A Business Credit Card can be very helpful, especially for small businesses, for a number of reasons but before we delve deeper into how they can be helpful let’s take a look at what a Business Credit Card entails.
In simple terms a Business Credit Card is a credit card that is owned by a business and not an individual. To understand this further we can simply draw an analogy between the Business Credit Cards and Business Bank Accounts which are in the name of the business as well. Other than the name on the card a Business Credit Card works in pretty much the same way as a personal credit card, with a few exceptions. These exceptions take the form of flexible credit limits, low annual percentage rates and a few other benefits that are only available to Business Credit Cards.
From just looking at those benefits a Business Credit Card can seem like a good proposition, however a Business Credit Card would be an attractive proposition without those features because the main benefit lies elsewhere. The outstanding benefit of a Business Credit Card is realised in terms of business expense accounting. For most small businesses, expense accounting is a big overhead. With a Business Credit Card this is handled very easily, you just have to ensure that all business expenses are paid with the Business Credit Card and any personal expenses are paid with another ‘personal’ card or straight from a personal bank account. This way the bill from the Business Credit Card supplier will have all the business expenses for the month and there is no need to collate all the various bills or sort out the personal expenses from business expenses on the one statement.
A lot of Business Credit Card suppliers realise the needs of businesses and even organize the Business Credit Card bills in a way that meets the accounting requirements of these businesses. Generally they will appropriately group the expenses on the Business Credit Card bill so as to facilitate all business expense accounting. In fact some of the Business Credit Card suppliers go to the extent of providing the bills in a format that can be downloaded and exported to an accounting system to negate the need to enter the information manually. If the format supplied by the credit card provider is not suitable for your accounting system you can easily hire a software professional to write a quick program to convert the information into a suitable format.
As you can see ‘Facilitation of Business Expense Accounting’ is enough of a reason to support the case of Business Credit Cards.
Credit Cards have gained so much popularity with the masses that no business can be termed as complete and efficient if it doesn’t take credit card payments. Without Credit Card Services most businesses would end up losing a significant portion of business opportunities. Some people go to the extent of calling businesses without Credit Card Services as non-serious businesses.
What are these Credit Card Services that we are talking about?
Put simply, Credit Card Services means the ability to accept credit card payments for goods or services. For example a shopkeeper using a credit card processing machine to accept credit card payments is offering a Credit Card Service to his or her customers. Since carrying cash is no more a common practice any shop that doesn’t use or provide such credit card services stand to lose a lot of customers that don’t want to pay with anything other than a credit card. So for most merchants providing Credit Card Services to their customers has become an essential part of doing business.
Also with the internet boom came a lot of ‘online stores’ which take the form of virtual shops that exist either only as an internet business or an extension of a ‘traditional’ business. All of these businesses need a way of accepting payments from their customers. This need gave birth to Online Credit Card Services. In it’s simplest form these Online Credit Card Services are in the form of a web page or web-form that asks for your credit card details. These details are then verified and processed to deduct the amount from the credit card and credit the amount to merchants account. Since credit card details are sensitive information and these websites started implementing mechanisms and technology to secure the transaction and prevent the details from reaching the hands of fraudsters. Such sites are called Secure Websites and form the backbone of E-Commerce.
Besides these basic ways of implementing Credit Card Services, these services are also used in other ways. Over the phone payments using credit cards and use of third party online credit card service providers who provide you with an interface to accept credit card payments.
There are a lot of different ways in which credit card services are implemented and as time goes by the expanse of these services is sure to increase.
Credit Card Debt Consolidation is the process or strategy to consolidate debt from multiple credit cards into a lesser number of cards, ideally one or two. Credit Card Debt Consolidation can also be referred to as Balance Transfer, where you transfer the balance owing on one or a number of cards to another. Generally the balance transfer or debt consolidation is done from credit cards with high annual percentage rates to credit cards that offer a lower rate of annual interest. Credit Card Debt Consolidation can also be achieved with a low interest bank loan, using the amount borrowed to pay the high rate credit card balances and then paying back the bank loan at a lower annual interest rate.
As you might have noticed many credit card suppliers and banks keep coming out with attractive offers for Credit Card Debt Consolidation or Balance Transfers. Debt Consolidation is a serious exercise and care must be taken to avoid getting yourself into deeper financial trouble. When applying for a debt consolidation card or loan you should properly investigate the offers from the various banks and card suppliers.
Check the time period for which the lower percentage rate is being offered and what the percentage rate will increase to after the initial low interest period. Generally a very low interest rate is offered for the first six to twelve months only. This is fine if you are confident that you can pay off a substantial amount of the balance owing in this period, however if there is any doubt as to the time frame needed to reduce the balance owing considerably you would be better off with a card or loan that offers a long-term low annual interest rate. Although the initial rate may not be as low as some offers, as long as the long term interest rate is lower than what you are paying on your original cards/s your debt consolidation will be successful.
Another important aspect to consider is the amount of charges or fees that come with your debt consolidation card or loan. If these charges are above what you are already paying it will make your debt consolidation efforts fruitless. Another good idea is to approach your current credit card supplier and see if they can offer you a lower annual percentage rate to help you with clearing your debt. With the amount of suppliers fighting for your business you may be surprised at what they will do to keep you with them.
It is very important with Credit Card Debt Consolidation that you exercise some control over your credit card spending and maintain regular payments or you may find yourself feeling like you are ‘spinning your wheels’ and getting nowhere with it.
People who have credit card debt often hear the advice to consolidate their debt. So what does ‘Consolidating Credit Card Debt’ involve? Put simply, consolidating credit card debt means consolidating (or combining) the debt on a number of different credit cards into one or two credit cards. This consolidation can be done either by a low-interest bank loan or by transferring the debt balance to a new credit card.
So what should you do when looking to consolidate your credit cards? The key thing to look for is the APR or Annual Percentage Rate. In either method mentioned above the Annual Percentage Rate or Interest Rate will always be the key, in fact you could say that it is the sole criteria that you should look at. If you choose a bank loan to consolidate your credit card debt the interest rate on the loan should be lower than the interest rate charged on the credit cards that you are consolidating. Similarly if you are changing over to another credit card to consolidate your debt the interest charged on that card should be lesser than the rate charged on the cards that you are consolidating.
There is a catch that you must be aware of when planning to consolidate credit card debt. The Annual Interest Percentage Rate advertised by most credit card suppliers are short term rates only, designed to lure you into consolidating your credit card debt with them. By short term we mean that these low rates of interest will only apply for a initial period of less than twelve months or some other time frame after which the Annual Percentage Rate will increase. When you go to consolidate your debt with these credit card suppliers they will offer you a low percentage rate (possibly even 0%!) for the first six to twelve months after which a much higher interest rate will be charged. You should always check what this higher interest rate will be after the ‘honeymoon’ period. For your consolidating to be effective the rate must be lower than what you are currently charged by your card suppliers. You may also be able to negotiate a lower Annual Percentage Rate from your current card supplier if you tell them that you are interested in consolidating your credit card debt, which of course is a lot easier for you to do than hunting around for a suitable credit card offer.
Before you make the decision to consolidate your credit card debt you must understand that consolidating the debt will only be beneficial if you pledge to adopt and follow a disciplined approach to your credit card usage, meaning controlled credit card spending and regular/timely payment of amounts owing.
What is the most prominent thing on any credit card ad? It is the credit card rate or the ‘APR’. The credit card rate is the most publicized feature of a credit card. A lot of people just compare the rates between cards and go for the one with the lowest rate at that time. While credit card rates are probably the most important factor in deciding between cards there are also other factors to consider, but a good understanding of credit card rates is essential to getting a good deal.
So what is a credit card rate? Put simply the credit card rate is the rate of interest that the card supplier will charge you on the amount that is owed. These interest charges only occur if the full payment is not made by the due date on your statement. When you receive your credit card bill it will specify the full amount owing on the card and also the minimum payment that you must make by a certain date. You have the option of paying the full amount and incur no interest charges or making the minimum payment shown. If you decide to make the minimum payment or any amount that is less that the full amount the credit card supplier will charge you interest based on the interest rate and amount owed. The interest rate will be the rate that was applicable at the time that you applied for the card.
The credit card rate or Annual Percentage Rate is as stated, an annual interest rate charge. The card supplier uses this annual interest rate to calculate the monthly interest rate charge and then calculates the amount of interest on the balance amount that you owe them at that time. The balance amount is equal to the full amount owed minus any payments made by you. The resulting interest is added to your balance for the next month (at the time of the next billing cycle). If you make another part-payment the new balance is calculated again and the monthly interest rate is applied to that amount for calculation of the new interest charge. This cycle continues until the amount is payed out in full.
That is the basics of how the credit card rate works and explains why the credit card rate is such an important consideration when searching for your new credit card.
A ‘Bad Credit’ Credit Card is a term used for credit cards that can be obtained even when the applicant has a bad credit rating. A ‘Bad Credit’ Credit Card gives people with a bad credit rating the opportunity to improve their credit rating. In that sense, bad credit credit cards act as a rescuer for people in this situation. In effect they act as a necessary ‘training ground’ for people that have not handled their spending well in the past.
Another name for a ‘Bad Credit’ Credit Card is a Secured Credit Card. The individual applying for such a card is required to open an account with the credit card provider and maintain a cash balance in the account. Why is this required? Credit Cards are a business for the credit card supplier, so how can they trust a person that has defaulted on their payments in the past? After all a business is about profits and risks from previous defaulters are a threat to profits. The bank or credit card supplier will usually pay interest on the cash balance kept in the account, however it is best to confirm this with the supplier before committing yourself. The credit limit on the Secured Card is determined by the cash balance in the account and is generally between fifty to one hundred percent of the cash balance. A ‘Bad Credit’ Credit Card can also be referred to as a Debit Card as they work less in a credit-giving manner and more in a debit-giving fashion.
There are plenty of ‘Bad Credit’ Credit Cards available and when searching for a card that is best suited to you, you should consider four things in particular -
- The Minimum Balance that you are required to maintain in the bank account,
- The Credit Limit that you will receive (The percentage of the balance of your cash account that you are able to spend on the card)
- The fees/other charges that are applicable to the card
- The rate of interest that you will receive on the cash balance in your account (if applicable)
and finally…
The ideal ‘Bad Credit’ Credit Card will have no fees or other charges associated with it and would only require you to keep a small amount of cash as a minimum bank balance. The ideal card would also offer around ninety to one hundred percent of your cash balance as the credit limit and more importantly offer a good rate of interest on that cash balance.
A ‘Bad Credit’ Card are a great concept for people struggling with credit problems as they allow the user to enjoy the benefits of a credit card while at the same time mending their credit rating.