With banks across the country tightening their credit policies, sole proprietors and small business owners have increasingly turned towards traditional unsecured credit cards, to support their businesses financially. Credit cards provide business owners with added cash flow and increased flexibility when purchasing goods or services.
Informed consumers should research the market thoroughly before making a credit decision and use credit card finder tool such as the one on this page.
Slick marketing pieces are stuffed in thick envelopes, coming from banks heretofore unseen and unheard of. E-mail boxes are crammed full each morning with all manners of credit offers. Sifting through these offers is a potential nightmare.
Do I need a business credit card?
Few business people could survive without credit, and securing purchases with a credit card is still the most popular and convenient way to do business in the United States today. In fact, many major corporations have established credit accounts, with limits in the tens or even hundreds of thousands of dollars to facilitate ordering and purchasing of raw materials and supplies.
Despite a slow economy, massive bank bailouts and significant changes to consumer credit laws enacted over the past few years, banks offering credit cards are more plentiful than ever! However, these offers are vastly different from in the past. Rates and terms have changed, along with the level of service that can be expected from a credit card provider.
Where else can I look on line for information?
Many websites provide helpful information, but then try to sell you their sponsor’s products. This site reviews and rates a wide variety of bank credit card services and recommends the cards based on your requirements.
Consumer rating sites such as the Better Business Bureau are also very helpful with determining how credit card businesses work with their customers. Another useful site would be JD Power, which rates credit cards periodically.
What changes have taken place?
Recent legislative changes include the banning of marketing at collegiate events and campus giveaways. New laws also restrict credit card access for those under 21. Banks are now required to make clear disclosure of required minimum payments. Additional changes include a 45-day warning of for interest rate changes and the deletion of alternative payment fees. The practice of “universal default” has been banned and bills must be due on the same day each month.
After many U.S. banks nearly collapsed, one important lesson was learned; banks cannot extend credit unprofitably. After years of easy credit, cards with high limits and generous benefits do not just show up in your mailbox as in past decades. Interest rates, once at historic lows, have slowly crept back up to a range where credit vendors can actually show a profit and pay their bills.
What are prepaid credit cards?
Many banks, credit unions and other financial institutions are now introducing prepaid credit cards. These are new versions of an old staple from the last century; secured loans. Credit is extended, but only up to the amount of cash that the purchaser has placed on deposit, in advance, in the card issuer’s bank.
The advantages of this system are plain to see. Secured credit cards can be offered with minimal or no fees. Benefits, such as purchase protection plans, discounted offers, travel and roadside assistance and 24-hour customer service are all standard features with prepaid cards, the same as with their traditional unsecured counterparts.
Why should I use my own money to secure a credit card?
American consumers continue to run up personal and business debt at an alarming rate. Pay now or pay later, the bills eventually have to be paid. Prepaid cards come with all the conveniences of a credit card but none of the financial burden. You and your business remain debt free, unencumbered by mandatory payments and arbitrary credit limits.
Business expenses are accurately tracked on monthly statements and permanent records are maintained according to IRS regulations. Most prepaid cards feature the same bonus and awards programs as standard credit cards.
Lastly, where else can you safely put your money and expect a reasonable rate of return? Interest bearing bank accounts often earn as little as one percent, while your credit card company is generally charging you between 10 and 14% interest, to use their money! By putting your own money on a prepaid card , you save the difference!
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