Many business owners do not understand their business credit score. What is it? How is it generated? What can I do to make it higher? Individual consumers normally find that much of their lending life rests on the FICO score, but what about businesses? Which scores do business owners need to worry about? There are … Continue reading Business Experian: A Comprehensive List of Everything You Need to Know
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Business Experian: A Comprehensive List of Everything You Need to Know
Many business owners do not understand their business credit score. What is it? How is it generated? What can I do to make it higher? Individual consumers normally find that much of their lending life rests on the FICO score, but what about businesses? Which scores do business owners need to worry about?
There are many options for business credit reports. Why worry about Experian? Business Experian is one of the main three busing credit reporting agencies. The other two are Dun & Bradstreet and Equifax.
Everything You Need to Know About Business Experian: From Profile to Improving Your Score
You need to know what your business Experian reports say. Honestly, knowing what information lenders are getting from this report is necessary to help you determine your business fundability. To understand completely, you need to know where the information on the report comes from, of course. But that’s not all. You also need to know how they calculate the business credit score.
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Business Experian: How Do They Get Your Information?
Experian keeps business credit profiles on 99.9% of all United States businesses. According to them, they hold the credit industry’s most inclusive database on small businesses. As a result, if your business is already operating, it probably already has a business Experian file.
Their information comes from third party sourcing. Consequently, you cannot add anything to your business credit profile yourself. You can, however, still review your profile. Then, you can tell them about any mistakes and have those mistakes corrected.
Business Owner Profile
For smaller companies, Experian will add a business owner profile. This is to show the relationships between you and your business. Experian’s Business Owner Link automatically links the credit history of more than 5 million business owners to their business credit history. This makes things easier for creditors to find a Business Owner Profile on small business accounts. It also makes it easier for them to determine overall creditworthiness.
What’s on Your Business Experian Report?
Experian sells different products and reports that keep track of a business’s credit.
Business Credit Advantage Plan
This is presently $149 monthly and incorporates mobile-friendly alerts and score improvement pointers.
Profile Plus Report
This report is currently priced at $49.95 and it includes financial payment details and predictive information on payment behavior.
Credit Score Report
The least costly of the available reports, it is currently $39.95. This fundamental report features detailed company and credit information. It also shows summary financial payment information.
Valuation Report
At $99, this report is a middle of the road option in terms of cost. It shows the value of your business and features Key Performance Indicators. It also shows the fair market value of the business.
Premium Corporate Profiles
For an additional charge, Experian also offers premium corporate profiles. They enhance these profiles by adding extra information. Additional data includes sales figures, size, contact details, products and operations, credit summary, any Uniform Commercial Code (UCC) filings, fictitious business names, plus payment and collections history. In addition, these premium profiles have information on credit inquiries made in the last nine months. UCC specifics and financial details from Standard & Poor’s round out the information on this report.
What Does Your Business Experian Report Tell Lenders?
A business Experian report is set up in several different sections. We break it down below.
Identifying Information
This report is split within itself. First, you get the standard identifying data and details of ownership. This area also lists major personnel, company type, and length of time in business. Number of employees and annual sales are on this report as well.
Payment Information at a Glance
After that, there is a section noting delinquent payments. It also shows those payments they expect to go delinquent. Additionally, you can see the lowest and highest balances for the past six months and the current balance. By showing the highest credit limits, there is an idea of the highest credit utilization rate.
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In addition, this segment contains the number of tradelines a business holds. Also, it has the number of credit inquiries in the past. Uniform Commercial Code filings are on this list too.
Next, there is a relative percentage showing the percent of businesses doing worse than the one in the report. Lastly, you can see the number of bankruptcies, liens, and judgments.
Credit Summary
After that is the credit summary. This shows the company’s Experian credit score. It also has links to information about what enters into the score and tips on exactly how to improve it.
Payment Summary
The next area is the payment summary. It shows line graphs for monthly and quarterly payment trends. It also shows where those numbers originated from. The monthly payment trend is even graphed against the industry average.
Just below this pair of graphs are three bar charts showing continuous payment trends. The first includes tradelines that have been reported for over 6 months. The next includes tradelines that have been reporting for 6 months. At the end, there is a chart that shows these payment trends in combination.
Trade Payment Information
How has the business done with making payments? This section will tell you. It breaks payments into credit card and leasing accounts. Then, it further breaks them down by supplier category. Lastly, payment trends are at the bottom.
Inquiries
This part is pretty self-explanatory. This is where the inquiries into the company’s credit are listed.
Collection Filings
If a business has any collection filings, they’ll be in this section in date order. It will also list collection agency name, status, amounts contested and collected, and the closed date.
Commercial Banking, Insurance, Leasing
This portion shows what Experian knows about your company in relation to banking, insurance, and leasing. For example, what was credit extended for? How much credit was extended? When did the loan start? Is there any remaining balance? If so, how much?
Judgment Filings
Next the report shows basic legal information. For example, the court where a judgment was filed, the day, and what amount it was for.
Tax Lien Filings
Tax lien filing data is similar to judgment filings, except that there is a listing for a filing location, rather than a court.
UCC Filings
This only displays the date, filing number, jurisdiction, name of the secured party, and activity on the filing.
Business Experian Credit Monitoring
Obviously, you can register for business credit alerts. Experian’s Business Credit Advantage program operates as a self-monitoring service. You get unrestricted access to your company’s business credit report and score. You can use this resource for proactively managing your company credit. Alerts are sent for:
- Company address changes
- Changes in your business credit score
- Credit inquiries on your business profile
- Newly-opened credit tradelines
- Any kind of USS filings
- Collection filings and
- Any public record filings, such as liens, bankruptcies, and judgments
However, we can help you monitor your credit with business Experian for a fraction of the cost. Go here to find out more.
Business Experian: Intelliscore Plus
You need to understand this score and how it works. You may not be able to change it much, but by understanding the score, what it tells lenders, and how it is calculated, you can work to mitigate any negative issues with positivity.
What is the Intelliscore Plus Credit Score?
The Intelliscore Plus credit score is credit-risk analysis. The primary function of Intelliscore Plus is to help businesses, investors, and prospective lenders make well educated judgments about who they should or should not do business with.
Intelliscore Plus Credit Score Range
The Intelliscore scores range from 1 to 100. The higher the score, the lower the risk class. In contrast, the lower the score, the higher the risk class. It breaks down like this:
Score Range Risk Class
- 76 – 100 Low
- 51 – 75 Low – Medium
- 26 – 50 Medium
- 11 – 25 High – Medium
- 1 – 10 High
How Does Business Experian Calculate Intelliscore Plus?
In the credit world, Intelliscore Plus is regarded as one of the most reliable tools for determining credit risk. Here’s why. They use over 800 variables to calculate the score. That’s a lot, but they all fit into these three general categories.
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Payment History
This features the number of times accounts have become delinquent, the percent of accounts that are currently delinquent, and your overall trade balance.
Frequency
Frequency is related to payment history. It takes into account how many times your accounts have been sent to collections, liens and judgements, and any bankruptcies on both business and personal accounts.
This also relates to payment patterns. Were you regularly slow or late with payment? Did you begin by paying bills late but now you are doing better? This is all taken into account.
Monetary
This detail focuses on how you make use of credit. For example, how much of your available credit is currently being used? Do you have a high ratio of delinquent balances in relation to your credit limits?
If you’re about to start a small business or are relatively new to this game, the list above may seem a bit overwhelming. Furthermore, how will you rate if you have a short time in business?
This is where the blended model comes into play. This means that they take your personal credit score into consideration when calculating your business’s credit score.
Can You Do Anything to Improve Your Business Experian Score?
While you may not be able to do anything to make a big score increase happen all at once, you can definitely do some things that will make a positive difference over time.
Pay on Time
This is number one. Over time, paying your bills punctually will help establish your company as one that satisfies their debts. This will definitely help push your score up and show other firms that you are a low credit risk.
Make Wise Credit Choices
The more debt you have on your plate, the more monthly bills you have. Consequently, the less disposable income you have. If your overall debt is close to or even over your income, your business with appear to be a high credit risk.
Keep your debts in check and consistently pay them down or off. So this is to keep a healthy balance between what you make and what you owe.
Use the Credit You Have
Keeping your debts low remains solid advice. But you have to make use of the business credit accounts you have. You have to be making payments on accounts for your score to grow. Having a ton of credit and not using it at all doesn’t really help. This, again, is where balance comes into play.
There is no need to buy things you do not need however. Even if you can pay cash, use credit for the things you would be buying regularly for your business anyway. Then, use the cash to pay the credit account.
Watch Your Personal Credit
By now, you’re aware that personal credit is fair game when it comes to your Intelliscore Plus score. Don’t fall into the trap of thinking your personal credit doesn’t matter. If it is bad, there are options for working around it. However, it is much better to just keep it healthy. Making certain you stay on top of your monthly bills is the number one way to keep your personal score strong. Avoid unneeded credit inquiries, and refrain from compromising your personal credit for business demands.
Make Use of Monitoring Options
No matter what your credit score is, it is crucial that you continue to be diligent. Sod review your personal and business credit reports. This can help you spot possible errors and stay educated on your own credit profile.
Business Experian Credit Scores Make a Difference When it Comes to Funding
It’s important to understand your business Experian score. It can affect your ability to get funding. So you need to know what it is, what it tells lenders, and what affects it. Once you know these things, you can work from your end to keep it as high as possible. In turn, this will greatly improve your ability to fund your business.
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Everything You Need to Know About Accounts Receivables Financing
… And What to Do for Funding Beyond Accounts Receivables Financing
Accounts receivables financing is not something that you hear a lot about. There is a ton of information out there about loans, credit cards, and even lines of credit. No one really talks about financing your receivables though. That is, until you start trying to figure out how to get cash fast. If you need fast cash and you have open receivables, then A/R financing may be just what you need.
Don’t confuse accounts receivables financing with accounts receivables selling. They are two different things used for two different purposes. For example, selling your receivables serves as more of a means of getting older receivables off the books.
The buyer pays a premium and then tries to collect the full value of the receivable. The business owner never gets any more money than the original selling price. You get cash fast and you get the receivables off the books.
Accounts receivable financing is different. You can do it in a couple of ways. The first is, you can simply use the invoices as security for a loan. The other, is invoice factoring. This is a mix of selling and financing. In factoring, the factoring company pays you a portion of the value of the invoices. Then, they collect what they can, hopefully full value. They then keep their set, agreed upon fee, and send you the difference.
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This means that the amount you get when you first factor the invoices may not be all you get. You will still get the difference in the amount collected less what you have already received and the factoring fee.
What Are the Benefits of Accounts Receivables Financing?
Accounts receivables financing is not the best choice for every business in every situation, but there are some times when it truly is the best option. Done correctly, there can be many benefits. For example:
- Faster, less complicated process than what is typical with other types of financing
- Accounts receivables financing premiums are often less than the interest rates and fees with traditional financing.
- In some cases, it is easier to qualify for A/R financing because lenders look at the quality of your invoices rather than your credit history.
- You get your money faster.
- Accounts receivables financing can happen on an ongoing basis so as to bridge the cash gaps due to slow collections.
How Do You Qualify for Accounts Receivables Financing?
While all financing companies have their own qualification requirements, these can give you an idea of the minimum most require to be eligible for accounts receivable financing.
- They must, of course, issue invoices to customers
- There must typically be at least $50,000 in annual revenue
- Usually they require that a business has been in operation for at least 6 months
- Customers must be creditworthy, meaning they are likely to pay their invoices
It is important to remember that, while there are some instances where the financing company will take on the task of collecting on the invoices, the debt is still the responsibility of the business owner receiving the financing. Regardless of who is doing the collecting, if the invoice is not paid, the business owner is still responsible for the debt to the lender.
Where Can You Get Accounts Receivables Financing?
There are many lenders that offer this service. Here are just a few.
1st Commercial Credit
This lender has been around for 15 years. They offer invoice financing starting at .69% to 1.59% or Prime +2 and an administration fee. 1st Commercial Credit boasts a fast approval process, and they do not require financial statements for financing up to $350,000. You can set up your accounts receivables financing with them in as little as 3 to 5 days.
New Century Financial
New Century Financial offers invoice financing up to 90% of the original invoice. They claim streamlined, fast processing with no hidden fees.
Blue Elephant Financing
This company works with businesses that have government contracts. They offer account receivables financing related to FEMA, HUD, and other government contracts. Blue Elephant Financing prides itself on an easy application process and fast turnaround.
Capital Plus Construction Services
Capital Plus offers accounts receivables financing related to construction contracts specifically.
Star Funding
This company will not only do accounts receivables financing, but they will also help you collect on open invoices. This is a major plus for a lot of businesses. If you need or want collection help along with financing, Star Funding if for you. They also offer accounts receivable management services.
Seven Oaks Capital Associates
Seven Oaks also offers general accounts receivables financing services along with collection and management services. In addition, they can help you obtain credit information on those to whom you extend credit.
Of course there are hundreds of companies out there that offer these services. These are just a few to get you started.
A Word About Merchant Cash Advances
If you need a similar option but do not have a ton of open invoices, you might look into getting a merchant cash advance. This is similar to factoring invoices, but it works based on average credit card sales. Basically, you get an advance on your projected credit card sales.
Here’s how it works. First, you will submit information about your average daily credit card sales. Then, the cash advance company will tell you how much you are eligible for based on that average.
What Else Should You Be Doing?
Now, the allure for many small businesses is that this type of financing doesn’t require great credit. In fact, if your invoices are solid, the factoring company may not even do a credit check. If you have bad credit or no credit, that is a good thing. However, you need to think beyond the right now and consider the future.
Working to build business credit is vital because this type of financing will not work for every need.
Every Small Business Needs To Establish Business Credit
This is credit in a small business’s name. It doesn’t connect to an entrepreneur’s consumer credit. Here is why you need it:
- Since small business credit is distinct from individual, it helps to safeguard an entrepreneur’s personal assets, in the event of court action or business insolvency.
- With two distinct credit scores, an entrepreneur can get two different cards from the same vendor. This effectively doubles buying power.
- Even startup companies can do this. Visiting a bank for a business loan can be a recipe for disappointment. But building company credit, when done correctly, is a plan for success.
- Consumer credit scores depend on payments but also various other elements like credit use percentages. For small business credit, the scores really merely hinge on whether a small business pays its debts punctually.
So where do you start? How do you establish business credit? It’s a process that has to be done in the right order. You have to actually work toward it. It doesn’t happen on its own.
How to Establish Business Credit
Accomplishing the steps out of sequence leads to repetitive denials. No one can start at the top with business credit. For example, you can’t start with retail or cash credit from your bank. If you do, you’ll get a denial 100% of the time.
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Start with Business Fundability
A small business has to be fundable to credit issuers and vendors. This includes a number of things. The first, is that a business needs its own phone number and address separate from the owner. They each need to be listed with the directories. Do that here. It will also need an EIN. This is similar to a social security number, only for a business rather than an individual. You can get one free from irs.gov.
Then, the business has to be incorporated. A sole proprietorship or partnership won’t work for building business credit. Whether you choose to organize as a corporation, S-corp, or LLC will depend on the level of liability protection you want and on your budget. Any of them work for business credit building.
Another necessary step for your business to appear fundable is to have a separate business bank account. Do not mingle personal and business expenses in the same account. Not only does that not work for building business credit, but it makes for a tangled mess come tax time.
Lastly, and surprisingly to some business owners, your business needs a professional website. Along with this goes an email address that is separate from the owners. The website needs to look professional, which probably means hiring a professional to do it. A lender will be much less likely to take you seriously as a business if you have a poorly put together website in today’s business world. The email address needs to have the same URL as the website and not be from a free service such as Gmail or Yahoo. Also, the website needs to have website hosting from a paid supplier such as GoDaddy. Free hosting doesn’t work for this situation.
Get Accounts Reporting
Start at the D&B web site and obtain a free D-U-N-S number. A D-U-N-S number is how D&B gets a company into their system, to produce a PAYDEX score. If there is no D-U-N-S number, then there is no record and no PAYDEX score.
After you do this, you can start establishing tradelines that will report to the credit reporting agencies (CRAs). These are part of the vendor credit tier. They are starter vendors that will extend invoices with net terms without a credit check. When they report your payments, your credit score will begin to grow.
Find out our picks for the easiest starter vendors to start with here.
Retail Credit Tier
Once you have several vendor trade accounts reporting to at least one of the CRAs, then you can move onto the retail credit tier. These are companies like Office Depot, Staples, and Lowes. The reason you have to go through the vendor credit tier first, before applying for these store cards, is that they need to see a PAYDEX score to grant approval.
For example, Lowe’s likes to see a PAYDEX of 78. The only way to get this is to start in the vendor credit tier.
As you handle credit in the retail credit tier responsibly by making on time payments, your credit score will grow even more.
Fleet Credit Tier
After there are several accounts from the retail credit tier reporting on-time payments, your score should be strong enough to apply for cards in the fleet credit tier. These are businesses such as BP and Conoco. Use this credit to purchase fuel, and to fix, and maintain vehicles
One such example is Shell. They report to D&B and Business Experian. They need to see a PAYDEX Score of 78 or more and a 411 small business telephone listing. This is another reason why a business contact listing is important.
Cash Credit Tier
Once you work through the vendor credit tier, the retail credit tier, and the fleet credit tier, your score should be stable enough to apply for cards in the cash credit tier. These are companies like Visa and MasterCard, but not related to a specific retailer as in the retail credit tier.
Monitor Your Business Credit
As you go through the tiers, and even after you are beyond the cash credit tier, you need to know what is happening with your credit. Make sure it is being reported and take care of any inaccuracies as soon as you can.
Hit the jackpot with our best webinar and its trustworthy list of seven vendors who can help you build business credit.
We can help you monitor business credit at Experian and D&B for 90% less than it would cost you at the CRAs. See: www.creditsuite.com/monitoring.
Accounts Receivable Financing Can Be a Great Option, But Don’t Stop There
Whether you are looking into accounts receivable financing because it is the best option for your needs or because it is the only option due to credit issues, you can work on building business credit in the meantime. Personal credit is just not sufficient for business expenses.
Our tried and true method for establishing and building business credit will ensure you have strong business credit. Then, your financing is only limited by you needs, and not by your options.
The post Everything You Need to Know About Accounts Receivables Financing 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 BUSINESS DEMO WEBSITES.
The post Business Credit Card Rates: Everything You Might Need to Pay appeared first on Buy It At A Bargain – Deals And Reviews.
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.