Credit Card Blog

As small business loans have dried up, more entrepreneurs are turning to small business credit cards to fund their ventures. Though this is a common approach, you should be careful which cards you sign up for.

Banks are now offering new cards labeled specifically for small business use. However, if the business doesn’t work out and the credit card bill goes into default, banks have a back-up source of funds – you, the cardholder.

One advantage of running a small business is that, if set up correctly, the business’s assets and liabilities are separate from your own. But with this new generation of small business credit cards, banks can come after your personal assets if the bill goes unpaid.

It’s worth noting that the new Credit Card Holder Bill of Rights doesn’t specifically protect entrepreneurs or small businesses. Experts recommend avoiding these small business cards altogether and using personal credit cards to pay business start-up costs. Then, pay the credit card bill from the business’s money.

Chase is planning to launch at least four entrepreneur-targeted cards, and other banks will undoubtedly follow suit. Weigh all of your options carefully when deciding how to fund your small business.

In the past, American Express gift cards were subject to $2 monthly maintenance fees beginning one year after the card was purchased. Thanks to a push from customers who told AmEx the fees diminished the value of the gift cards, American Express has decided to change its ways.

Effective immediately, there will no longer be a monthly fee on AmEx gift cards. This is also true for cards which have already been purchased. So if you’ve been holding on to an AmEx gift card for a while, you can rest assured that your balance won’t slowly seep away.

There is still an upfront fee associated with gift card purchases, but monthly fees are a thing of the past. In fact, American Express has elected to do away with all fees after purchase.

Thanks to new legislation, other gift card issuers will have to rethink their own fee structures. In August of 2010, it will no longer be legal to charge dormancy fees on gift cards unless those cards have been inactive for one year.

Ann Minch started a debtor’s revolution on YouTube when she told Bank of America to stick her credit card debt in their bailout pipe and smoke it. Angered that her interest rate had jumped from 12.99% to 30% for no good reason, Minch went on an angry video rant targeting the bank.

The result? Bank of America renegotiated her interest rate within 5 days, and lots of other angry cardholders jumped on the bandwagon with horror stories of their own.

Some debtors are determined not to repay a cent of their credit card debt until the bank lowers their interest rates. Others want their accounts settled immediately, without the 180-day delinquency that Bank of America requires before settling an account. Many are angered that Bank of America continues to charge such high interest rates after receiving billions of bailout dollars – especially at a time when so many customers are struggling to find work and pay their bills.

YouTube user ‘efrasier21mbf’, a former assistant branch manager for Bank of America, posted a video of his own in which he supports the debtor’s revolt. He has harsh words for Bank of America due to the practices he witnessed during his time as an employee, and his own experience with an interest rate that jumped from 5.1% to 32% — even though he was never late on a payment. At the end, he offers the bank a deal: settle his account now for a large cash sum, or never see another penny on the loan.

Want to witness the debtor’s revolt? You can watch Minch’s original video here. Huffington Post also featured several follow-up videos here. (Warning: Some videos contain strong language.)

Small business owners often complain about the time consuming task of keeping track of their finances and purchases for tax time. It’s imperative that a business can account for each of their purchases – both for tax purposes and for strong management of their business.Using a business credit card can eliminate some of the time spent categorizing and tracking each of your expenses and purchases.

When you use a single credit card for all business purchases, your monthly credit card statement will give you a record of all of your expenses by the month, broken down by individual purchase. You can often get a year-end statement from the credit card company as well, with purchases already categorized by type and by month which will make your job (or your accountant’s job) of balancing your books much easier.For businesses that have a key employee or two, using business credit cards allows you to keep a close eye on the items they’re purchasing or paying for on behalf of your business. You can issue your key employees a card in their name, and then review the purchases made to each individual card on a monthly basis.Additionally, many credit cards designed for business use offer discounts for businesses – from office supplies to travel discounts to merchandise discounts or rewards. Select a card based on the type of purchases you need to make most often for the most benefits.

Did you know that merchants pay a fee to process credit card purchases when you shop in their stores? These are called interchange fees. They are represented by a percentage of all of the sales that are charged onto credit cards which is only several points. But it adds up quickly for merchants. There are a few things you need to know about interchange fees and how they affect you as a credit card user.

Higher prices

Interchange fees are one of the highest expenses of a merchant right behind payroll. In fact, they are more than rent most of the time. That creates a situation where merchants are forced to raise prices as an off-set to these fees. They will say otherwise, but it has been all too often proven otherwise. Take away: merchants that do not accept credit cards might have lower prices.

Convenience to you

Merchants do not have much of a choice in accepting credit cards if they want to remain competitive in today’s retail market. Not doing so puts them at a disadvantage to their competition. Take away: it is easy for you to walk in and pay for your purchases with credit or debit cards because of this system.

Pending legislation

There is a law pending that will likely create a higher fee for interchange rates for merchants. This law will allow merchants to charge higher prices specifically when you use credit cards for your purchases. Take away: higher interchange fees means higher prices for you at the register.

There are different interchange fees for different merchants from card issuers. For example, MasterCard has over 120 different rates for the various kinds of retailers. Supermarkets have the lowest rates, while Internet based retailers pay the highest.

Knowing the above information can help you be a wise shopper and user of credit cards.

It’s common for couples to share credit card accounts, with one spouse opening the account and adding the other as an authorized user. This is especially useful when one spouse has a good credit history, and the other needs to build their credit.

But things get tricky when marriages go bad. For one thing, if you’re still an authorized user on your ex’s credit card, their spending habits can harm your credit score. For another, keeping you as an authorized user is a good way for your ex to see what you’re spending money on.

So what should you do? Experts recommend calling the credit card companies and asking to be removed as an authorized user. Remember, you’re responsible for at least half of the debt incurred on your credit cards during the marriage. If you stay on the accounts following your divorce, you can also be held liable for half of the debt incurred after the marriage ended.

If you’re receiving alimony or child support in the form of credit card privileges, it might be a better idea to set up automatic deposits or old-fashioned checks instead. If your ex defaults on the credit cards, your support – and your credit score – will suffer.

If you plan to travel overseas, you might be wondering which credit cards you should use. Between high exchange fees and surcharges, some credit cards don’t do much to add to your travel experience. USA Today recently listed their top picks for foreign purchases.

Lowest Foreign Currency Surcharge

Capital One: 0%
American Express: 2.7%
Bank of America: 3%
Citibank: 3%
Diner’s Club: 3%
Wells Fargo: 3%

Capital One came away the clear winner. That covers purchases made in foreign currency, but what about purchases made in US dollars? It appears that Bank of America, Citibank, and Diner’s charge the same amount, even if there is no actual currency exchange. American Express and Well’s Fargo don’t add a surcharge for dollar billing.

In keeping with their 2001 advice for foreign travelers, USA Today still recommends using debit cards for cash and credit cards for large purchases. Since traveler’s checks and currency exchanges lose 5-10% of their value in fees, stick with the plastic when you travel abroad.

For the full list of traveler-friendly credit cards, go to USA Today’s web site.

There are signs that consumers are bringing credit card debt under control and are beginning to make strides to pay it off along with other debts like automobile loans.

Moody’s Investor’s Service reports that the charge-off rate by banks for bad consumer debts decreased from 10.76 percent in June 2009 to 10.52 percent in July.

Also, delinquencies that had been on a steady increase have also begun to decline. The Federal Reserve has issued statements that show that there is a positive move by consumers to paying down their debts as well.

Retailers are hoping that this bodes well for the holiday shopping season. It appears that more families have discovered ways to manage their debt and make strides to pay it down. Other studies are validating this trend. Consumers are also increasing their savings rates at levels not seen in years.

With unemployment and underemployment still major issues, the positive effects will probably not be wide-reaching, but it is better than the opposite.

The best way to view this information is to realize that families are in a better position to make a comeback when things do improve.

This is not good news, however, for credit card companies who are beginning to feel the pinch of fewer and fewer people using their credit cards for purchases and instead paying with cash via debit cards or using tactics like layaways at retailers to fund their purchases.

The door to economic recovery is opened but just slightly for the moment. The recovery is fragile and might still be a ways away before it grows stronger.

Beginning in February 2010, it will become more difficult to get credit cards for those who are under the age of 21. That is because under the Credit Card Accountability, Responsibility and Disclosure Act of 2009, that restriction will be imposed on those who try.

The only exceptions for this are if a parent, guardian our spouse is willing to co-sign the application which makes them liable for the charges on the account as well. Or, there must be proof of sufficient income to meet the financial obligations of the card.

The fear is that before this law goes into effect in February, there will be a run to apply for and obtain credit cards since once one is issued, it will fall outside of the law’s provisions.

In 2004, over 75 percent of undergraduates had at least one credit card. And now, that number is over 84 percent. Most do not pay off their balances every month and the median debt amount held by this group is $1,645 as opposed to around $950 in 2004.

Students in this age category show a clear need for guidance when it comes to using credit cards and paying their balances. Yet, one of the overriding protests to this law is that since they are able to vote, drive and enlist in the armed forces, they should be able to get credit cards, too.

The better course of direction with regards to credit cards and their used would be to educate about the merits of using them responsibly. But, ultimately, it is up to the students and their parents to make sure that their use of credit cards is based on sound logic and with forethought to the consequences.

If there was a single task you could perform to help keep your credit card information safe online you would do it, right? Think about all of the programs and offers that you hear about everyday that try to get your money. They have their place and can help keep you safe. But you should not use them unless you are first doing this one thing that can help you just as much – and it does not cost a dime.

Change Your Password

That’s it. This one simple task can help keep you from trouble by making it much more difficult to hack into your account. And that goes for all of your online banking activities and accounts.

Changing your password helps if it ever falls into the wrong hands from being used against you. A password is the lock on the front door to your account. It is the most basic of security tools (like the keys that you use on your home).

Change it often. Make it a priority to change your password at least every three months. This will require you to go in to each and every account and change them, but schedule a time just as you would do for an appointment and get it done.

Make your passwords hard to hack. Use a combination of letters and numbers (usually you cannot use symbols). Mix them up and make it very difficult to guess or piece together with information about you. Use a small paper journal with a pen to keep your passwords written down and safe.

That’s all it takes to strengthen your security, your credit and your life. Do it today.