Archive for June, 2009

During the present credit crunch scenario, everyone wishes to minimize debts and small business owners prefer the use of debit cards to send and receive money for business purposes. These cards help separate management of business funds so that you dont have to mess up your business debts and personal funds. According to the survey of Synergistic Research Corporation, 35% small business owners use debit cards.

Debit cards are now popular not only because they ease transactions, but also because the banks promote them more. As the interchange rate of business debit cards is higher, banks want their business checking account customers to use debit cards to carry out large volumes of business transactions.

When more and smaller business owners start using business debit cards, the banks prepare themselves to offer several services. Payroll services offered by banks were found to be useful for small business owners.

Using debit cards, business owners can reduce the hassle required for payroll solutions. Reports say that several enterprises face problems associated with processing of payroll checks. Now, business owners can use payroll services provided by banks and credit the salary account of the employees directly without paperwork. Employees can receive money using their account and manage funds using personal debit cards.

In the modern business world, no one is ready to wait for several days for check clearance to get payments. Suppliers can now receive money using debit cards so that payment arrived instantly. This is useful for business owners as well because you can have full control over the transaction. You will use the existing balance in your account and so, you never have to spend anything more than you have. For receivers, debit cards are more reliable as money is available without any delay.

Debit cards incur no annual fees like credit cards. Moreover, you never have to pay any extra fees or interest rates when you use debit cards. Considering the volume of transactions for your business, you can save money in the long run with debit cards. A lot of paperwork can be eliminated with regular use of debit cards.

You should set overdraft protection to protect yourself from spending more than you can afford. If you dont pay proper attention for this overdraft, you have to pay more fees for the bank for exceeding the limit.

Also, you must keep the PIN number safe because scammers can easily get access to your bank account using the card and PIN number. As a result, you will lose all your hard earned money.

An ideal solution for those who are looking to get their finances under control and reduce their overall debt position would be opting to transfer your credit card balance to a 0% interest card.

However, successfully changing to this type of arrangement requires a lot of discipline - and by extending these offers to you, the banks are ‘banking’ that you don’t have any!

First of all, it’s important to read all of the conditions attached to the 0% card offer. In order to recoup the lost interest revenue, the credit provider might charge higher late payment, over limit or missed payment fees, which could cancel out the benefits you’ll receive from the 0% interest rate.

When moving your debt across to their account credit card providers will also often charge a “transfer fee”, which can be up to 3% of the total amount of debt. This means that on a 2,000 credit card debt, the transfer fee would be 60. Should you transfer two or more credit card balances across, you will be charged for the total number of transfers, so it’s easy to see how these charges can quickly build up. Many introductory offers reduce or waive these transfer fees, but make sure you read the fine print.

Also, while these offers generally allow for a 0% interest charge on a monthly basis, occasionally they require that a monthly “finance charge” be applied to the account. This can be as small as 50p or 1.00, but again, it crucial that you read the fine print and understand all of the rule and conditions that accompany your new account.

Tips for success:

Read and understand all of the conditions attached to the balance transfer offer, so you know exactly what you’re in for.

Ask plenty of questions. How long does the 0% interest rate last for, for example - and what does the interest rate revert to once the 0% interest period is over?

Commit to paying down the debt. Just because the interest payable is zero, doesn’t mean you should let the debt sit there for months. Use this as an opportunity to pay off as much of your credit card balance as possible, before a higher interest rate kicks in again.

Before you move to a new credit provider, approach your bank and ask them if they can give you a better deal on your current credit card account or business credit cards. They may be able to wipe a few percentage points off your interest rate in order to retain your business.

Credit crunch is killing several businesses and hence, small businesses are looking for ways to control business expenses using debit cards. Synergistic Research Corporation conducted a survey among small business owners and reported that 35% of such owners prefer using debit cards for their business. As they use debit cards at home, they find it convenient to use at work as well.

Banks now promote debit cards for its customers with business checking accounts as banks also benefit from these business customers. The amount of business transactions is huge and hence, banks can profit from the interchange rate of business debit cards.

When the business owners show interest in conducting business transactions using debit cards, the banks are ready to offer more offers and services. The interchange rates for business debit cards continuously increases as the volume of transactions increases.

With debit cards, you dont have to mess up with payroll checks. All organizations have to find affordable and easy payroll solutions with lesser amount of paperwork. Debit cards make it possible by offering simple solutions to pay for your employees. Without the need for any paperwork, you can send money to the bank account of your employees.

To pay for the suppliers, there is no need of paperwork and delay involved in the issue of checks. Small businesses use debit cards to send money to the suppliers. This way, payment is instant and highly secure. Further, there is no chance of frauds associated with debit card transactions. However, there are still a higher percentage of people who dont accept debit card payments. This scenario is changing now as the popularity of debit card increases.

Debit cards incur no annual fees like credit cards. Moreover, you never have to pay any extra fees or interest rates when you use debit cards. Considering the volume of transactions for your business, you can save money in the long run with debit cards. A lot of paperwork can be eliminated with regular use of debit cards.

You should set overdraft protection to protect yourself from spending more than you can afford. If you dont pay proper attention for this overdraft, you have to pay more fees for the bank for exceeding the limit.

You must keep the PIN number of your debit card safely because anyone who has access to your card and PIN number can drain your bank account completely.

Whether you close your sales over the internet or in stores or in a mixture of both, you may soon start considering the use of credit card processing in order to help your customers pay you faster.

Having credit card processing is a decision that may be easy for you to make. What makes it more complicated is selecting a merchant provider of accounting because this decision may have greater repercussions in your bottom line.

Credit card processing once started is not a complex process. However, it is important to keep in mind the additional costs that this service implies like: fees, rates, limits and customer care. The latter should not be disregarded because it is a crucial one and when not included in the decision making can give business owners many headaches.

Here we will try to explain step by steps all the implications to credit card processing in order to understand how it works.

The first step is when a customer makes a purchase using his or her credit card, either from our store of your website.

The credit card processing software will obtain the information regarding the amount of the sale and the data of the customer that performed it. This information is sent to the acquisition bank.

An authorization is later requested by the acquisition bank from the one emitting the card. Once it is accepted, the first one will process the transaction and will request yet another approval.

The credit card processing software will allow you to review the transaction and send a confirmation to the acquiring bank.

The next step is receiving the funds from the financial institution that issued the card to the customer.

The funds are then transferred from the customers’ account to your business account.

And this is how credit card processing works. Now, it is needless to say all parties involved in this process have a cost advantage. Here are the primary fees to consider:

A one-time fee is charged in order to get started. The Transaction fee which the merchant pays for every transaction. There is also a Discount rate which is a flat percentage charged to the merchant for every transaction. Lastly, there is a Rate of return of charge which is a percentage of monthly sales “held” in reserve to offset the cost of fraudulent transactions

Should you have a bad credit rating, whatever the reason may be, you may find that a credit card might be hard to come by. This is where secure credit cards can be useful.

A cash collateral deposit is a requirement for secure credit cards. Where the provider permits you a spend of up to a certain limit of their funds per month, secured credit cards need you to deposit some of the money individually, unlike a traditional credit account. Confused? Don’t be - here’s how it works.

Under a secure credit card arrangement, the debtor - that’s you - places funds on deposit with the bank or financial institution providing the card.

The lender then allows you to make credit card purchases, up to a value of 90%-150% of the amount you’ve placed on deposit. That percentage depends upon your individual circumstances and your arrangement with the bank. For example, if you’re arrangement allows 120% credit, and you have placed 500 on deposit, you have access to 600 on your credit card.

While secure credit cards are often the only choice available to consumers with a bad credit history, they’re also often the only option for those who are new to credit, such as university students and teenagers. Without a credit history, banks can be nervous about extending even small-scale credit facilities to you.

Thus, the purpose that secure credit cards serve is to enable people with poor or non-existent credit histories to use a credit card, and establish a fresh pattern of repayment and spending habits. Meanwhile, the bank feels that the risk of taking on a poor-credit customer is balanced out, as they have a cash deposit they have on file, which can be tapped into to repay the credit card debt if necessary.

Usually, that cash deposit must not to be withdrawn while you have a secured credit card account. You will earn interest on the account - generally, the interest rate is on-par with what you would earn on an ordinary savings account with your bank - but you’ll need to speak with your lender about specific rules regarding adding and withdrawing from the savings account. You should also ask how long your money is required to remain on deposit once you close the account, as some lenders may elect to hold the deposit for an extra month or two, to cover any late transactions and charges.

There are plenty of lenders on the market who are willing to offer secure credit cards, but it absolutely pays to shop around. Fees, charges and restrictions vary drastically, including application fees, interest rates, mandatory card insurance costs and annual fees, so remember to read the fine print.

Merchant accounts are contracts between an acquiring bank that extends lines of credit to a merchant, and that allow businesses to accept payment for goods or services via credit cards.

Did you know that customers are more likely to purchase from businesses that offer credit card facilities? Statistics show that businesses using merchant accounts can see an immediate increase in the number of sales. These statistics are based on the average cash sale being only $9, while the average credit card sale is approximately $40.

No matter the type of business, the availability of merchant accounts will improve your cash flow in a number of ways. Here are some benefits for using merchant accounts:

- Having credit card facilities means you can offer customers the option to purchase on the spot.

- Processing fees for merchant accounts can be lower than check transaction fees.

- Debt Collection issues become the banks problem, not yours.

While there are obvious benefits to having merchant account facilities in your business, there are also some drawbacks to consider.

- You will have to institute measures to protect your business from credit card fraud.

- Your policies about charge-backs and refunds may need revising in order to minimize damages.

- If your business accepts credit cards on your website, be sure to use fraud protection measures to lower the risk of fraud, theft and scams.

Instituting Merchant Accounts

Setting up a merchant account can be relatively simple. You will need to set up a bank account for your company for the proceeds of any credit card purchases to be credited to. You will also need to lease processing equipment and software that will facilitate transactions.

If you intend to process credit card payments online through your companys website, then youll need to take the extra step of registering with a payment gateway like VirtualNet or CyberCash. Always check that the merchant account software you have will be compatible with your online payment gateway.

Comparing Merchant Accounts

Before you call your bank to get a merchant account, take the time to compare the options and offerings of several different banking institutions, in addition to merchant account providers. Fees and charges often vary greatly, so its very important to check what you’ll be charged and what fees are likely for each transaction.

For instance, fees might include initial start-up costs, equipment monthly lease fees, sales volume costs, transaction and processing fees. When looking at potential merchant account providers, be sure to ask for a written list of all the fees you’re likely to incur so that you can accurately compare them with other vendors.

Merchant Account Fees and Charges

Most providers will charge some form of application fee. This can vary from $0 up to $100 and sometimes more depending on your lender.

You may need to pay for your software, which can have an initial cost around $100 or more. Once installed, you may have to pay a monthly licensing lease, which can vary from $20-$50 a month. This, too, will vary and depend on your lender.

On top of these, you will incur transaction fees that range between $0.20-$0.50 per transaction. While these don’t sound high, if you process a lot of transactions they can really add up.

Other fees to ask about with any potential merchant account provider are charge back fees, minimum usage fees, statement fees, annual fees, close-out fees and account keeping fees.

Merchant accounts are contractual agreements between a participating bank who extends a line of credit to a merchant. This allows businesses to accept payment for goods and/or services from credit cards.

You should know that customers are far more likely to buy from businesses that offer the option to pay with credit cards. Statistics prove that vendors using merchant accounts will see an immediate increase in the number of sales. While the average cash sale is around $9, the average credit card sale is closer to $40.

No matter what type of business you own, the availability of merchant accounts can help your cash flow in several ways. Here are some of the benefits for using merchant accounts:

- Having credit card facilities means you can offer customers the option to purchase on the spot.

- Merchant account processing fees are frequently lower than check transaction fees.

- Debt collection problems becomes an issue for the bank, not you.

While there are some definite benefits to having a merchant account facility for your business transactional needs, there are also some drawbacks to think about.

- You will need to protect your business against instances of credit card fraud.

- Your policies about charge-backs and refunds may need revising in order to minimize damages.

- If you accept credit card payments via your website, be certain youre using fraud protection measures to minimize scams, thefts and fraudulent charges

Instituting Merchant Accounts

Setting up a merchant account is often a relatively simple process. A company bank account will be needed for deposits from any credit card purchases. You’ll need to also lease processing equipment and/or software in order to process transactions.

If you’re planning to process credit cards via your company’s website, then you’ll need to register with a payment gateway like VirtualNet or CyberCash. You should also make sure that the merchant account software you’re using will be compatible with your online payment gateway.

Merchant Account Comparisons

Before you call up your own bank and ask them for a merchant account, take a little time to compare the facilities offered by several different banking institutions, in addition to merchant account vendors. The fees and charges associated with accounts can vary drastically, so always check what youre being charged and what fees are likely to come into effect per transaction as well.

An example of fees could include initial start -up costs, monthly equipment lease fees, transaction fees, processing fees and even sales volume costs. Ask your merchant account provider to supply you with a written list of all fees so you can compare with other lenders accurately.

Merchant Account Charges and Fees

Many providers will charge some kind of application fee. It can vary from $0, all the way to $100 or more, depending on the lender.

You may also need to purchase your software, which can range in cost around $100, or more. Once this software is installed, its possible you may have to pay a licensing lease on the software, which can range from $20-$50/month. Again, this depends on your lender or merchant account provider.

In addition, you will incur transaction fees that can range from $.20-$.50 per transaction. While this doesn’t sound necessarily high, this can really add up if you process a large number of transactions.

Other fees you want to make sure you ask any potential merchant account vendor include charge back fees, statement fees, minimum usage fees, annual fees, account keeping fees and close out fees.

Merchant accounts are contractual agreements between a participating bank who extends a line of credit to a merchant. This allows businesses to accept payment for goods and/or services from credit cards.

You should know that customers are far more likely to buy from businesses that offer the option to pay with credit cards. Statistics prove that vendors using merchant accounts will see an immediate increase in the number of sales. While the average cash sale is around $9, the average credit card sale is closer to $40.

Regardless of the type of business, the availability of merchant accounts will definitely improve your cash flow in several ways. Below are some benefits for using merchant accounts:

- Having credit card facilities means customers can purchase right on the spot.

- Processing fees for merchant accounts can be lower than check transaction fees.

- Debt collection problems becomes an issue for the bank, not you.

While there are obvious benefits to having merchant account facilities in your business, there are also some drawbacks to consider.

- You will have to institute measures to protect your business from credit card fraud.

- You may need to examine and possibly revise your policies concerning charge-backs and refunds to minimize damages.

- If your business accepts credit cards on your website, be sure to use fraud protection measures to lower the risk of fraud, theft and scams.

Instituting Merchant Accounts

Setting up a merchant account can be relatively simple. You will need to set up a bank account for your company for the proceeds of any credit card purchases to be credited to. You will also need to lease processing equipment and software that will facilitate transactions.

If you’re going to be processing credit cards through your company’s website, you’ll need to register with a payment gateway like CyberCash or VirtualNet. Make sure that the merchant account software you’ll be using is compatible with your online payment gateway.

Comparing Merchant Accounts

Before calling your own bank to ask about merchant accounts, its a good idea to compare the offerings of several different banking institutions, as well as merchant account providers. Fees and charges can vary greatly, so its important to check what are the charges and fees likely per transaction.

For instance, fees might include initial start-up costs, equipment monthly lease fees, sales volume costs, transaction and processing fees. When looking at potential merchant account providers, be sure to ask for a written list of all the fees you’re likely to incur so that you can accurately compare them with other vendors.

Merchant Account Fees and Charges

Different providers may charge some type of application fee. This can range from $0 up to $100, sometimes more depending on your lender.

You will also need to pay for your software, which will have an initial cost of around $80-$100. Once the software is installed, you’ll then have to pay the licensing lease on the software, which could be anywhere between $20-$50 per month. Once again it depends on your lender.

In addition, you will incur transaction fees that can range from $.20-$.50 per transaction. While this doesn’t sound necessarily high, this can really add up if you process a large number of transactions.

Other fees to ask about with any potential merchant account provider are charge back fees, minimum usage fees, statement fees, annual fees, close-out fees and account keeping fees.

Just as the term brings to mind, student credit cards are credit cards meant particularly for students, many who are not earning a documented income with employment. Credit card issuers are alert to students and their credit challenges so they make accommodations for students when building student credit card offers specifically. Typically, the only restriction when applying for a student credit card is the age of the student, and as mandated by the law of the country, which is typically 18 years old and above at the time of application. In many ways, a student credit card is very similar to traditional, run-of-the-mill credit cards. But the major difference, is the standard APR, or interest rate, levied for card purchases, which is relatively higher than a traditional credit card APR.

Student credit cards give more financial flexibility for young students. But, while it may come in handy when paying the rent, paying tuition, purchasing books, and other must get items like food and clothing, uncontrolled card swiping can sometimes lead to financial trouble, especially in the form of poor credit scores and damaged credit histories. To a certain extent, this can be blamed on a lack of education or awareness as young people, often times, will not think too much about the concept of credit scoring or the idea of building a good credit history. As a result of this lack of comprehension, they will usually not hold themselves back from using the credit card freely either.

The danger of poor credit scores will not become readily obvious, but will certainly become apparent when the student approaches a bank for credit at a later point in time. Credit profiling or credit scores, as determined by any of the three credit bureaus, represent an individual’s credit life history, and black marks on credit histories, however they are acquired, will make it tough, at worst, more expensive, at best, to secure the lowest possible interest rate on the loan or financing. So, consequently, even if one manages to get the home loan or car loan, for instance, the interest rate, in order to allow the bigger credit risk anticipated by the bank, will be higher than normal, and in turn, much more expensive for the borrower. The bottom line is that student credit cards represent a potential risk to future economic standing if the cards are not used judiciously.

As previously mentioned, it is clear that unrestrained use of a student credit card can easily damage an individuals budding credit score and credit history profile. But on the flip side, knowledgeable spending and timely payback can go a long way toward building a solid credit history and credit score. Using the card for essential purchases that are well within his/her payback capabilities and making the payments within the due date can improve one’s credit rating exceedingly.

The rules of credit bureaus are pretty straightforward. The amount of money that an individual borrows will be returned in his or her credit report and the credit limits that each person can hold on to will be reflected in the amount of credit that the individual has previously “borrowed” and has paid back on time. Simple, right?

One additional point of interest…the credit card company is supposed to report each transaction that is been done on a particular credit card account to the three major credit bureaus hastily. But this does not happen in every case. More distinctively, secure student credit cards or prepaid cards, often times will not report transactions to the major credit bureaus. Therefore, it is the user’s responsibility to make sure that the credit card transaction history is indeed being reported to the credit bureaus and is being done done in a timely manner. Remember, an unnoticed credit transaction does not do any good to improve your credit history.

In order to get out of credit card debt takes perseverance and willingness to succeed. So whether or not you are being swallowed by the sink hole of credit card debt or you are just starting out to dig yourself into credit card debt - you have to take action before it’s too late in order to be come debt free.

The six tips listed below will help you get out of credit card debt…if you use them.

1. Stop using your cards - By using your credit cards you are paying additional interest on the credit card balance you owe on which you’ve already been charged interest. Unless you pay the new charges when you are billed you are accumulating additional interest on both present and past charges. (Don’t you love credit companies…and yes this is legal for them to do.)

2. Figure out how much credit card debt is costing you. How you may ask! You can find out how much credit card debt is costing you by seeing how much interest rate you have to pay. This is done by reading the fine print on your latest credit card statement. If you do not understand then you call your credit card company and have them explain it to you. (By law they have to explain it to you.)

3. Lower your interest rate you are currently paying on your credit cards. Lowering your interest rate is the most effective and easiest way to get your credit card debt problem under control. You can lower the interest rate you are paying by transferring high interest rate amount balances to lower or no interest credit cards. Once you’ve stopped using your credit card you’ve stopped your situation from getting worst, it’s now time for you to improve it.

4. Call your credit card companies and tell them to lower your interest rates. Since you already know the interest rates it is time for you to ask your banks and credit card companies to lower the interest rates. You should call them and ask to speak with a supervisor. The supervisor has the authority to give you a lower interest rate.

This is what you tell them: The rates are too high and you want it lowered. And also let them know that if they are not willing to lower your interest rate you are considering to close your account and transfer all your credit card balances to the company that is willing to give you the lowest interest rate.

5. Consolidate your credit card debts - transferring all credit card balances to one credit card - is an effective way of getting out of credit card debts. So when negotiating to get a lower interest rate you should let it be known that your ultimate goal is to get out of credit card debt at the lowest possible cost and not credit card shuffling.

6. Cut your savings in half. It would be foolish to be paying high interest rates while continuing to save the usual amount, if you are indeed saving. If you are already so deep in debt that no one company is willing to loan you the money to consolidate your credit card debts then you would have to resort to this tactics.

It works like this. Get all your credit card balances. Divide each balance by the minimum amount you are required to pay each month. This tells you how long it would take to pay off each balance. Start by paying off the one that takes the least amount of time (half your savings + minimum payment). Continue making minimum payments on the rest. When that least payment is finished you would pay the next least payment and so on. You would continue using this tactics until you are no longer in debt.

If you follow the above tips and tactics you should be on your way to getting out credit card debts in very short order.