have a credit report. It is also possible that you have been a victim of identity theft, and that definitely needs to be cleared up before you start building credit in earnest. WalletHub is one site that offers credit reports and scores that are updated daily. If you find a report under your Social Security number, analyze it and if necessary, dispute errors, fraudulent accounts and negative records related to unauthorized use.

Get A Credit Card

Starting with a clean slate, open a starting credit card. It is usually pretty easy. There are some that don’t charge an annual fee or require you to incur debt as loans do. They report to the major credit bureaus on a monthly basis.

Three options for a starter card include student credit cards, general use cards for people with limited credit and secured credit cards. You have to have an active college or university email address to get a student credit card. A secured card offers the best opportunity to get guaranteed approval without the risk of overspending. The alternative to a starter card is a loan, usually for home, car, student use or other need that requires debt with interest.

Use Your Credit Card For 6 Months

Use the card responsibly for at least six months. That will generate a credit report and score. The score could range from bad to well above average, depending on what you did with the card and how well you paid. This first report is critical, because it puts you under the credit score microscope. Mistakes will be magnified beyond what they would be if you were a seasoned credit user.

Pay Bills On Time

Pay each month’s bill on time and keep your utilization of the card below 30 percent – 10 percent for the best result. Never use all the credit they extend to you. Setting up automatic payments from a deposit account is helpful in meeting these standards. Responsible handling of the initial card will help when you are ready to apply for a higher credit limit.

Study Your Credit Report

When you have a sense of how your initial foray into credit card use went, continue to study your credit report regularly. By looking at all of the components of the report, you can gain a sense of how the system works and be prepared for long-term credit use. You can learn to adjust course if any element of your report seems out of sync.

A responsible journey into the world of credit can set you up for life in what is an important element in ongoing personal finance.