Recognizing Student Credit Card Basics Usually, these cards are indicated to be credit history cards for university trainees, although they can be made use of with high college trainees. To much better recognize what trainee credit report cards are all around, it is valuable to take an appearance at trainee credit score card essentials. That …
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Does Your Business Credit Card Show on Your Personal Credit Profile? It Might!
How to Get Your Business Credit Card Off Your Personal Credit Profile
If you have a business credit card, you probably think it isn’t affecting your personal credit profile. While ideally this would absolutely be the case, the fact it, it could be. There are ways to keep your business debt off your personal credit report, but it isn’t something that happens automatically. There is a very specific process that actually takes some time.
It also has to be intentional. A business owner must be active about building business credit. It doesn’t happen passively. The idea is to set up your business in a way that it easily exists in the eyes of credit reporting agencies (CRAs) and lenders as an entity separate from yourself. How do you do that? After you do, how do you get accounts that will report to the CRAs before you have a business credit score?
We can answer all these questions and more. We can walk you through the process and show you not only how to establish business credit that will not show up on your personal credit profile, but how to build it so that it is strong enough to qualify for any financing you may need.
One Business Credit Misunderstanding
One major misunderstanding when it comes to business credit is that if you have a business credit card, it isn’t on your personal credit profile. While this can be true, if you haven’t actively built business credit and you did not apply for the credit card with your business information, it likely is not true. The fact is, that card is a personal credit card that has a few extra perks due to its business designation. It is not actually a credit card that is based on the merits of your business credit profile. If a business credit card is in the owner’s name, it is on the owner’s personal credit profile.
Share our foolproof business credit building checklist and tell your friends about how you’re building business credit the quick and easy way.
How to Establish Your Business as Separate from Yourself
The question then becomes how do you separate your business from yourself. Many new small business owners operate as a sole proprietorship because it is just easier. They simply use their own contact information as their business contact information, and business finances mingle with personal finances.
When it comes to establishing business credit however, this just will not work. Here is what you need to do.
Get Incorporated
The first step is to incorporate. There are three options for this.
- C Corp– This is the most definitive separation, but it is also the most complicated and expensive. Before choosing this option, be certain there are reasons other than establishing business credit that it needs to be done. If it isn’t necessary for some other reason, there are other, simpler, less expensive options.
- S Corp– This option basically offers the same separation as the C Corp, but taxes are paid at the personal level, rather than requiring the business to be taxed as well, resulting in double taxation. It is also cheaper than incorporating as a C Corp. If you aren’t required to file as a C corp, this is a good alternative.
- LLC– forming a Limited Liability Corporation results in less liability, thus the name, and offers enough separation to serve the purpose of establishing business credit. If you are not required to be a C Corp or S Corp, this is the easiest and most cost-effective way to create the separation of business and personal credit needed.
The option you choose will depend on your specific tax and liability needs, as they each offer different levels of protection and expenses.
Get an EIN to Keep Accounts off Your Personal Credit Profile
You need to apply for an EIN. Stop using your Social Security Number as the identifying number for your business. Your SSN is a direct link to you personally. It is virtually guaranteed that anything connected to it credit wise will end up on your personal credit reports.
In fact, even if you follow all the other steps for establishing business credit but skip this one, accounts could end up on both reports. You don’t want that.
The process of applying for and EIN is easy. The IRS has an online form, and as soon as they verify all the information, you receive your number. It typically happens almost immediately.
Don’t Forget to Get a D-U-N-S Number
Dun and Bradstreet (D&B) is the most widely used business credit reporting agency. They issue each business on file a 9-digit D-U-N-S number. Application is easy and free, and once you have that number, you will be even closer to establishing credit for your business separate from your own.
Get Shiny New Contact Information
Your business needs its own phone number and address. This way, when you apply for credit, you can enter contact information that is separate from your own. When information is reported to agencies, sometimes the phone number and address are used as identifying factors. If you and your business share a number and address, that just decreases the level of separation.
Be sure you get your contact information listed in the directory under your business name.
Get a Dedicated Business Bank Account
If you don’t have one already, you need a dedicated business bank account in the business name. Make sure all business expenses run through this account. Not only does this help separate you from your business, but it will keep business expenses separate from personal expenses for tax purposes as well.
Business Website and Email Address
A lot of business owners do not realize how important this is. Truly, these days if you do not have a website, you do not exist. However, your business website needs to be professionally built and hosted on a paid service such as GoDaddy. The email address needs to have the same URL as the website. Free web hosting and free email services such as Gmail and Yahoo do not work well.
These things make your business look fundable to lenders. This is the first step to building business credit.
Establish Credit Lines with Vendors
If you are a new business and just starting with vendors, look for those that will extend credit and report to the top credit agencies. We call this the vendor credit tier.
Share our foolproof business credit building checklist and tell your friends about how you’re building business credit the quick and easy way.
If you have been around for a while and do not have credit with your existing vendors, ask for it. If they comply, ask if they currently report to the credit agencies, or if they will. Not all vendors do because it is not required. Not all are willing either. If your current vendors do not want to cooperate in this endeavor, consider switching to vendors that will.
Here are some of the starter vendors that are the easiest to get started with.
o Use Quill to order supplies you use every day, including pens, pencils, folders, printer ink, copy paper, and even cleaning supplies.
o Order shipping supplies, janitorial equipment, and more through Uline.
o Grainger offers industrial supplies as well as tools that you will need in the course of regular business.
It may be necessary to place a few initial orders with each of these before you can get net terms. There is no need to order anything you do not need however. They each sell things that business owners need in the everyday operations of a business. Once you make your on-time invoice payments and they begin reporting those payments to the credit agencies, your credit score will start to grow.
Talk to the Utility Companies
Sometimes utility companies are willing to report payments to credit agencies. However, you almost always have to ask. The worst they can do is refuse. If they do, no damage is done. If they agree, you will only establish your business credit faster.
Talk to them all, including telephone, electric, gas, and even internet. Before you do this, be certain that all of these utilities are in your business name with your business contact information.
Topsy Turvy: Your Personal Credit Profile Still Matters for Your Business
Taking these steps will help you establish separate credit for your business. That means your business credit cards and other business credit accounts will not show up on your personal credit profile. However, it is virtually impossible for the reverse of this to hold true all the time.
It’s true, your personal credit accounts will not show up on your business credit report. However, your personal credit can still affect your ability to get a loan even if you are using business credit. It doesn’t always, but it can. Here’s how.
First, some lenders insist on checking personal credit even if you have business credit. The thing is, if your personal credit isn’t up to par but you have strong business credit, you are more likely to get the loan anyway. That not so great personal credit score can affect your terms and rates however.
The other way that your personal credit profile can affect your business credit is this. Some CRAs actually use your personal credit in the calculation of your business credit score. While not all of them do this, there is really no way to know which of the CRAs your lender will choose to use.
The moral of this story is that you cannot ignore your personal credit profile while you are building business credit. You have to stay on top of your complete credit history.
Why Does it Matter if Business Credit Cards are on Your Personal Credit Profile?
You may be wondering why it matters. If your personal credit can affect things anyway, wouldn’t it be easier to just have everything in one place? The answer is a resounding no. In the long term, not having separate business credit is a bad idea.
The thing is, even if you make all your payments on time, your personal credit cannot handle the level of spending that running a business requires. Business credit cards that you get on your business credit have higher spending limits. These higher limits are designed to handle the larger spending amounts necessary to run a business.
Why does that matter? Well, when you carry balances at or near your credit limit, your debt-to-credit ratio goes up. A high debt-to-credit ratio has a negative impact on your personal credit score. With the level of monthly spending that most businesses require regularly, it is all but impossible to keep a low debt-to-credit ratio with business accounts on your personal credit profile, even with an immaculate credit history. This can impede your ability to get personal financing for things such as houses, home renovation, automobiles, and more.
Share our foolproof business credit building checklist and tell your friends about how you’re building business credit the quick and easy way.
Are Your Business Credit Cards Affecting Your Personal Credit Profile?
How can you know if your business cards are affecting your personal credit? Well, if you have not taken the steps necessary to separate your business credit from your personal credit, you can bet for sure this is happening. To know for certain, get a free copy of your personal credit report from each of the main personal credit CRAs. These include Experian, Equifax, and Transunion. You should be able to see them on there.
If you have strong business credit, call the credit card company and inquire about shutting down the card on your personal account and switching to a card on your business credit. If you do not yet have strong business credit, start building it now. When you have a high enough business credit score, take the steps necessary to remove the card that is on your personal credit and open new ones using your business credit.
You Don’t Know What You Don’t Know
If you aren’t sure if this is happening to you, or if you didn’t even know it was possible, find out now. Get copies of your personal credit profile and see what is on there. At the same time, start building business credit if you do not have it already. Then you can access all the funding you need to ensure your business is able to continue to grow and thrive.
The post Does Your Business Credit Card Show on Your Personal Credit Profile? It Might! appeared first on Credit Suite.
Time for a Change? 6 Reasons to Swap Your Old Card for a New Business Credit Card
…And How to Find the Best New Business Credit Card for Your Business
Just as Thor has his hammer and Captain America has his shield, every business super hero needs an ultimate tool. You cannot really call them all weapons right? I mean, a shield is not about destroying, but about protection. Everyone knows a hammer is a tool. So, in short, tools can be used as weapons, and superhero tools can serve a variety of purposes, all for the greater good. So too, can your business credit cards. Sometimes, however, it is necessary to pursue a new business credit card, also for the greater good. How do you know when that time has come? Read on and we’ll tell you.
How Do You Know It’s Time for a New Business Credit Card?
You might not think it’s a hard decision. Most business owners fall into two camps. Either they are happy with their card and there is no need for a new one, or you just get a new card whenever you feel like it. Unbeknownst to most, there actually is a right time and a wrong time to get a new business credit card. Not only that, but there is also a right and a wrong way to handle the old one. We can help you with both.
It might be time to ditch the old business credit card and get a new one if:
1. The Fee is More than the Benefits are Worth
Maybe you are paying a hefty annual fee, but you justify it by weighing it against the rewards and interest rate you receive with the card. It’s always wise to review that however. Next time you are about to fork over that fee, take a look at what your options are. Do you actually use the rewards offered with that credit card? Are the rewards based on fuel spending and maybe you don’t travel? Perhaps the rewards are at dining establishments you do not frequent.
Is that interest rate really the best? Maybe you had a great promotional rate when you first got the card but now it’s nothing special. Maybe the interest rate was the best available at the time but you are not so sure any more.
If either or both of these situations sound familiar, it may be time to ditch the old card and look for a new business credit card. There is no point in paying the annual fee if you are no longer reaping the benefits that made you willing to pay it in the beginning.
2. Your Spending Habits Have Changed
Have you outgrown the credit limit on your own card? Maybe you spend more now that your business has grown. It could also be that you spend on different things now. In the beginning you may have used your card mostly for business supplies and sales dinners, whereas now you may use the funds for travel expenses and inventory more often.
Things change, and those things include spending habits. The card that worked for your spending habits before may not be the best option for your current spending habits. Take a look at what you have versus what’s available in light of this, and you may see its time to ditch your old card and get a new one.
3. You Now Qualify for Better Perks
For most business owners, their first business credit card is the first one for which they qualify for approval. As your business, and your credit score, grows, you can get so much more. If it’s been awhile since you shopped around, or if you see that you are getting unsolicited offers for cards that offer better perks than your currently have, it may be time to check out what new business credit cards are out there and ditch your old one.
Hit the jackpot with our best webinar and its trustworthy list of seven vendors who can help you build business credit.
4. You Can Get a Better Interest Rate with a New Business Credit Card
Another thing that you can get stuck with in the beginning, simply because you qualify for nothing better, is a lousy interest rate. After you spend some time managing your business, and your finances, wisely, you are likely eligible for much better.
You can start with calling your current credit card company, but if they won’t budge, it’s time to drop the old card and start looking for a new business credit card.
5. There is Any Better Offer With No Fee
Aside from a lousy interest rate and non-existent or useless perks, you can get stuck with an annual fee. Sometimes the fee it worth it for the perks. However, it is important to keep watch for cards that have better perks, better rates, and no annual fee. Even if you get the same perks and the same rates, if there is no fee you are better off. If you are getting offers that do not include an annual fee, it might be time to find a new business credit card.
6. You Anticipate an Upcoming Large Purchase
Sometimes it is simply a matter of dollars. If you foresee a larger purchase in the near future, you may need to start looking for a new card. For example, if you need to buy a new industrial refrigerator or oven, or both, you might not want to put that on a card you use for regular purchases. Not only can it mess with the amount of funds you have available, but often you can find great deals on interest rates from dealers that sell what you are looking to buy. It can help to save money and manage finances, by keeping larger purchases separate, if you just go ahead and open a new business credit card.
Bonus: Your Old Card Is Connected to Your Personal Credit Score
You need your business cards to be based on and reporting to your business credit. In the beginning however, most businesses do not have business credit. They can get cards based on their personal credit score, so they never even think about business credit.
When it comes to running a business however, business credit is better.
If you have great personal credit, you may think business credit is a non-issue. Regardless of what your personal credit looks like, as a business owner it is important that you begin to build business credit. Here’s why.
If you use business credit to handle business transactions, your personal finances will not be affected by those transactions. This means that if your business fails, your personal credit score will stay intact. Also, you will not be personally liable for your business debts.
In addition, paying business expenses with personal credit cards can keep balances near the credit limit. This is true even if you pay everything off each month. Business expenses are large, and personal credit cards usually have smaller limits than business credit cards.
Your debt-to-credit ratio is affected by this. That will negatively affect your personal credit score even if you make payments on time.
How to Build Business Credit
You know the why, now here’s the how.
Get an EIN
It is a number for your business, kind of like your personal SSN. Apply on the IRS website. It doesn’t cost anything, and you can use it on business credit applications instead of your SSN. You may still need to provide your SSN for fraud prevention, but it will not be used to access your personal credit score.
Formally Incorporate
A business must be incorporated to have business credit. The idea is that your business needs to be established as an entity separate from yourself in every way. Incorporation not only accomplishes that, but it also offers you some liability from business debts.
Dedicated Contact Information
You need a dedicated business address and telephone number. The phone number should be toll free, and the business should be listed in the directories with its own contact information.
Professional Website and Email
All businesses these days need a professional, user friendly website to be able to compete. You also need an email address that is specifically for the business. Do not use a free email service such as Gmail or Yahoo. The business email address should use the same URL as the business website.
Business Bank Accounts
A separate business banking account is a must. You can pay yourself from this account, but do not run personal expenses through it.
You Need a D-U-N-S Number
Yes, another number. This time it comes from Dun & Bradstreet. They are the largest and most commonly used business credit reporting agency, so having a credit report with them is necessary for getting business credit. The number is free on the D&B website, but they will try to sell you other services. You don’t need any of them.
A Quick Note on How to Start Building Business Credit
Once you accomplish this, it is time to work on building your business credit score. There is a process, and you have to work your way through it patiently. It takes time, but the payoff is big.
Hit the jackpot with our best webinar and its trustworthy list of seven vendors who can help you build business credit.
The Vendor Credit Tier
This is your way in. These are vendors that will extend net 30 terms on invoices and then report your payments to the credit reporting agencies. Once they start doing that, your business credit score will be established and grow from there.
This tier includes vendors such as Quill.com, Granger, and Uline that sell items you can use in your business every day. Make a few purchases with net 30 terms, make your payments on time, and watch your business credit score explode. Find more about vendors that can help you build business credit here.
Working Through the Credit Tiers
After you have 7 to 10 accounts reporting from the vendor credit tier, it should be possible to get approval in the retail credit tier. These are credit cards attached to specific stores such as Best Buy, Amazon, and Office Depot.
After you have several accounts reporting from the retail credit tier, you will qualify for cards in the fleet credit tier. These cards are issued by companies like Shell, Fuelman, and WEX to be used for fuel and vehicle repair and maintenance.
The last tier is the cash credit tier. When you have enough accounts reporting from each tier, and if you are keeping current on all your payments, your score will be strong enough to get your approval for these cards. They are general credit cards such as MasterCard and Visa that are not attached to a specific store. Typically, they have higher limits and more rewards options.
What to Look for in a New Card
This part is easy. You want something, everything if possible, to be better than the old card. Your old tool should by default be more powerful than the old one.
- Annual Fee– Whether the fee is the actual reason for the change or not, if you are changing anyway look for the lowest annual fee possible that also fulfills all your other needs.
- Interest Rate– Again, maybe you are changing specifically for the lower rate, and maybe you aren’t. Either way you need to find the lowest interest rate possible that still gives you everything else you need.
- Perks– look for perks you will actually use. If it’s all travel miles and you never travel, there is no point.
- Credit Limit– A limit that will not handle your spending habits or the amount of your new purchase isn’t going to do you any good. Look for the highest limit you are eligible for. Remember that if you do not use it all, it will only help your debt-to-credit ratio, which in turn helps your credit score.
Hit the jackpot with our best webinar and its trustworthy list of seven vendors who can help you build business credit.
As with all things, you can do an analysis of the cost versus the benefit. If the annual fee means you get a super low interest rate or perks that will save you several hundred dollars a year, it may be worth it. Before you make a decision, consider this in light of the reason why you are changing versus what is available to you at the moment.
Should You Shut Down the Old Card?
This is where it can get iffy. You might think it obvious that you close the old account. That is not always the best option however. It can actually be beneficial to keep it open.
The average age of all of the accounts on your credit report affects your credit score. The older your accounts are, the better it is for your score. Opening a new account already lowers that average, so closing an older account is going to lower it even further.
If you have had the account for a while, it might be better to zero it out and keep it active. Be sure to determine what level of activity is necessary to keep the account active. If you have to make a small monthly purchase and pay it off every month or so it may be worth it to keep and older account open.
Is it Time for a New Business Credit Card?
The short answer is, maybe. If your credit is at a point where you can get better rates and incentives with a lower annual fee, then it is time to get a new card. If your credit limit on your old card can’t support your current or changing spending habits, it’s time for a new card. Lastly, if your business credit cards are on your personal credit report, it’s time to build business credit and get a new business credit card.
The post Time for a Change? 6 Reasons to Swap Your Old Card for a New Business Credit Card appeared first on Credit Suite.
The post Time for a Change? 6 Reasons to Swap Your Old Card for a New Business Credit Card appeared first on Buy It At A Bargain – Deals And Reviews.
Time for a Change? 6 Reasons to Swap Your Old Card for a New Business Credit Card
…And How to Find the Best New Business Credit Card for Your Business
Just as Thor has his hammer and Captain America has his shield, every business super hero needs an ultimate tool. You cannot really call them all weapons right? I mean, a shield is not about destroying, but about protection. Everyone knows a hammer is a tool. So, in short, tools can be used as weapons, and superhero tools can serve a variety of purposes, all for the greater good. So too, can your business credit cards. Sometimes, however, it is necessary to pursue a new business credit card, also for the greater good. How do you know when that time has come? Read on and we’ll tell you.
How Do You Know It’s Time for a New Business Credit Card?
You might not think it’s a hard decision. Most business owners fall into two camps. Either they are happy with their card and there is no need for a new one, or you just get a new card whenever you feel like it. Unbeknownst to most, there actually is a right time and a wrong time to get a new business credit card. Not only that, but there is also a right and a wrong way to handle the old one. We can help you with both.
It might be time to ditch the old business credit card and get a new one if:
1. The Fee is More than the Benefits are Worth
Maybe you are paying a hefty annual fee, but you justify it by weighing it against the rewards and interest rate you receive with the card. It’s always wise to review that however. Next time you are about to fork over that fee, take a look at what your options are. Do you actually use the rewards offered with that credit card? Are the rewards based on fuel spending and maybe you don’t travel? Perhaps the rewards are at dining establishments you do not frequent.
Is that interest rate really the best? Maybe you had a great promotional rate when you first got the card but now it’s nothing special. Maybe the interest rate was the best available at the time but you are not so sure any more.
If either or both of these situations sound familiar, it may be time to ditch the old card and look for a new business credit card. There is no point in paying the annual fee if you are no longer reaping the benefits that made you willing to pay it in the beginning.
2. Your Spending Habits Have Changed
Have you outgrown the credit limit on your own card? Maybe you spend more now that your business has grown. It could also be that you spend on different things now. In the beginning you may have used your card mostly for business supplies and sales dinners, whereas now you may use the funds for travel expenses and inventory more often.
Things change, and those things include spending habits. The card that worked for your spending habits before may not be the best option for your current spending habits. Take a look at what you have versus what’s available in light of this, and you may see its time to ditch your old card and get a new one.
3. You Now Qualify for Better Perks
For most business owners, their first business credit card is the first one for which they qualify for approval. As your business, and your credit score, grows, you can get so much more. If it’s been awhile since you shopped around, or if you see that you are getting unsolicited offers for cards that offer better perks than your currently have, it may be time to check out what new business credit cards are out there and ditch your old one.
Hit the jackpot with our best webinar and its trustworthy list of seven vendors who can help you build business credit.
4. You Can Get a Better Interest Rate with a New Business Credit Card
Another thing that you can get stuck with in the beginning, simply because you qualify for nothing better, is a lousy interest rate. After you spend some time managing your business, and your finances, wisely, you are likely eligible for much better.
You can start with calling your current credit card company, but if they won’t budge, it’s time to drop the old card and start looking for a new business credit card.
5. There is Any Better Offer With No Fee
Aside from a lousy interest rate and non-existent or useless perks, you can get stuck with an annual fee. Sometimes the fee it worth it for the perks. However, it is important to keep watch for cards that have better perks, better rates, and no annual fee. Even if you get the same perks and the same rates, if there is no fee you are better off. If you are getting offers that do not include an annual fee, it might be time to find a new business credit card.
6. You Anticipate an Upcoming Large Purchase
Sometimes it is simply a matter of dollars. If you foresee a larger purchase in the near future, you may need to start looking for a new card. For example, if you need to buy a new industrial refrigerator or oven, or both, you might not want to put that on a card you use for regular purchases. Not only can it mess with the amount of funds you have available, but often you can find great deals on interest rates from dealers that sell what you are looking to buy. It can help to save money and manage finances, by keeping larger purchases separate, if you just go ahead and open a new business credit card.
Bonus: Your Old Card Is Connected to Your Personal Credit Score
You need your business cards to be based on and reporting to your business credit. In the beginning however, most businesses do not have business credit. They can get cards based on their personal credit score, so they never even think about business credit.
When it comes to running a business however, business credit is better.
If you have great personal credit, you may think business credit is a non-issue. Regardless of what your personal credit looks like, as a business owner it is important that you begin to build business credit. Here’s why.
If you use business credit to handle business transactions, your personal finances will not be affected by those transactions. This means that if your business fails, your personal credit score will stay intact. Also, you will not be personally liable for your business debts.
In addition, paying business expenses with personal credit cards can keep balances near the credit limit. This is true even if you pay everything off each month. Business expenses are large, and personal credit cards usually have smaller limits than business credit cards.
Your debt-to-credit ratio is affected by this. That will negatively affect your personal credit score even if you make payments on time.
How to Build Business Credit
You know the why, now here’s the how.
Get an EIN
It is a number for your business, kind of like your personal SSN. Apply on the IRS website. It doesn’t cost anything, and you can use it on business credit applications instead of your SSN. You may still need to provide your SSN for fraud prevention, but it will not be used to access your personal credit score.
Formally Incorporate
A business must be incorporated to have business credit. The idea is that your business needs to be established as an entity separate from yourself in every way. Incorporation not only accomplishes that, but it also offers you some liability from business debts.
Dedicated Contact Information
You need a dedicated business address and telephone number. The phone number should be toll free, and the business should be listed in the directories with its own contact information.
Professional Website and Email
All businesses these days need a professional, user friendly website to be able to compete. You also need an email address that is specifically for the business. Do not use a free email service such as Gmail or Yahoo. The business email address should use the same URL as the business website.
Business Bank Accounts
A separate business banking account is a must. You can pay yourself from this account, but do not run personal expenses through it.
You Need a D-U-N-S Number
Yes, another number. This time it comes from Dun & Bradstreet. They are the largest and most commonly used business credit reporting agency, so having a credit report with them is necessary for getting business credit. The number is free on the D&B website, but they will try to sell you other services. You don’t need any of them.
A Quick Note on How to Start Building Business Credit
Once you accomplish this, it is time to work on building your business credit score. There is a process, and you have to work your way through it patiently. It takes time, but the payoff is big.
Hit the jackpot with our best webinar and its trustworthy list of seven vendors who can help you build business credit.
The Vendor Credit Tier
This is your way in. These are vendors that will extend net 30 terms on invoices and then report your payments to the credit reporting agencies. Once they start doing that, your business credit score will be established and grow from there.
This tier includes vendors such as Quill.com, Granger, and Uline that sell items you can use in your business every day. Make a few purchases with net 30 terms, make your payments on time, and watch your business credit score explode. Find more about vendors that can help you build business credit here.
Working Through the Credit Tiers
After you have 7 to 10 accounts reporting from the vendor credit tier, it should be possible to get approval in the retail credit tier. These are credit cards attached to specific stores such as Best Buy, Amazon, and Office Depot.
After you have several accounts reporting from the retail credit tier, you will qualify for cards in the fleet credit tier. These cards are issued by companies like Shell, Fuelman, and WEX to be used for fuel and vehicle repair and maintenance.
The last tier is the cash credit tier. When you have enough accounts reporting from each tier, and if you are keeping current on all your payments, your score will be strong enough to get your approval for these cards. They are general credit cards such as MasterCard and Visa that are not attached to a specific store. Typically, they have higher limits and more rewards options.
What to Look for in a New Card
This part is easy. You want something, everything if possible, to be better than the old card. Your old tool should by default be more powerful than the old one.
- Annual Fee– Whether the fee is the actual reason for the change or not, if you are changing anyway look for the lowest annual fee possible that also fulfills all your other needs.
- Interest Rate– Again, maybe you are changing specifically for the lower rate, and maybe you aren’t. Either way you need to find the lowest interest rate possible that still gives you everything else you need.
- Perks– look for perks you will actually use. If it’s all travel miles and you never travel, there is no point.
- Credit Limit– A limit that will not handle your spending habits or the amount of your new purchase isn’t going to do you any good. Look for the highest limit you are eligible for. Remember that if you do not use it all, it will only help your debt-to-credit ratio, which in turn helps your credit score.
Hit the jackpot with our best webinar and its trustworthy list of seven vendors who can help you build business credit.
As with all things, you can do an analysis of the cost versus the benefit. If the annual fee means you get a super low interest rate or perks that will save you several hundred dollars a year, it may be worth it. Before you make a decision, consider this in light of the reason why you are changing versus what is available to you at the moment.
Should You Shut Down the Old Card?
This is where it can get iffy. You might think it obvious that you close the old account. That is not always the best option however. It can actually be beneficial to keep it open.
The average age of all of the accounts on your credit report affects your credit score. The older your accounts are, the better it is for your score. Opening a new account already lowers that average, so closing an older account is going to lower it even further.
If you have had the account for a while, it might be better to zero it out and keep it active. Be sure to determine what level of activity is necessary to keep the account active. If you have to make a small monthly purchase and pay it off every month or so it may be worth it to keep and older account open.
Is it Time for a New Business Credit Card?
The short answer is, maybe. If your credit is at a point where you can get better rates and incentives with a lower annual fee, then it is time to get a new card. If your credit limit on your old card can’t support your current or changing spending habits, it’s time for a new card. Lastly, if your business credit cards are on your personal credit report, it’s time to build business credit and get a new business credit card.
The post Time for a Change? 6 Reasons to Swap Your Old Card for a New Business Credit Card appeared first on Credit Suite.
Business Credit Card Rates: Everything You Might Need to Pay
Find Out What Hidden Business Credit Card Rates to Look For and How to Avoid Them
Credit cards are a fact of life for most small businesses. They get a bad rap, but used properly they can be hugely beneficial. It is a precarious walk on a balance beam, however, to balance the benefits versus the cost. When you think of business credit card rates, the first thing that comes to mind is probably interest rates. These are, of course, one of the largest costs of credit cards. They are also widely variable, ranging from as low as 0% for an introductory rate to almost 30% in some cases.
There are many more costs that can be associated with these cards however. So many in fact, that many business owners do not even realize the business credit card rates they are paying. It can be frustrating to continually make payments yet never see a corresponding decrease in the balance. We dug in to find out everything you need to know about the business credit card rates you know, those you don’t know, and how to handle or avoid each one.
Business Credit Card Rates: The Devil You Know
Here are some common business credit card rates you are probably familiar with, and some tips on how to save on each.
Check out our professional research and score the best business credit cards for your business.
Interest
This is a given with any credit card, and most likely the number one cost most associate with them. The only way to avoid it is to pay off the entire balance every month. Short of that, it cannot be eliminated. It can be reduced however.
First, keep your personal and business credit score strong. The better the score, the lower the interest rate options available to you. Then, shop around. Just look for the cards with the best rates. Be aware however, many lower rates are promotional only, so they will go up after a set period of time.
Annual Fees
When it comes to business credit card rates, this one is no secret either. Many cards charge an annual fee for the administration of the account. Most often they are associated with cards that earn rewards such as miles or points that can be converted to gift cards, airline miles, or cash back. The key to keeping annual fee costs to a minimum is to simply use cards that do not charge this fee.
If, however, you find a card with a fee that has rewards that you will use to the point that you recover the cost of the fee plus some, then the benefit may outweigh that cost. There could be other benefits associated with a card that charges a fee as well. A cost-benefit analysis based on your specific business situation is the only way to know if it is worth it.
Late Fees
This one is self-explanatory. Late fees are charged to your card when you pay after the due date. The best way to avoid them is to not pay late. However, know that if you do pay late and it is a first offense, you may be able to have that fee removed. You have to call and ask. It doesn’t always work, but sometimes it does for a first offender.
Hidden Business Credit Card Rates
Now for the part you are really wondering about. What are you paying that you do not realize? How much could you save if you knew about these things and either avoided them or chose cards that did not charge them? Here are the hidden costs to look for, and how to reduce or avoid them all together.
Balance Transfer Fees
These are fees on balances that you transfer from another card. Typically this would be done in an effort to get a lower, promotional interest rate on the balance transfer. Usually the fee is a percentage of the amount being transferred with some minimum. So if, for example, you were to transfer $3,000 and the transfer fee was 3%, your balance on the new card would increase by $3,090.
The only way to avoid this is to not do a balance transfer. Of course, there could be cases where the savings with the promotional rate makes it worth the fee. That will have to be determined on an individual basis.
Cash Advance Fees
These are just as they sound, fees paid on cash advance funds. Similar to balance transfer fees, they are typically a percentage of the advance. Cash advances can come in the form of cash advance checks that you simply write and deposit into your account, or funds that you get from an ATM with your credit card and a cash advance PIN. If you do not do cash advances with your credit card, you do not have to worry about this fee.
Reward Redemption Fees
Did you know that sometimes you have to pay a fee on rewards that you earn? The credit card companies say that this is to pay for the processing of the rewards. Avoid these fees by reading the fine print in the rewards section before you apply for the card. Most do not even know that these fees exist, and sometimes they end up costing more than the rewards are even worth.
Reward Recovery Fees
This fee is closely related to late fees. Some cards revoke rewards earned during the month if you are late on your payment for that month. They then charge a fee to reinstate those rewards. To avoid this fee, be sure to pay on time.
Inactivity fees and Account Closure Fees
The inactivity fee is assessed after you go a certain length of time without any activity on the card. Most often that amount of time is one year. The first thing you have to do to avoid this fee is know which cards have if. After you determine that, figure out the minimum you must spend in a year to avoid the fee. Then, either make certain you spend that amount, or cancel the card.
Beware however, because some cards do charge a fee for closing accounts.
Payment Protection
Most cards offer a payment protection plan. This is basically insurance that will cover your payments in the event you become ill or unemployed. While is sounds great, it can be quite expensive and add up quickly. Avoid it by either opting out on the front end, or canceling it if you already have it and do not want to pay it.
Paper Statement
The push to save the environment is a noble one, and the credit card companies are doing their part. One way they are doing this is by charging a fee for paper statements. You can opt in for electronic statements and avoid paying the fee.
Foreign Transactions
Did you know that if you use your credit card to pay for goods from a company that is not located in the United States, you may have to pay a fee for that transaction? This is true even if you never leave the country, and even if you do not know the other company is foreign. Read the fine print about fees before making any purchases from companies you are not familiar with to determine if this will be an issue.
Taxes on Rewards
While this isn’t exactly a credit card fee, it is a potential hidden cost of using credit cards. There are times when, depending on how rewards are earned and how they are used, that you may have to pay taxes on them. Find out more about this and how to avoid it here.
Check out our professional research and score the best business credit cards for your business.
Here’s the big key to avoiding unexpected fees and costs. Know what to look for. Now that you have a list of the most common hidden credit card costs, you can be diligent to pay close attention on the front end and not apply for any credit cards that charge fees you do not want to pay.
No one wants to pay more than they have to. On the other hand, some of these fees may be worth it to you to pay depending on the benefit associated with it and whether or not your specific business could benefit. For example, if you have a chronic health issue, it may be worth it to you to pay for the payment protection plan.
Why Business Credit Card Rates May Be Worth It: Benefits of Business Credit Cards
While all these costs can make it seem that credit cards are the devil, and though they do get a bad rap, there are actually plenty of benefits to using business credit cards. Here are just a few:
- Build business credit
- Finance business needs without the hassle of a loan, including:
- Taking advantage of special bulk pricing
- Equipment maintenance and repair
- Working capital
- Unexpected, or expected, cash gaps
- Use rewards to reduce costs
Of course, we all know credit can get out of hand, but used properly and with the proper attention to business credit card rates, they can be an amazing tool for your business.
How Can They Help Build Business Credit?
Not only can these cards help you build business credit, they are actually vital to the process. Of course, regardless of the business credit card rates, you will have to have business credit to get business credit. That is why you start with vendors in the vendor credit tier first. These vendors will give you net 30 terms on invoices and report those payments to the credit reporting agencies, without a credit check. After you have enough of these accounts reporting, you will have enough business credit to apply for your first business credit cards.
You’ll start with store cards. Cards tied to retail stores such as Best Buy, Office Depot, and Lowes will approve accounts with very new business credit earned from accounts in the vendor credit tier. They will also report payments to the credit agencies, which will further grow your score
After enough of these are reporting, you can apply for cards in the fleet credit tier and the cash credit tier. As these cards report your on-time payments, your score will only grow stronger. This will also mean you start getting offers from cards with more favorable business credit card rates, such as lower interest. Find out more about the credit tiers and building business credit using credit cards in each one here.
Side Note: Hidden Business Credit Card Rates When Accepting Credit Cards
Just as there are hidden fees when it comes to using credit cards in the course of your business, there are also hidden rates on the other side. If you accept cards as payment in the course of your business, be aware of these little-known costs.
Manual entry fee
Did you know that it costs your business more in credit card processing fees if you manually enter the credit card number rather than swiping it? It’s because of the increased security risk. If at all possible, make sure customers swipe instead of type in the number.
Check out our professional research and score the best business credit cards for your business.
Below Limit Costs
Okay so this isn’t an “extra” fee per se, but it is a definite cost. It is entirely possible that you can lose money on a credit card sale if it doesn’t hit a certain dollar amount. This is because the business credit card rate on processing that transaction may actually be more than the profit earned from it.
That’s why you see many businesses, such as donut shops and other businesses with frequent low dollar amount purchases, require a minimum purchase if you intend to use a card. This not only avoids the problem of losing money on low dollar amount purchases due to processing fees, but it can increase profits when you consider the number of people that do not carry cash.
Stop Paying Business Credit Card Rates You Do Not Know About
It is impossible to find a card with no unsavory fees. The key is to determine which ones are worth it to you to pay. Then, apply only for cards that charge business credit card rates you are willing to pay. The credit card industry is fiercely competitive, and if your business credit score is solid, you can have your pick of the cards that will work best for you.
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Do You Owe Tax on Business Credit Card Rewards? The Answer Might Surprise You
And 3 Surprising Things Other than Tax on Business Credit Card Rewards that May Impact Your Taxes
When choosing a credit card, whether personal or business, there are several factors to compare. Interest rate is probably the one most consumers consider first, followed closely by credit limit, and then rewards. Throw an annual fee in the mix, and you have even more to ponder. Back to the rewards thing though. Who doesn’t love a good reward? Cash back, points, airline miles galore, these are often the things that make the choice between one card or the other most interesting. When it comes to rewards however, one thing most do not consider is that they may have to pay a tax on business credit card rewards.
When Do You Have to Pay Tax on Business Credit Card Rewards?
Whether or not you pay tax on credit card rewards on your business credit cards will depend. Depends on what you ask? It depends on whether you had to spend money to get those rewards. For example, if you earn cash back, that would be a discount rather than income. It is therefore not taxable. The same is true if you earn points or travel miles as a percentage of the money you spend. If you earn $1 cash back for every $5 spent, that is considered a $1 discount, not $1 of income, and therefore not taxable.
If, however, all you had to do was open the account to earn the reward, and you did not have to spend anything to get it, then you may have to report it as income. This is the case with the bonuses that many credit card companies are fond of offering for opening an account with them. They may come in the form of cash, points, or miles. It doesn’t matter what form they take. If you didn’t have to do anything to get them, they are likely going to be taxable.
If your credit card information specifically states the funds are taxable, or if you receive a form 1099 from your credit card company, you can be sure there will be a tax impact. However, the absence of these two things does not set you free. A company only needs to to send a form 1099 if the amount is $600 or greater. Amounts under $600 are still taxable, but companies only have to send a form 1099 if the amount is over $600.
Check out our professional research and score the best business credit cards for your business.
Real Life Example of Tax on Business Credit Card Rewards
In 2012, some Citibank card holders received frequent flyer miles as a gift for opening their accounts. At tax time, a 1099-Misc came in the mail. It indicated the miles had been reported to the IRS as income with a value of 2.5 cents per mile. As you can imagine, this was an unwelcome shock to most. Since they did not have to spend anything to receive the miles, the reward was taxable income.
Special Considerations for Tax on Business Credit Card Rewards
When it comes to tax on rewards from business credit cards, there are some special considerations that can affect the tax impact of the rewards.
Using Rewards to Offset Business Expenses
If you are using business credit card rewards to reduce the cost of business purchases, that affects the amount of a business expense that is tax deductible.
For example, if you purchase a new printer for your business for $300, and you offset the cost with rewards equal to $100, you can only deduct $200 as a business expense. In this way, business credit card rewards can still increase your taxable income, though they are not technically taxable as income directly.
Using Business Credit Card Rewards to Offset Personal Expenses
If you happen to use rewards earned on business credit cards for personal expenses, rather than business expenses, you will not have to worry about them reducing business expense and thus indirectly affecting your tax liability. The question has come up about whether rewards earned on business cards and used for personal purposes should be personal taxable income. The IRS has said no. They will not consider this to be taxable income. As a result, there is zero impact on your taxes from these rewards.
Charitable Donations
If you receive a $500 bonus for opening an account, that is taxable income because no spending took place to get those funds. If, however, you have the option to donate that amount to a charity, you do not have to report that $500 as income. And it is also tax deductible as a charitable contribution. It’s a win/win.
Recap: How Do You Avoid Tax on Business Credit Card Rewards?
What’s the takeaway? To best use your business credit card rewards with minimum tax impact, do the following:
- Donate any bonuses, such as rewards not attached to required spending, to charity.
- Use rewards such as cash back, points, or miles for personal expenses rather than to reduce business expense.
How Do I Find the Best Business Credit Cards for My Business?
There are a ton of options when it comes to choosing a business credit card, and which one is the best for your business will depend on many factors. The first, as mentioned earlier, should probably be interest rate. You want the interest rate to be as low as possible.
Next, consider the credit limit. Does it give you access to enough funds to handle what you need it to? If you are going to consistently have balances at or near your credit limit, that’s no good. It will lower your debt-to-credit ratio, which directly impacts your credit score in a negative manner.
The next thing to look at is rewards. You need to find the card with the rewards that will be the most useful to you. A great travel rewards program is only great if you travel a lot. Triple points earned at gas stations and restaurants sounds good, but it is only a good deal if you spend a lot of money at gas stations and restaurants. If most of your credit cards spending is on supplies or inventory, these rewards will not be useful to your business.
Check out our professional research and score the best business credit cards for your business.
Next, balance the cost of the rewards versus how much you will actually benefit from them. For example, you may have a card with rewards that are good for you. But if it has a high annual fee, determine if the rewards benefit actually makes up for the cost of the annual fee. Do you pay $100 fee each year? Then be sure to earn more than $100 worth of useable rewards with that card annually.
How To Get Business Credit Cards
Of course, the business credit card discussion is moot if you don’t even have one. Perhaps you have tried, but you can’t get approval. Here’s the key. You need to have strong business credit to get the best business credit cards. This is credit that is separate from your personal credit, and therefore the accounts on your business credit report do not affect your personal credit score.
Business credit doesn’t just happen on its own however, and most new businesses do not realize this. In fact, many new small business owners are not aware that business credit is even a thing, and consequently they have no clue how to set up their business properly to allow them to build business credit.
How Do You Set Up a Business to Build Business Credit?
Before you can worry about tax on business credit card rewards, you have to have business credit cards. Before you can get business credit cards, you need business credit. To get business credit, you have to set up your business to be a separate entity from yourself.
The first step in this process is to incorporate. It is easy for a new business owner to simply operate as a sole proprietorship or a partnership, but this ties up all your personal credit data with your business information. By incorporating, you are taking the first step in separating your business from your personal credit.
Next, apply for an EIN. You can do this for free at IRS.gov. It is a number that functions as an identifier for your business the same way your SSN is a personal identifier. You will use this number on business credit card applications instead of your SSN.
Then, you will need to get a DUNS number. This is a unique identifying number that you get from Dun & Bradstreet. Since D&B is the largest and most commonly used business credit reporting agency, this number is essential to building business credit. Get it for free on the Dun & Bradstreet website, but don’t let them fool you. They will try to sell you a bunch of stuff you don’t need. You really only need the number, and it is free.
Other Things that Will Make Your Business Appear Fundable On its Own to Lenders
What else does your business need to appear as a fundable entity separate from you personally?
- A phone number and address that is different from your personal phone number and address. The phone number should be through a toll -free exchange and listed in the directories along with the business name and address.
- A business bank account that all business transactions run through. Not only does this help separate your business as its own entity, but it also makes it easier to separate business expenses come tax time. In addition, some lenders actually make a business bank account a requirement for approval.
- A professional website and dedicated email address. The email address should have the same URL as the website, and the web address should be something professional and paid for. A free email or website service is not suitable for these purposes.
Surprise! Here Are 3 Other Things that are Taxable that May Not Know
Now you know whether or not your credit cards rewards are taxable, how to avoid tax impact from business credit card rewards as much as possible, and how to get the best business credit cards for your business. How about a few fun facts? Here are 3 things that are taxable that you probably did not realize.
Bitcoin
Yes, if your bitcoin is currently worth more than you paid for it, the gains are taxable just like with stocks and bonds. This also rings true of Bitcoin you get from your employer as compensation, a bonus, incentive, or even as a gift.
Gifts from an Employer
Speaking of gifts from employers, they are usually taxable. This includes more than cash bonuses. Did your boss give you an awesome new set of golf clubs or a weekend in his beach condo? That may be taxable too.
Check out our professional research and score the best business credit cards for your business.
Bartering
This one was a total shock to me. One of my favorite small business budget hacks is to barter within my network for goods and services. It is not uncommon for small business owners to trade off for any number of things. Graphics, social media management, content writing, cleaning services, printing services, and more. The cash value of those trades can actually be taxable. Who ?
Do You Owe Tax on Business Credit Card Rewards? Maybe, Maybe Not
It all depends on how you got those rewards and what you do with them. Most credit card rewards are actually a discount, because they are directly related to some level of spending. These are not taxable, but they can still increase your taxable income by decreasing your business expense deduction if you choose to use them to reduce your business expenses. But if you choose to use those rewards to reduce personal expenses, they have no tax impact at all.
Bonuses for opening an account are different. They are taxable as income, even if they do not reach the $600 threshold to trigger a form 1099. This changes if you get the option to donate these funds to charity and choose to do so. Not only are they then not taxable, but they also count as a tax deduction.
The best option to avoid tax on business credit card rewards is to choose the card with the rewards that will best benefit you personally. Then you can redeem rewards for personal use. For bonuses, just donate them to charity if given the option. It looks good for your business, and it will only help you come tax time.
Always be careful to weigh the tax benefit of not using rewards for business expense against the actual benefit of the cost reduction however. You may find reduced expenses to be worth the cost come tax time.
The post Do You Owe Tax on Business Credit Card Rewards? The Answer Might Surprise You appeared first on Credit Suite.
Business Credit Card Rates: Everything You Might Need to Pay
Find Out What Hidden Business Credit Card Rates to Look For and How to Avoid Them
Credit cards are a fact of life for most small businesses. They get a bad rap, but used properly they can be hugely beneficial. It is a precarious walk on a balance beam, however, to balance the benefits versus the cost. When you think of business credit card rates, the first thing that comes to mind is probably interest rates. These are, of course, one of the largest costs of credit cards. They are also widely variable, ranging from as low as 0% for an introductory rate to almost 30% in some cases.
There are many more costs that can be associated with these cards however. So many in fact, that many business owners do not even realize the business credit card rates they are paying. It can be frustrating to continually make payments yet never see a corresponding decrease in the balance. We dug in to find out everything you need to know about the business credit card rates you know, those you don’t know, and how to handle or avoid each one.
Business Credit Card Rates: The Devil You Know
Here are some common business credit card rates you are probably familiar with, and some tips on how to save on each.
Check out our professional research and score the best business credit cards for your business.
Interest
This is a given with any credit card, and most likely the number one cost most associate with them. The only way to avoid it is to pay off the entire balance every month. Short of that, it cannot be eliminated. It can be reduced however.
First, keep your personal and business credit score strong. The better the score, the lower the interest rate options available to you. Then, shop around. Just look for the cards with the best rates. Be aware however, many lower rates are promotional only, so they will go up after a set period of time.
Annual Fees
When it comes to business credit card rates, this one is no secret either. Many cards charge an annual fee for the administration of the account. Most often they are associated with cards that earn rewards such as miles or points that can be converted to gift cards, airline miles, or cash back. The key to keeping annual fee costs to a minimum is to simply use cards that do not charge this fee.
If, however, you find a card with a fee that has rewards that you will use to the point that you recover the cost of the fee plus some, then the benefit may outweigh that cost. There could be other benefits associated with a card that charges a fee as well. A cost-benefit analysis based on your specific business situation is the only way to know if it is worth it.
Late Fees
This one is self-explanatory. Late fees are charged to your card when you pay after the due date. The best way to avoid them is to not pay late. However, know that if you do pay late and it is a first offense, you may be able to have that fee removed. You have to call and ask. It doesn’t always work, but sometimes it does for a first offender.
Hidden Business Credit Card Rates
Now for the part you are really wondering about. What are you paying that you do not realize? How much could you save if you knew about these things and either avoided them or chose cards that did not charge them? Here are the hidden costs to look for, and how to reduce or avoid them all together.
Balance Transfer Fees
These are fees on balances that you transfer from another card. Typically this would be done in an effort to get a lower, promotional interest rate on the balance transfer. Usually the fee is a percentage of the amount being transferred with some minimum. So if, for example, you were to transfer $3,000 and the transfer fee was 3%, your balance on the new card would increase by $3,090.
The only way to avoid this is to not do a balance transfer. Of course, there could be cases where the savings with the promotional rate makes it worth the fee. That will have to be determined on an individual basis.
Cash Advance Fees
These are just as they sound, fees paid on cash advance funds. Similar to balance transfer fees, they are typically a percentage of the advance. Cash advances can come in the form of cash advance checks that you simply write and deposit into your account, or funds that you get from an ATM with your credit card and a cash advance PIN. If you do not do cash advances with your credit card, you do not have to worry about this fee.
Reward Redemption Fees
Did you know that sometimes you have to pay a fee on rewards that you earn? The credit card companies say that this is to pay for the processing of the rewards. Avoid these fees by reading the fine print in the rewards section before you apply for the card. Most do not even know that these fees exist, and sometimes they end up costing more than the rewards are even worth.
Reward Recovery Fees
This fee is closely related to late fees. Some cards revoke rewards earned during the month if you are late on your payment for that month. They then charge a fee to reinstate those rewards. To avoid this fee, be sure to pay on time.
Inactivity fees and Account Closure Fees
The inactivity fee is assessed after you go a certain length of time without any activity on the card. Most often that amount of time is one year. The first thing you have to do to avoid this fee is know which cards have if. After you determine that, figure out the minimum you must spend in a year to avoid the fee. Then, either make certain you spend that amount, or cancel the card.
Beware however, because some cards do charge a fee for closing accounts.
Payment Protection
Most cards offer a payment protection plan. This is basically insurance that will cover your payments in the event you become ill or unemployed. While is sounds great, it can be quite expensive and add up quickly. Avoid it by either opting out on the front end, or canceling it if you already have it and do not want to pay it.
Paper Statement
The push to save the environment is a noble one, and the credit card companies are doing their part. One way they are doing this is by charging a fee for paper statements. You can opt in for electronic statements and avoid paying the fee.
Foreign Transactions
Did you know that if you use your credit card to pay for goods from a company that is not located in the United States, you may have to pay a fee for that transaction? This is true even if you never leave the country, and even if you do not know the other company is foreign. Read the fine print about fees before making any purchases from companies you are not familiar with to determine if this will be an issue.
Taxes on Rewards
While this isn’t exactly a credit card fee, it is a potential hidden cost of using credit cards. There are times when, depending on how rewards are earned and how they are used, that you may have to pay taxes on them. Find out more about this and how to avoid it here.
Check out our professional research and score the best business credit cards for your business.
Here’s the big key to avoiding unexpected fees and costs. Know what to look for. Now that you have a list of the most common hidden credit card costs, you can be diligent to pay close attention on the front end and not apply for any credit cards that charge fees you do not want to pay.
No one wants to pay more than they have to. On the other hand, some of these fees may be worth it to you to pay depending on the benefit associated with it and whether or not your specific business could benefit. For example, if you have a chronic health issue, it may be worth it to you to pay for the payment protection plan.
Why Business Credit Card Rates May Be Worth It: Benefits of Business Credit Cards
While all these costs can make it seem that credit cards are the devil, and though they do get a bad rap, there are actually plenty of benefits to using business credit cards. Here are just a few:
- Build business credit
- Finance business needs without the hassle of a loan, including:
- Taking advantage of special bulk pricing
- Equipment maintenance and repair
- Working capital
- Unexpected, or expected, cash gaps
- Use rewards to reduce costs
Of course, we all know credit can get out of hand, but used properly and with the proper attention to business credit card rates, they can be an amazing tool for your business.
How Can They Help Build Business Credit?
Not only can these cards help you build business credit, they are actually vital to the process. Of course, regardless of the business credit card rates, you will have to have business credit to get business credit. That is why you start with vendors in the vendor credit tier first. These vendors will give you net 30 terms on invoices and report those payments to the credit reporting agencies, without a credit check. After you have enough of these accounts reporting, you will have enough business credit to apply for your first business credit cards.
You’ll start with store cards. Cards tied to retail stores such as Best Buy, Office Depot, and Lowes will approve accounts with very new business credit earned from accounts in the vendor credit tier. They will also report payments to the credit agencies, which will further grow your score
After enough of these are reporting, you can apply for cards in the fleet credit tier and the cash credit tier. As these cards report your on-time payments, your score will only grow stronger. This will also mean you start getting offers from cards with more favorable business credit card rates, such as lower interest. Find out more about the credit tiers and building business credit using credit cards in each one here.
Side Note: Hidden Business Credit Card Rates When Accepting Credit Cards
Just as there are hidden fees when it comes to using credit cards in the course of your business, there are also hidden rates on the other side. If you accept cards as payment in the course of your business, be aware of these little-known costs.
Manual entry fee
Did you know that it costs your business more in credit card processing fees if you manually enter the credit card number rather than swiping it? It’s because of the increased security risk. If at all possible, make sure customers swipe instead of type in the number.
Check out our professional research and score the best business credit cards for your business.
Below Limit Costs
Okay so this isn’t an “extra” fee per se, but it is a definite cost. It is entirely possible that you can lose money on a credit card sale if it doesn’t hit a certain dollar amount. This is because the business credit card rate on processing that transaction may actually be more than the profit earned from it.
That’s why you see many businesses, such as donut shops and other businesses with frequent low dollar amount purchases, require a minimum purchase if you intend to use a card. This not only avoids the problem of losing money on low dollar amount purchases due to processing fees, but it can increase profits when you consider the number of people that do not carry cash.
Stop Paying Business Credit Card Rates You Do Not Know About
It is impossible to find a card with no unsavory fees. The key is to determine which ones are worth it to you to pay. Then, apply only for cards that charge business credit card rates you are willing to pay. The credit card industry is fiercely competitive, and if your business credit score is solid, you can have your pick of the cards that will work best for you.
The post Business Credit Card Rates: Everything You Might Need to Pay appeared first on Credit Suite.
Business Credit Card Rates: Everything You Might Need to Pay
Find Out What Hidden Business Credit Card Rates to Look For and How to Avoid Them
Credit cards are a fact of life for most small businesses. They get a bad rap, but used properly they can be hugely beneficial. It is a precarious walk on a balance beam, however, to balance the benefits versus the cost. When you think of business credit card rates, the first thing that comes to mind is probably interest rates. These are, of course, one of the largest costs of credit cards. They are also widely variable, ranging from as low as 0% for an introductory rate to almost 30% in some cases.
There are many more costs that can be associated with these cards however. So many in fact, that many business owners do not even realize the business credit card rates they are paying. It can be frustrating to continually make payments yet never see a corresponding decrease in the balance. We dug in to find out everything you need to know about the business credit card rates you know, those you don’t know, and how to handle or avoid each one.
Business Credit Card Rates: The Devil You Know
Here are some common business credit card rates you are probably familiar with, and some tips on how to save on each.
Check out our professional research and score the best business credit cards for your business.
Interest
This is a given with any credit card, and most likely the number one cost most associate with them. The only way to avoid it is to pay off the entire balance every month. Short of that, it cannot be eliminated. It can be reduced however.
First, keep your personal and business credit score strong. The better the score, the lower the interest rate options available to you. Then, shop around. Just look for the cards with the best rates. Be aware however, many lower rates are promotional only, so they will go up after a set period of time.
Annual Fees
When it comes to business credit card rates, this one is no secret either. Many cards charge an annual fee for the administration of the account. Most often they are associated with cards that earn rewards such as miles or points that can be converted to gift cards, airline miles, or cash back. The key to keeping annual fee costs to a minimum is to simply use cards that do not charge this fee.
If, however, you find a card with a fee that has rewards that you will use to the point that you recover the cost of the fee plus some, then the benefit may outweigh that cost. There could be other benefits associated with a card that charges a fee as well. A cost-benefit analysis based on your specific business situation is the only way to know if it is worth it.
Late Fees
This one is self-explanatory. Late fees are charged to your card when you pay after the due date. The best way to avoid them is to not pay late. However, know that if you do pay late and it is a first offense, you may be able to have that fee removed. You have to call and ask. It doesn’t always work, but sometimes it does for a first offender.
Hidden Business Credit Card Rates
Now for the part you are really wondering about. What are you paying that you do not realize? How much could you save if you knew about these things and either avoided them or chose cards that did not charge them? Here are the hidden costs to look for, and how to reduce or avoid them all together.
Balance Transfer Fees
These are fees on balances that you transfer from another card. Typically this would be done in an effort to get a lower, promotional interest rate on the balance transfer. Usually the fee is a percentage of the amount being transferred with some minimum. So if, for example, you were to transfer $3,000 and the transfer fee was 3%, your balance on the new card would increase by $3,090.
The only way to avoid this is to not do a balance transfer. Of course, there could be cases where the savings with the promotional rate makes it worth the fee. That will have to be determined on an individual basis.
Cash Advance Fees
These are just as they sound, fees paid on cash advance funds. Similar to balance transfer fees, they are typically a percentage of the advance. Cash advances can come in the form of cash advance checks that you simply write and deposit into your account, or funds that you get from an ATM with your credit card and a cash advance PIN. If you do not do cash advances with your credit card, you do not have to worry about this fee.
Reward Redemption Fees
Did you know that sometimes you have to pay a fee on rewards that you earn? The credit card companies say that this is to pay for the processing of the rewards. Avoid these fees by reading the fine print in the rewards section before you apply for the card. Most do not even know that these fees exist, and sometimes they end up costing more than the rewards are even worth.
Reward Recovery Fees
This fee is closely related to late fees. Some cards revoke rewards earned during the month if you are late on your payment for that month. They then charge a fee to reinstate those rewards. To avoid this fee, be sure to pay on time.
Inactivity fees and Account Closure Fees
The inactivity fee is assessed after you go a certain length of time without any activity on the card. Most often that amount of time is one year. The first thing you have to do to avoid this fee is know which cards have if. After you determine that, figure out the minimum you must spend in a year to avoid the fee. Then, either make certain you spend that amount, or cancel the card.
Beware however, because some cards do charge a fee for closing accounts.
Payment Protection
Most cards offer a payment protection plan. This is basically insurance that will cover your payments in the event you become ill or unemployed. While is sounds great, it can be quite expensive and add up quickly. Avoid it by either opting out on the front end, or canceling it if you already have it and do not want to pay it.
Paper Statement
The push to save the environment is a noble one, and the credit card companies are doing their part. One way they are doing this is by charging a fee for paper statements. You can opt in for electronic statements and avoid paying the fee.
Foreign Transactions
Did you know that if you use your credit card to pay for goods from a company that is not located in the United States, you may have to pay a fee for that transaction? This is true even if you never leave the country, and even if you do not know the other company is foreign. Read the fine print about fees before making any purchases from companies you are not familiar with to determine if this will be an issue.
Taxes on Rewards
While this isn’t exactly a credit card fee, it is a potential hidden cost of using credit cards. There are times when, depending on how rewards are earned and how they are used, that you may have to pay taxes on them. Find out more about this and how to avoid it here.
Check out our professional research and score the best business credit cards for your business.
Here’s the big key to avoiding unexpected fees and costs. Know what to look for. Now that you have a list of the most common hidden credit card costs, you can be diligent to pay close attention on the front end and not apply for any credit cards that charge fees you do not want to pay.
No one wants to pay more than they have to. On the other hand, some of these fees may be worth it to you to pay depending on the benefit associated with it and whether or not your specific business could benefit. For example, if you have a chronic health issue, it may be worth it to you to pay for the payment protection plan.
Why Business Credit Card Rates May Be Worth It: Benefits of Business Credit Cards
While all these costs can make it seem that credit cards are the devil, and though they do get a bad rap, there are actually plenty of benefits to using business credit cards. Here are just a few:
- Build business credit
- Finance business needs without the hassle of a loan, including:
- Taking advantage of special bulk pricing
- Equipment maintenance and repair
- Working capital
- Unexpected, or expected, cash gaps
- Use rewards to reduce costs
Of course, we all know credit can get out of hand, but used properly and with the proper attention to business credit card rates, they can be an amazing tool for your business.
How Can They Help Build Business Credit?
Not only can these cards help you build business credit, they are actually vital to the process. Of course, regardless of the business credit card rates, you will have to have business credit to get business credit. That is why you start with vendors in the vendor credit tier first. These vendors will give you net 30 terms on invoices and report those payments to the credit reporting agencies, without a credit check. After you have enough of these accounts reporting, you will have enough business credit to apply for your first business credit cards.
You’ll start with store cards. Cards tied to retail stores such as Best Buy, Office Depot, and Lowes will approve accounts with very new business credit earned from accounts in the vendor credit tier. They will also report payments to the credit agencies, which will further grow your score
After enough of these are reporting, you can apply for cards in the fleet credit tier and the cash credit tier. As these cards report your on-time payments, your score will only grow stronger. This will also mean you start getting offers from cards with more favorable business credit card rates, such as lower interest. Find out more about the credit tiers and building business credit using credit cards in each one here.
Side Note: Hidden Business Credit Card Rates When Accepting Credit Cards
Just as there are hidden fees when it comes to using credit cards in the course of your business, there are also hidden rates on the other side. If you accept cards as payment in the course of your business, be aware of these little-known costs.
Manual entry fee
Did you know that it costs your business more in credit card processing fees if you manually enter the credit card number rather than swiping it? It’s because of the increased security risk. If at all possible, make sure customers swipe instead of type in the number.
Check out our professional research and score the best business credit cards for your business.
Below Limit Costs
Okay so this isn’t an “extra” fee per se, but it is a definite cost. It is entirely possible that you can lose money on a credit card sale if it doesn’t hit a certain dollar amount. This is because the business credit card rate on processing that transaction may actually be more than the profit earned from it.
That’s why you see many businesses, such as donut shops and other businesses with frequent low dollar amount purchases, require a minimum purchase if you intend to use a card. This not only avoids the problem of losing money on low dollar amount purchases due to processing fees, but it can increase profits when you consider the number of people that do not carry cash.
Stop Paying Business Credit Card Rates You Do Not Know About
It is impossible to find a card with no unsavory fees. The key is to determine which ones are worth it to you to pay. Then, apply only for cards that charge business credit card rates you are willing to pay. The credit card industry is fiercely competitive, and if your business credit score is solid, you can have your pick of the cards that will work best for you.
The post Business Credit Card Rates: Everything You Might Need to Pay appeared first on Credit Suite.
The post Business Credit Card Rates: Everything You Might Need to Pay appeared first on Buy It At A Bargain – Deals And Reviews.
Obtain A Cheap Credit Card By Understanding The Fees
Obtain A Cheap Credit Card By Understanding The Fees
Charge card business bill costs of some type or an additional. The trick is to locate a card with the most affordable charges for the solutions you make use of. If you utilize cash money advancements, after that explore those charges with credit scores card business prior to you authorize up with them.
Upfront Fees
Not every bank card program has ahead of time charges, so it pays to search for the ideal card. Yearly costs are usual on cards with repaired or reduced prices. In the appropriate condition, this cost with the best price can conserve you loan.
You will certainly additionally locate cash loan charges, either a level price or percent. Not all cards bill this, yet normally they have greater APRs. If you prepare on utilizing this attribute, it is crucial to check out the terms.
Balance-transfer charges likewise can be billed, normally when you make use of a ‘check’ sent out by the bank card business. Some programs provide no costs or reduced prices for transfers, specifically with an initial deal.
Bonus Fees
Bonus charges can typically be stay clear of however ought to still be looked into. Much less usual are set up, return thing, or telephone purchasing costs.
Reduced Fees Equal High Rates – Sometimes
While nobody intends to pay costs, occasionally they can conserve you loan. With big equilibriums or equilibrium transfers, you can usually locate reduced prices by paying a little charge. You might additionally locate that with motivation programs, a month-to-month cost will certainly still permit you ahead out in advance.
For those that pay off their equilibriums every month, pick a card with no or reduced charges. You can likewise pick to have a number of various kinds of bank card programs to fulfill your various funding demands.
Study Fees
Under government regulation, credit history card firms are called for to checklist charges and also APRs prior to you use. It will certainly consist of yearly, minimal money, money advancement deal, transfer, late settlement, and also over-the-credit-limit costs.
Credit score card business bill costs of some type or one more. If you make use of cash money developments, after that check out those costs with debt card business prior to you authorize up with them.
Not every credit rating card program has in advance costs, so it pays to go shopping about for the appropriate card. Yearly charges are usual on cards with taken care of or reduced prices. Under government regulation, credit score card business are needed to listing charges and also APRs prior to you use.
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Obtain A Cheap Credit Card By Understanding The Fees
Obtain A Cheap Credit Card By Understanding The Fees Charge card business bill costs of some type or an additional. The trick is to locate a card with the most affordable charges for the solutions you make use of. If you utilize cash money advancements, after that explore those charges with credit scores card business … Continue reading Obtain A Cheap Credit Card By Understanding The Fees