Credit Cards

Tips, news, reviews, caveats, trends, updates and analysis related to consumer and business credit cards, and prepaid debit cards. From the interest rate specialists @ FedPrimeRate.com

Wednesday, October 29, 2008

Using Business Credit Cards To Make Ends Meet - A Growing Reality

image: credit crunch aheadIt’s reasonable to argue that small business owners are feeling the effects of the global credit crunch most of all. Small businesses use credit for capital purchases, operations, and payroll, so when banks stop lending, small business owners find themselves in hot water. This year’s stock market crash has sent the global economy into a tailspin, and the Congressional bailout plan hasn’t stabilized financial markets the way the Fed and the Bush administration hoped it would. Instead of using the money to sustain or increase lending, banks are using the bailout funds mostly as a cushion for their own operations, which is killing many small businesses. Big businesses and big banks made poor choices; now small businesses are left holding the bag.

That’s why business credit card usage is steadily increasing.

Many business owners are now using business credit cards to make equipment and inventory purchases to make up for their dwindling credit lines. Banks are not loaning as much as they used to and not nearly as often, so many small business owners have had to use credit cards to make up the difference.



The problem with using business credit cards like traditional lines of credit is that they are not designed to for that kind of usage. Business credit cards are supposed to be used for expenses in daily operations and minor purchases. However, these tough economic times are forcing business owners to make major purchases on credit cards, putting both their personal and business finances at greater risk. Most business cards require the cardholder to provide a personal guarantee, and all charge interest when balances are not paid off every month. It’s most likely that daily expenses will be covered monthly; however, running a business on credit cards costs the business more because of the interest and fees associated with credit cards.

So, what is a struggling business owner to do?

If you absolutely have to use business credit cards in non-traditional ways, you should get the best cards available. There are small business credit card resources that provide access to deals that allow business users to transfer balances with no fees and make new purchases with an introductory 0% APR. The rewards packages on many of these cards may also help you cut costs by making certain services and modes of transportation cheaper or even free. Performing a balance transfer to a new business card once or twice a year is an easy way to avoid paying interest on an outstanding balance, so it's a good idea to pay attention to all those snail mail business credit card offers you likely receive on a regular basis. Bottom line: if you can take advantage of favorable credit card offers when they are available, then you should.

Sooner or later the economy will recover, but until it does, small business credit cards may be the best financial tools available that can keep small business owners afloat.

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Tuesday, October 28, 2008

Bad Credit, No Credit - Big Problem

credit card“Bad credit, no credit - NO PROBLEM”. Have you ever heard that catch phrase on a TV commercial or seen it on a billboard? Used car salesmen and sub-prime mortgage lenders have practically burned that slogan into the psyche of working class and young America. Of course, we know that potential financiers use such tactics to woo customers into signing for what many would call bad loans, but the reality is that bad credit really is a problem. It can be extremely hard to make ends meet without any credit cushion at all, and the current state of the economy is only making matters worse. Although Congress agreed to a $700 billion bailout plan for America’s largest commercial banks, these lending institutions are actually lending less, not more. The reins have been pulled in tighter, and it is nearly impossible to get a decent loan these days, even for applicants with good credit.

So what do those with bad credit and no credit do?

If you search diligently enough, you can find credit cards designed for people with bad credit. The idea is to approve you for a very low credit limit to help you rebuild your credit. As you pay off your balances on time and develop a positive history, you can qualify for credit increases. It sounds like a good option for starting over - until you read the fine print. The following video highlights the terms and conditions on one of these cards and it will shock you to learn just how terrible a deal this is!



If that kind of card was your only credit option, you would be in pretty bad shape.

The good news is that such a poor deal isn’t your only option. If you have bad credit or no credit at all, consider applying for the Discover More credit card. Discover More offers 0% intro APR on balance transfers and new purchases, and a 5% cash back reward that tops just about all competitors. Because the credit card industry has trained consumers to believe that exclusivity is a sign of quality, many people have been led to believe that Discover is somehow a sub par credit option. The hit prime-time cartoon series Family Guy has even poked fun at Discover.


What’s not funny, however, is applying for credit from one of the more “exclusive” companies and being rejected. Rejection doesn’t just hurt your ego; it hurts your credit rating, too. So, although Peter Griffin had a good time delivering the bad news to that potential patron, it’s actually good news for you. If your credit rating declares you to be just “anybody”, then you may actually have a good way to help rebuild your credit with the Discover More card.

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Wednesday, October 22, 2008

Economic Stimulus: Give Everyone A Prepaid Card with A 6-Month Expiration Date

Neeraj NigamNow here's an idea I can vote for. Neeraj Nigam, who is making a second run (he was a Republican, but is now running as an independent) for Virginia's 10TH Congressional District seat, had this to say about stimulating the U.S. economy:

"...Nigam opposes the so-called Wall Street bailout package passed by the U.S. Congress and supported by [incumbent U.S. Rep. Frank] Wolf. Instead, the federal government should give a $500 credit in the form of a prepaid credit card to every American and tell the public they have to use the money in six months.

'That would get money pumped into the economy and the economy would have to go up...'"
Full article can be found here.

Neeraj Nigam's election website can be found here.

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Wednesday, October 01, 2008

Some Good Tips Related To Credit Cards and Traveling

When I first saw this YouTube.com video, I almost stopped watching after 30 seconds or so, because I thought it would be too fluffy for my tastes (i.e. too much fluff and not enough useful content.) But, I posting this clip here today because, eventually, these two vacationers from Seattle offer some very good advice for travelers with credit cards. If you are planning to go on vacation any time soon, check out this video. I'm certain you'll bookmark the clip when you see how much good advice it contains. Enjoy!

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