Credit Cards Blog

When starting a business you'll likely end up accepting credit or debit cards, which means hiring a third-party processing firm to manage the transaction between you and the card giants.
Visa and MasterCard manage the overwhelming majority of the credit and debit card network but don't work directly with business owners. They outsource sales and customer support to processors, says Amad Ebrahimi, founder of MerchantMaverick.com, a credit card processing comparison and review site.

Processors are also commonly known as merchant account providers or aggregators.
“The seller has more information than the buyer, so anytime you have a situation like that, it is like a used car sales lot,” Ebrahimi says. As a result, these aggregators are often criticized for confusing merchants with complicated payment schedules and fees.

To prepare for this complex marketplace, here are five questions to ask to make sure you're getting the best deal.

1. Is there a cancellation or early termination fee?
Ideally, you want a processor that won’t charge for this. But if you must pay a fee for leaving before your contract expires, it should no more than $200 to $400, says Phil Hinke, the founder of MerchantFeeSavers, dedicated to helping business owners understand the industry. Hinke also warns business owners to avoid processors that stipulate a “liquidated damages” termination fee, which means you'll be charged for the estimated amount of the full contract, if you cancel before it expires.

2. Is the payment processor compatible with your online shopping cart?
 Some processors have proprietary software that may not work with your online shopping cart, so check this before you sign up. The software that connects your online shopping cart and your processor is known as the 'payment gateway.' Ebrahimi says most processors work with a company called Authorize.Net, which has fairly universal software.

3. Is interchange-plus pricing an option?
If the answer is no, go elsewhere. With interchange-plus pricing, you can see exactly what MasterCard or Visa charges (the interchange fee), plus what you're paying the processor. If you're locked into a tiered-payment system, however, fees are not as easily identifiable: You could be charged one of three different fee levels for each transaction, depending on the type of card (i.e., airline credit cards cost more per swipe than standard ones) and how it's processed (i.e., if the customer is present, it'll save you in fees). Processors can more easily overcharge you in this pricing structure, without you recognizing it.

4. What fees will I be charged aside from the cost of each transaction?
Processors may tack on annual or monthly fees, regulatory fees, compliance fees, and statement fees. Be sure to ask about this upfront. Hinke says these fees generally shouldn't total more than $200 per year for brick-and mortar-merchants -- and no more than $300 annually for ecommerce retailers because of additional service fees associated with the online shopping cart.

5. What customer support is available?
You are going to need help when, for example, your terminal malfunctions. Look for a processor that offers phone support available 24 hours a day, 7 days a week, says Ebrahimi.

Finally, don’t be talked into leasing a terminal, which is the machine where customers swipe their cards to pay. Hinke says he has seen novice merchants lease a terminal for as much as $139 per month, when purchasing one would only cost between $200 and $350. If you decide to buy, Hinke says to chose a terminal that can be used with different processors – such as VeriFone or Hypercom brands -- should you need to change service providers.

Ref: http://www.entrepreneur.com/blog/223696#ixzz2g3o0x4ev

The oft-repeated survival statistics: Only about a third of startups survive to celebrate their 10th anniversary, according to U.S. Census Bureau and Labor Department data, and only a quarter last until their 15th. Making it as a small-business owner is tough.

There are many ways to increase your company’s survival odds, but one of the easiest is to control your use of credit-card debt. Too often, entrepreneurs don’t make the best use of their accounts and end up hurting their businesses. Here are seven of the most common credit-card slipups to avoid.

1. Ignoring your personal credit standing:
Credit-card issuers pull personal credit reports when making business-card approval decisions because to them, a small business is its owner. So, it’s crucial to try to maximize your personal credit score before applying for a business card. Start by visiting annualcreditreport.com and ordering a free copy of your major credit reports (Experian, Equifax and TransUnion). You can check for inaccuracies that could be dragging down your credit standing, as well as get a sense of whether there is any negative information that you will need to devalue to improve your score. The most efficient way to do so is to get a new personal credit card and either lock it away unused or pay your bill on time each month. This will relay positive information to your credit files on a monthly basis.

2. Leveraging credit too early:
The numbers speak for themselves when it comes to the dangers of relying on a credit card to power a company through its infancy: For every $1,000 in credit-card debt that a small business takes on, its chances of long-term survival fall by more than 2 percent, according to a study from the Ewing Marion Kauffman Foundation. If you rack up a huge balance from the get-go, you will likely waste money on interest payments and won’t be able to reinvest in your company as freely as you might otherwise.

3. Being wed to only a small-business card:
Most people assume business credit cards are the plastic of choice for small-business owners, but for purchases you won’t be able to pay off within a single billing period, you actually could be better off using a personal credit card. Credit-card issuers are banned from increasing interest rates on personal-card balances in the absence of 60 days’ payment delinquency, but this rule doesn’t apply to business cards. So, you could face unexpected higher interest charges if you carry a balance on a business card, potentially disrupting your cash flow and strategic plans. Using a personal card won’t affect your liability; you’ll be personally liable for your small-business spending no matter what type of card you use.

4. Overlooking rewards:
Small-business credit cards have long offered unparalleled rewards on business-related expenses, and now, credit-card companies also are offering enticing initial reward bonuses on both business and personal cards to people with excellent credit ratings. You can garner hundreds of dollars in free cash or points, which can be used to score a free flight to visit an important client or help pay for a marketing campaign.

5. Paying interest:
You can avoid credit-card interest payments by taking advantage of introductory zero-percent rates on both purchases and balance transfers. For example, the Citi Diamond Preferred Card offers zero percent on new purchases for 18 months, while the Slate Card from Chase offers zero percent on balance transfers for 15 months and doesn’t charge a balance transfer fee. If you currently have a $5,000 balance with a 15 percent interest rate and want to become debt free in 15 months, the Slate Card would save you $518 in interest fees and help you pay down the debt one month faster.

6. Not segmenting transactions:
The rewards and low interest rates available today obviously provide value, but you won’t be able to take advantage of both using a single credit card. That’s why you should follow the "island approach" and segment your transaction types on different credit cards. For example, you can use a business-rewards credit card for everyday expenses and a zero-interest personal card for funding. This will enable you to reap the benefits of a business card but enjoy the debt stability of a personal card.

7. Failing to safeguard against fraud:
The best way to ward off fraud is to exercise common sense. Avoid leaving important financial documents where employees can see them; it’s possible they could apply for financial accounts under your name or your company’s name. If you regularly deal with clients or vendors over the phone or online, always be careful when exchanging financial information. And keep an eye out for credit-card transactions for unusual amounts, which could be a sign of unauthorized account access.

Ref : http://www.entrepreneur.com/article/224518#ixzz2g3hNEJrU

What it is: Credit cards can provide easy money for young, growing companies. But they also come with serious dangers.

How it works: There are personal credit cards, and there are cards tailored toward small businesses. Each come with benefits and rewards. There are more government protections for personal credit card holders, while business cards can have higher limits and rewards such as discounted office supplies that are tailored toward business owners.
No matter what, you will wreck your personal finances if the bills aren't paid, so don't be tricked into thinking you need to use a business card with the business.

Upside: Besides providing needed cash flow to young businesses, credit cards can also improve credit scores for owners and businesses alike -- as long as payments are made on time. There are also special rewards and perks such as airline miles, discounted gas or even cash.
The funds are also easier to come by, which can help in a pinch.
Embracing business credit cards for daily expenses inside the business can also aid in record keeping by helping business owners to separate personal and business finances, track employee spending, reduce time balancing checkbooks, and produce business financial reports.

Downside: Credit card interest rates are much higher than traditional loans, which can make them a pricey form of debt that will drag the business down during tough times.
It is little wonder that the Ewing Marion Kauffman Foundation has found that for every $1,000 in credit-card debt that a small business takes on, its chances of long-term survival fall by more than 2 percent.

For a young company, it is crucial to tap personal funds, family, friends and other investors in order to avoid racking up too much credit card debt. Such high-interest debt will swallow up a young company's revenues.

Getting late on a payments and you can damage your credit score, hurting your ability to take out loans as the business grows. A late payment on a small business credit card also gets you reported to a business credit bureau.

Extra tips:

• Review sites such as CreditCards.com,CardRatings.com and Bankrate.com provide online tools to compare interest rates, rewards programs and annual fees.
  
• You could get burned on a small business credit card if you don't scrutinize the fine print and ask a lot of questions. Such cards are not covered by the 2009 Credit Card Accountability, Responsibility and Disclosure Act. The law protects consumers from such practices as arbitrary interest-rate increases.
  
• If you think you won't be able to pay off purchases in a single billing period, it might be better to charge them on the personal plastic, rather than a business card.
  
• Don't just hone in on annual fees. Check out baggage insurance, concierge service, employee-expense tracking, and even access to airline clubs.
  
• Search out the business cards with the best rewards in order to make something back on the business' purchases.
  
• Take advantage of introductory zero-percent rates on both purchases and balance transfers.
  
• Use different types of cards for different types of transactions. For example, a business-rewards credit card might be best for everyday expenses, while a zero-interest personal card might be the best for funding.


Ref: http://www.entrepreneur.com/article/228193#ixzz2g3XUAbfq

According to the Federal Reserve's most recent survey of consumer finances, roughly 46 percent of American families carry a credit card balance, and nearly one in four owe more than $3,000 on their plastic.

Because of this, some folks believe credit cards are evil. But credit cards are no more evil than a chain saw. Sure, my chain saw can be dangerous, but only if I use it like an idiot. Used wisely, credit cards can be valuable tools, especially for small-business owners who can earn reward points and manage their cash flow while paying the monthly bills.
Jim Wang, for instance, loves his credit cards. The entrepreneur from Columbia, Md., writes about personal finance at Bargaineering.com. He controls his credit cards instead of letting them control him.
"I carry three cards," he says. "They're all cash-back or rewards cards. One card's for business; one offers rewards at restaurants, movie theaters and bookstores; and one offers cash back on everything else."

• Read the fine print. You should read every contract you agree to, and a credit card is no different. Reading the paperwork alerts you to the card's hidden benefits--and its hidden pitfalls.

• Review your statement every month. Watch for fraudulent transactions, but also keep an eye out for changing due dates, fees and interest rates. And don't be afraid to speak up. If something seems strange (or you want a rate reduction), call customer service.

• Don't buy anything with your credit card unless you already have cash in the bank to pay for it. Don't let your having a credit card influence your shopping decisions. A credit card isn't a license to spend--it's just a different way to pay. 

Another bonus? Credit cards make money management easier. "I like that all my spending records are in one place," Wang says.
If you choose to use credit, be smart. This isn't free money. Live by three basic rules, and you can safely use credit without getting burned.
"The idea is to spend within your means," Wang says. "Don't charge more than you're able to pay back in a month. If you carry a balance, you negate most of the benefits."
Not all credit cards are created equally, of course. Some carry high fees and onerous interest rates. In 2009, Congress passed the Credit Card Act, designed to protect consumers from some of the worst credit-card company tricks, but it can still be tough to sort the wheat from the chaff. To find a credit card that best suits your needs, consult Consumer Reports or visit card comparison websites such as IndexCreditCards.com or CardRatings.com.
Small-business owners should be careful, though.
"Business credit cards aren't regulated by the Credit Card Act," notes Curtis Arnold, founder of CardRatings.com. "In fact, some companies are issuing ‘professional' cards to get around consumer regulations."
Arnold, author of How You Can Profit from Credit Cards, says that banks are targeting entrepreneurs aggressively with these cards.
"Some small-business owners have switched from business cards to consumer cards to get protection," he says. "To get the same protection, consider applying for a personal card in your business's name. As long as you're not actually mixing your business and personal accounts, you're fine."
Credit cards aren't evil, but they can be dangerous. Just as you handle a chain saw with care, you need to be equally cautious with credit to avoid hurting yourself (and your business). Used wisely, credit cards can actually give you a financial edge.

Ref: http://www.entrepreneur.com/article/218128#ixzz2fXd0Srmj

If you have to accumulate charges on plastic to launch or build your business, you ought to be using one of the best credit cards out there so that you get money back and earn rewards.
The credit-card comparison website CardHub.com today is releasing its analysis of more than 1,000 business and personal credit cards for small-business owners. The analysis ranks them by four categories:

• Earning rewards
• Longer-term funding
• Decreasing the cost of existing debt
• Building a credit history

Surprisingly, in this analysis consumer credit cards are sometimes the best option for small-business owners, CardHub.com says. The Credit Card Accountability Responsibility and Disclosure Act, known as the CARD Act, which was passed in 2009 and went into effect in 2010, instituted measures of transparency and accountability in the credit-card industry. However, the protections were not extended to business credit cards.

Here is a look at the recommended credit-card options from Washington, D.C.-based CardHub.com, by personal finance priority.

REWARDS CREDIT CARDS

1. Ink Plus Business Card from Chase:
If you spend $5,000 in the first three months of signing up for the Ink Plus Business Card, you will receive 50,000 bonus points. Also, for every dollar you spend on office supplies and telecommunications services, you can earn another five points, up to $50,000 per year. For every dollar you spend on gas and hotel accommodations, you can earn two points, up to $50,000 per year. The annual fee on this card is $95 after the first year. Of course, as with all credit cards, it's a good idea to pay off the balance on a monthly basis to avoid being charged interest. Because the CARD Act protections do not extend to business credit-cards, your interest rates can be changed at any time on credit cards specifically designated for businesses. 

2. Club Carlson Business Rewards Credit Card from Visa:
This card is especially good for entrepreneurs who spend a lot of time living out of a suitcase and like Radisson hotels. The card offers 50,000 bonus points after your first purchase and 35,000 additional points if you spend more than $2,500 in the first three months of signing up. Those 85,000 points can be exchanged for as many as 18 free nights in Club Carlson hotels. If you book more than two consecutive nights at a hotel with the Club Carlson, the last night is free. While Club Carlson may not be a familiar brand for you, it is the parent company of chains including the Radisson, Park Plaza and Country Inn. There is a $75 annual fee.

3. Capital One Spark Cash for Businesses:
This credit-card gives you two percent cash back on any purchase, and while that is slightly less than you can get back for specific categories of purchases on other cards, that this card offers some cash back on all purchases makes it especially convenient, the report says. Also, if you spend $1000 in the first three months, you will get $100 as a bonus. If you authorize an employee to use your card, you get another $50 bonus. The annual fee is $59 after the first year.

BUSINESS FUNDING :

1. Citi Diamond Preferred:
Approximately one-third of small-business owners use credit-cards for financing, according to the most recent National Small Business Association access to capital report. If you are looking to finance a larger purchase on a credit card, having an extended period of time where you don’t accrue interest is key. This credit card from Citi offers zero percent interest rate for 18 months, the longest in the industry, according to CardHub.com. The Citi Diamond is a consumer credit-card. Not only are consumer-credit cards protected under the CARD Act, but also they tend to have longer periods with zero interest, says CardHub CEO Odysseas Papadimitriou.

2. Bank of America Cash Rewards for Business MasterCard:
Bank of America is the only large, primary card issuer to have voluntarily applied the CARD Act protections to its small-business offerings. This credit-card offers no interest payments on new purchases for nine months. Also, you can get three percent cash back at gas stations and office supply stores, two percent at restaurants and one percent for all other purchases.

LOWER THE COST OF DEBT:

1. No Balance Transfer Fee Slate Card from Chase:
 About half of small-business owners carry credit-card debt from month to month, CardHub.com says. If you are one of them, the Slate Card from Chase is your best option because there are no fees for transferring your balance, says Papadimitriou, who is “amazed” this option is available anywhere because it is not a profitable offering for card issuers. Also, once you transfer your debt to the Slate Card, there are no finance charges for 15 months. There is no annual fee.

BUILD CREDIT :

1. Capital One Spark Classic for Business:
Building a good credit history takes time. The only way a specific credit card will help is by having no annual fee, says Papadimitriou, allowing you to use all your cash to pay off debt. Also, the Capital One Spark credit-card gives one percent cash back.

2. Harley-Davidson Secured Credit Card:
If you don’t have credit, or have bad credit, the Harley-Davidson Secured Card is a way to build credit. You have to make a security deposit to open the credit card and you can spend only as much as you have deposited. You can add more cash to your deposit to increase your credit limit. A bonus to this card is that it waives the annual fee for the first year.

Corrections & Amplifications: An earlier version of this article incorrectly referred to Ink Plus Card as charge card. It is a credit card.

Ref: http://www.entrepreneur.com/article/226941#ixzz2fVdYtboh

A personal finance expert will always advise against running up a credit-card balance. But as a small-business owner trying to launch or grow your company, that may not always be a reality.
If you do have to turn to plastic, be reminded that some cards are better than others.

Credit-card comparison site CardRatings.com today released its list of the 10 best credit cards for 2013 thus far. The cards were chosen based on the quality of their customer service and their value for people with good to excellent credit.

Credit-card issuers are having to work extra hard these days to win over consumers, many of whom are working to pay down debt, says CardRatings.com Editor-in-Chief Curtis Arnold. "This puts consumers in the driver's seat and I would encourage folks, particularly those with good credit, to be very discriminating when shopping for a new card," he says in a statement.
Here are 10 best credit cards of 2013:

1. Discover It
2. Barclaycard Ring
3. Capital One Venture Rewards Credit Card
4. PenFed Platinum Rewards Visa Signature Card
5. Southwest Airlines Rapid Rewards Premier Credit Card
6. Citi Simplicity MasterCard
7. Chase Sapphire Preferred
8. American Express Blue Cash Preferred 
9. American Express Platinum Card
10. Citi Forward Card for College Students

Ref : http://www.entrepreneur.com/article/227893#ixzz2fRViwysh

The following are top 6 best credit card offers designed for students. Compare offers and apply online with a student credit card application.
New Federal laws impose restrictions on issuing credit cards to individuals under 21 unless the applicant has the independent ability to repay debt, or has an adult co-signer who agrees to accept joint liability for the account.

Discover it® for Students

• Pack a Discover it® card when you go back to school.
• Fair...No annual fee. No overlimit fee. No foreign transaction fee & no pay-by-phone fee. No late fee on your first late payment. And we won't increase your APR for paying
• Generous...5% cash back in categories that change throughout the year up to $1,500 in purchases with free and easy sign-up. And 1% cash back on all other purchases.*
• Plus a Cashback Concierge^SM who guides a free, personalized online tour to help you get the most rewards for how you use your card.
• Flexible...Choose your own due date and pay up to midnight ET online or by phone.
• Human...talk to a real person any time with 100% U.S.-based service.
• Safe...Because you'll never pay for unauthorized purchases with our $0 Fraud Liability Guarantee.
• 0% intro APR* on purchases for 6 months, then the variable standard purchase APR of 12.99% - 21.99%. *Click apply for Terms & Conditions.

Discover it® for Students with $20 Cashback Bonus

• Get back-to-you cash on back-to-school expenses with Discover it®.
• Generous...5% cash back in categories that change throughout the year up to $1,500 in purchases with free and easy sign-up. And 1% cash back on all other purchases.*
• Plus a Cashback Concierge^SM who guides a free, personalized online tour to help you get the most rewards for how you use your card.
• Fair...No annual fee. No overlimit fee. No foreign transaction fee & no pay-by-phone fee. No late fee on your first late payment. And we won't increase your APR for paying late.*
• Flexible...Choose your own due date and pay up to midnight ET online or by phone.
• Human...talk to a real person any time with 100% U.S.-based service.
• Safe...Because you'll never pay for unauthorized purchases with our $0 Fraud Liability Guarantee.
• Experience our cash rewards with $20 Cashback Bonus® when you make your first purchase within 3 months of approval.* Standard variable purchase APR*- 12.99% - 21.99%.
• *Click apply for Terms & Conditions.

Citi Forward® Card for College Students

• 5 ThankYou® Points for every $1 you spend at restaurants and on books, movies and music. 1 point per $1 on all other purchases.
• Up to 2% APR reduction when using credit wisely
• 100 ThankYou Points each billing period that you pay on time and stay under your credit line.
• 1000 bonus ThankYou Points when you sign-up for paperless statements.

JourneySM Student Rewards from Capital One®

• Designed to help students build good credit with responsible use
• Access to your monthly credit score, plus an interactive tracking tool to help monitor your credit
• Customizable text and e-mail alerts to help keep you on track
• Get 1% cash back on all purchases, plus a 25% bonus each month you pay your bill on time
• No annual fee
• $0 Fraud Liability if your card is lost or stolen

American Express Serve®

• Get American Express Serve and you could get $50 when you use Direct Deposit. Must enroll in Direct Deposit by 9/30/13.*
• No credit check. No minimum balance. No activation fee.
• Manage your money with the prepaid card, online account, and mobile app.
• Shop online or off and get access to membership benefits like Purchase Protection.*
• Enroll in Direct Deposit to get your paycheck in your American Express Serve Account on payday.
• No need to use a check. Email money to anyone no matter where they have a bank account.
• The safety and security of American Express.
• The 24/7 customer service you expect from American Express.
• *Terms, conditions and exclusions apply.

Citi® Dividend® Card for College Students

• Earn 5% cash back on eligible purchases within the Hilton Worldwide portfolio of brands, car rental agencies, movie theaters and theme parks from 7/1/13 to 9/30/13, upon enrollment
• Earn a full 1% cash back on all other purchases
• Earn bonus cash back each quarter for new must-have categories - like department stores, travel and more, upon enrollment.
• Manage your account online, on your tablet or on your Smartphone
• No Annual Fee

Ref : http://www.creditcards.com/college-students.php#ixzz2fJYlKOcJ