Tag: Fees

The Shame of Debt

Money doesn’t make you happy. That’s how the saying goes, and you can’t deny that there’s some truth to it. However, while having lots of money won’t make you happy, having very little is more likely to make you stressed and depressed. 

The less you have, the more likely you are to stress over the smallest of things, and if debt is forcing that poverty on you, hanging a dark cloud of uncertainty over your head, that stress and that depression will increase.

Psychological Cost of Debt

Debt has a massive psychological cost and a lot of that boils down to shame. Debt stress and debt shame are more common than ever in the United States, as debtors seek to hide their troubles from their families and loved ones. There is an unmistakable link between debt and an increased suicide risk.

A student conducted several years ago looked at the finances of people who had committed suicide and found they were significantly more likely to have massive debts (student loan debt, credit card debt). Similar studies have been conducted on mental health, noting that people are more likely to suffer from debilitating depression, stress, and anxiety when they have problems with debt.

And it’s easy to see why. Not only do many debtors choose to keep their problems to themselves, feeling an immense shame that stops them from telling even their closest friends and family, but debt can also lead to anxieties about debt collectors, foreclosures, repossessions, bankruptcy, and more. 

How to Overcome the Shame of Debt

To improve your mental health, you need to fight debt stress and shame. That’s easier said than done, but there are a few things that you can do:

Understand Where the Shame Comes From

The first step is to understand why you feel the way that you feel. This might not fix your debt shame, but it will help you to understand it more.

There is no single, overriding cause of debt shame. Some debtors feel shame because they see themselves as the breadwinner, the provider, and if they have debt it means they have failed. Others feel shame because they come from frugal backgrounds and have been wasteful or because their debt is the result of a drug, alcohol or gambling problem.

Whatever the reason, you need to find it, address it, and fix it. Get help for that gambling or drug addiction, get advice from that frugal family.

Admit Your Fault

Debt doesn’t mean that you’re a bad or useless person. It doesn’t mean that you don’t care about your family. It’s not a character flaw tied to your personality, it’s a behavioral issue tied to impulsivity and even mental health issues. It’s still your fault, but it’s easily fixed and doesn’t make you a bad person.

Understanding this can help you to get rid of that shame and deal with your stress and mental health issues.

Improve Your Financial Knowledge

Researchers have found a direct correlation between debt and financial knowledge; the more you have of the former, the less likely you are to be competent in the latter.

Fortunately, it has never been easier to educate yourself. Take a look at the many guides here on Pocket your Dollars, spanning everything from pay off strategies for credit card debt to money-making ideas, recommendations for loans and credit cards, and more.

Get Credit Counseling

Credit counseling exists for a reason and can help you in your time of need. They’re not mental health counselors, they can’t prescribe you medication and they can’t help with your insomnia and anxiety. However, they have worked with countless debtors, many of which have anxiety and depression, and they understand what it’s like to be in your shoes.

They can help you to assess and manage your debts before advising on the right course of action. A financial therapist can also provide assistance with any relationship issues, counseling you on who you should tell, how you should tell them, and what sort of reaction to expect.

The problem that many debtors have is that they think they know everything. They won’t speak to a counsellor because they’re convinced they know what the counsellor will say. But let’s be honest, if you’re struggling with debt, there’s a good chance you’re not a financial wizard and even if you are, it always helps to speak with an expert, voicing your concerns out loud and bouncing some ideas around.

Stop Spending

We spend when we’re depressed, get depressed because we’re in debt and are in debt because we spend too much. It’s a cycle that’s keeping your favorite retailer in profit and doing untold damage to your finances. To get out of debt, you need to accept that this cycle exists and that the only way to escape is to stop that spending immediately.

Anything that isn’t an absolute necessity can be left for another day, preferably one when you actually have money to spend. Limit your spending to clothes, food, rent, utility bills, medical bills, and everything else that allows you to continue living comfortably from day to day, but give the alcohol, cigarettes, vacations, and other luxuries a miss.

How to Take Control of Your Debt

The best way to avoid the shame and stress of debt is to get rid of it. Studies on debtors have found that at least 9 out of 10 believe they will be much happier if they didn’t have debt. These beliefs have been confirmed by individuals who successfully pay off debt, claiming = they are much happier than they ever were.

There are many ways you can pay off debt and we’ll look at a few of these options below, but generally speaking, you need to:

  • Assess your financial situation
  • Check your credit report and credit score
  • Get help from a credit counselor or financial therapist
  • If your debt-to-income ratio is low, budget better and pay off more with a debt payoff strategy
  • If your debt-to-income ratio is high, try debt relief
  • Create an emergency fund to prevent future issues

Best Ways to Get out of Debt

There is no debt shame if there is no debt. As discussed above, debt is not something you should be ashamed of, but it’s also not something you should cling onto. It can cause you a great deal of stress, placing strain on your relationships and generally making life very difficult for you.

So, while it’s important to face the truth of the situation and dispel those feelings of shame, it’s just as important to fight your debt and get your head above water. Here are a few debt relief options and debt payoff strategies that can help. For more information, including expensive guides and recommendations on each of these options, take a look at the relevant sections on Pocket Your Dollars.

Snowball and Avalanche Methods

The debt snowball and debt avalanche methods are two of the most popular debt payoff strategies, and ones that we have discussed at great length before (see debt snowball vs debt avalanche). They can make the process more systematic, which, in turn, may provide you with the support and the structure you need to get your debts in order. 

In both cases, you need to make a list of all your debts, covering things such as Balance, Monthly Payment, and Interest Rate. For debt snowball, sort the list by balance and go from the smallest to the largest. For debt avalanche, focus on the debts that have the highest interest rate and get those out of the way first. With both methods, you need to keep meeting your monthly payment obligations, before putting any extra money you have towards your chosen debt.

Debt avalanche provides the most practical benefits as it clears the problematic debts first, thus reducing the total interest. Debt snowball provides more of a psychological boost, giving you motivation as you steadily clear your debts.

Major Sacrifices

The biggest issue with any debt payoff strategy is that it isn’t easy to get the extra money you need to make those additional payments and clear your debts early. However, many debtors are trapped in a cycle of debt not because they can’t scrape the cents together no matter how hard they try, but because they struggle to budget properly and make the necessary sacrifices.

The average American debtor spends thousands of dollars every year on uneaten groceries, lottery tickets, and media subscriptions. They drop hundreds of dollars on luxuries they don’t really need and spend over $3,500 a year eating out. If debt is dragging you down then it’s imperative that you clear it, which means making some sacrifices and getting your priorities in check.

If you genuinely can’t spare a dime and don’t waste money on unnecessary expenses, then look into some of the options below.

Debt Settlement

Debt settlement is tailor-made for unsecured debt and works especially well for clearing credit card debt, as well as private students. Debt settlement companies often request that you stop meeting your monthly payment obligations, which puts the accounts into doubt and means your creditors are more likely to accept a settlement.

This settlement will clear the entirety of the debt for a fraction of the price, often around 50%. This means that a credit card debt of $10,000 would be cleared for $5,000, providing you with some big savings even after the settlement fees have been taken into account.

Debt Consolidation

A consolidation loan is a large loan that pays off all of your debt at a reduced interest rate and for a reduced monthly payment. The loan is often extended by several years, which means you pay more in the long-term, but the reduced monthly payments alleviate some of the burden and make the debt more manageable.

Debt Management

Debt management provides debtors with a debt repayment strategy, with all funds funneled through the debt management plan and then distributed to creditors. This service is often provided by credit counseling agencies and credit unions, who begin the process by negotiating with creditors and then assuming control of all debts.

These companies often ask that the debtors cancel all but one credit card, which can reduce the debtor’s credit score by impacting their credit utilization ratio.

Balance Transfer

A balance transfer credit card lets you move all your credit card balances onto a single card, one that offers a 0% APR for the first 6, 12 or 18 months, allowing you to pay down debt without interest, thus reducing compounded interest and clearing the debt quickly.

This method works with all credit card debt and you can typically move between 1 and 5 balances onto a new credit card, providing that card isn’t offered by the same company.

The Shame of Debt is a post from Pocket Your Dollars.

Source: pocketyourdollars.com

Truth About Reward and Store Credit Cards

On the surface, reward cards are a great way to make a few extra dollars or grab some air miles without increasing your spending or your debt. If you spend a lot of money at a particular shop, store cards will seem like an equally beneficial prospect. But these cards exist for a reason—they’re there to make more money for the providers and the retailers, not you.

Sure, reward/store cards have other benefits if you use them properly, but there are a host of disadvantages and hidden terms that you need to be aware of before signing on the dotted line. 

What are Store Cards?

Store cards are tied to specific stores and offered by chains of retailers. These cards work just like traditional cards and are often branded by networks like Visa and MasterCard. The difference is that they can only be used in the issuing stores and their rewards are tied to those stores.

In essence, they are store loyalty cards that come with a lien of credit attached. 

What are Reward Cards?

Reward cards are also tied to credit card networks, including American Express and Discover, as well as Visa and MasterCard. They award points every time they’re used for qualifying purchases and these points can then be swapped for air travel and other benefits. 

Some reward schemes award a specific amount of cash back, often fixed to 1% or 2% of purchases made on specific items, such as groceries or utility bills.

How Can Providers Offer These Rewards?

If a provider offers you cash back every time you spend money on your credit card, someone has to foot the bill. Many consumers assume that the credit card network covers the cost, and to an extent, they do. But it’s not quite as simple as that.

Every time you use your credit card to make a purchase, the retailer is charged a fee, often between 1% and 3% of the purchase. This is the network’s charge. With reward cards, this fee increases, and the extra money is used to fund the rewards program.

As a result, retailers are not exactly happy with these programs as they drive their costs up and reduce their profits. The only way around this, is to increase the cost of the product or, more likely, to reward customers who pay with cash/debit. Retailers are not allowed to add a surcharge for credit card use, but there’s nothing stopping them from choosing which cards they do and don’t accept.

Your local Mom & Pop enterprise isn’t being antiquated and old-fashioned by refusing credit cards. They just can’t cover the costs. 5% may not sound like a big deal, but for retailers with minimal buying power and the massive overheads of running a brick-and-mortar store, 5% can be a deal breaker.

Smaller retailers are fighting back against reward cards while bigger ones are embracing them by adopting their own store cards. With a store card, they have more say, more control, and they know that those small losses will be offset by the increased purchases.

Issues with Store Credit Cards

Store cards carry a big risk and have far few benefits than reward cards. The advantages of these cards are obvious: If you shop a lot in a particular place, you can save money via the cash back schemes. 

They can also help with emergency purchases, providing you clear the balance in full. But, while the benefits are obvious, the same can’t be said about the disadvantages.

Con 1: They Have High Interest Rates

The average credit card interest rate in the United States is around 16%. The average rate for store cards is over 20%. That 4% may not seem like much, but if you don’t repay your balance every month that interest will compound, grow, and cost you a small fortune. 

At 16% with a $10,000 balance and a 60-month repayment term, you’ll pay $243 a month and over $4,000 in total interest.

Increase that rate to 20% and your monthly payment grows by $20 while your total interest increases by nearly $1,500. The longer you leave it and the smaller your monthly payments are, the greater that difference will be.

For example, if you repay just $200 a month on that balance, the difference between 16% and 20% is 26 extra months and close to $5,000. Of course, store cards rarely offer such high limits, but this is just as example to show you how much of a difference even the slightest percentage increase can cause.

It’s worth keeping this in mind if you ever apply for a traditional rewards card. Getting rewards in return for a higher APR is great if you repay your balance in full every month and terrible if you don’t.

Con 2: They Have High Penalty Rates

If you miss a payment on your store credit card you could be hit with a penalty APR as high as 29.99%, as well as a late payment fee of $39. The rates are high to begin with, but these penalty rates are astronomical and will make a bad situation worse.

That’s not all, as some providers are known to be very unforgiven when it comes to missed and late payments. In some cases, your account will default even if you underpay just once and just by a few dollars. 

Con 3: They Have Low Credit Limits

Retailers are not lenders. They don’t have the time, funds or patience to chase debts and deal with collection agencies. As a result, they don’t offer high credit limits and generally you’ll get a fraction of what an unsecured credit card might provide you with.

This might not seem like much of an issue. After all, a smaller credit limit means you’re less likely to accumulate large amounts of debts. However, this has a massively negative impact on your credit score that few borrowers consider.

30% of your credit score is based on something known as a credit utilization ratio. This looks at the total available credit and compares it to the debt that you have accumulated. If you have several cards with a combined credit limit of $10,000 and a balance of $5,000, then your ratio is 50%, which is considered to be quite high.

If a store card is your only account and you spend $450 on a $500 limit, then you have a credit utilization ratio of 90%, which will reduce your score. Your credit report is also negatively affected by maxed-out credit cards, a feat that’s much easier to achieve when you have a low credit limit.

Con 4: There Are Better Options

It’s better to have one good reward card than multiple store cards. The former will provide you with far better interest rates and terms, while the latter will hit your credit report with several hard inquiries and new accounts. 

A rewards card will still benefit you when shopping at those stores and will also provide you with a wealth of other benefits.

Con 5: You May Spend More

Store cards are not designed to make your life easier and give you a few freebies. Regardless of what the store tells you, they’re not made to reward loyalty, they’re made to encourage spending. 

This doesn’t always work, and research suggests that many individuals use reward cards just like they would normal cards. But for a small minority, the idea of acquiring points is enough to convince them to spend more than they usually would.

Some good can be good debt, such as when it’s used to acquire an asset or something that won’t depreciate. But very rarely do we use credit cards for this purpose and generally, if you’re spending more on a store card it means you’re wasting more money on things you don’t need.

Con 6: You Can’t Use Them Anywhere Else

A store card can only be used in that particular store. This renders it redundant as an emergency card and also means you’re encouraged to shop in that one place. You don’t have a chance to shop around and find the cheapest price; you may spend more just to use your card and get the benefits, with those benefits rarely covering the additional money you spend.

What About Reward Cards?

Some reward cards have very high rates as these rates are used to offset the rewards program. However, this isn’t always the case, because, as discussed above, networks often charge retailers more to offset these purchases and therefore don’t always need to cover the costs themselves.

Some credit cards, such as the Discover It, offer solid reward schemes and would also be included on any list of the best non-reward credit cards. It’s a solid all-rounder and it’s not alone. However, many reward cards charge high annual fees and penalty rates, just like you’ll find with a store card.

It’s important to study the small print and make sure the card is viable. If you’re going to clear the balance every month, a slightly higher interest rate won’t hurt, especially if it comes with some generous rewards. But if there is any doubt and even the slightest chance that you won’t clear the balance, it’s always best to focus on a low-interest rate first.

Even the most generous 5% cash back reward card will not offset the losses occurred by paying a few more percentage points of interest.

Will Reward/Store Cards Affect my Credit Score?

Credit cards trigger hard inquiries, which can reduce your credit score by up to 5 points. This is true for every credit card that you apply for. Rate shopping can combine multiple inquiries into one if they are for the same type of credit, but this doesn’t apply to credit cards.

A new account will also impact your score. This impact is often minimal and if you keep up with your repayments then it will vanish in time. However, if you miss a payment, max-out your card or increase your credit utilization score, it could have a detrimental effect on your score and your finances.

Keep store cards to a minimum and only sign up if you’re 100% sure you’re getting a good deal that will benefit you in the short-term and the long-term.

Truth About Reward and Store Credit Cards is a post from Pocket Your Dollars.

Source: pocketyourdollars.com

What You Need to Know About the New Apple Credit Card

Man in light green shirt shopping on a tablet with his apple credit card

UPDATE: Some offers mentioned below have expired and/or are no longer available on our site. You can view the current offers from our partners in our credit card marketplace. DISCLOSURE: Cards from our partners are mentioned here.

The Apple credit card launches this summer, and it pairs the high-tech, app-based culture of the brand with some favorite credit card user perks. Before you join the flock likely to flood Apple with credit card applications, do your homework to make sure this card will meet your needs. Check out the details about the Apple credit card below, as well as some alternative credit cards you might apply for.

What’s the Apple Credit Card?

The Apple credit card is a payment card offered by Apple and issued by Goldman Sachs. Despite the Apple name on the card, whether or not a consumer is approved and the day-to-day financial management of accounts is handled by Goldman Sachs.

The design of the card and all its cash-back credit card perks, however, are courtesy of Apple and include:

  • Integration with Apple Pay and Apple Wallet
  • Integration with your iPhone or another iOS mobile device to support phone-based payments and access to accounts
  • Apple’s customary security and privacy levels
  • Cash back offers that are especially useful to Apple fans

Basic facts to know about the new Apple credit card include:

  • It comes with a 49% to 23.49% variable APR (as of 12/19/2019) depending on your creditworthiness.
  • You earn 1 to 3% cash back on purchases.
  • The Apple credit card doesn’t come with any fees—that includes no annual fee, late payment fees, foreign transaction fee and over-limit fees.
  • Though you do receive a physical card whose number you can use in Google Wallet, the Apple credit card also comes as a virtual card number designed to live in your Apple Wallet.

The wide range APRs suggest so some that the card may be available to people with a fair credit score.1 No one will know until the card actually launches though.

Benefits and Perks of the Apple Credit Card

While interest rates and credit limits are important, most consumers also choose a card based on the perks its rewards program affords them. Intelligent use of perk-related cards, such as travel rewards cards, can help you save money or earn extra pennies on cash you already plan to spend. Here’s a look at how Apple credit card perks stack up for users.

Expense and Spending Organization in One Place

Apple is making a big deal out of the user experience element of this credit card, which involves heavy integration with iPhones. The card itself is housed in the Apple Wallet app on your iOS device. Since you can only use the digital version of the card where Apple Pay is accepted, you also get a unique physical card that’s as sleek and high-tech as any Apple device.

The card’s digital component offers specific benefits:

  • You can apply for the card and, if approved, it’s immediately in your Wallet app. You can start using it the same day without waiting for a card to arrive in the mail.
  • Without using a physical card, you don’t have a card number or other elements that can be stolen, which increases the security of your account.

Apple also provides an app that lets you manage your spending and account in a single location. You can view charges based on a map to figure out where money was spent, get a color-coded breakdown of your expenses to help you budget and view visual and numeric information about how various payment amounts impact the total owed. Log in to the app when you’re ready to make a payment on your account, and you’re also provided with estimates on how much interest you’ll be charged and can see how much interest you’ll pay if you pay your card off sooner than later and vice versa.

Cash Back and Daily Cash Back with Some Purchases

The card gives account holders the chance to earn cash-back rewards too. And you get even more cash back rewards when you spend with Apple.

  • You get 3% cash back on all purchases from Apple. That includes purchases at apple.com, Apple stores, iTunes and the Apple app store. You earn cash back on the game, app and in-app purchases, including music, storage plans and books.
  • You get 2% cash back on anything else you purchase and pay with using Apple Pay.
  • If you have to break out the physical Apple Card to make a payment, you still earn 1% cash back.

Cash back is always a great perk for a credit card, but it’s especially nice when the card doesn’t have an annual fee. The Apple credit card makes cash back even more of a perk by awarding it to you the day after you spend rather than waiting for the statement cycle to close.

To make use of cash back the next day, you do have to have an Apple Cash card, which is how Apple transmits rewards to you. If you don’t have an Apple Cash card, then the cash back rewards are applied as a statement credit on your Apple credit card account.

Who Benefits Most from This Credit Card?

Because of its heavy integration with iOS technology and the Apple Wallet, the Apple credit card is more likely to be useful to Apple customers. Individuals who carry Android or other devices won’t be able to access many of the features available with this card. And if you’re not shopping with Apple or using Apple Pay, you miss the top tier cash-back rewards.

You might benefit from this card if:

  • You have an iPhone, especially if you’re prone to or like the idea of handling your finances via a single app on your device.
  • You’re an avid user of Apple technology and have already adopted Apple Pay and Apple Wallet.
  • You make a lot of purchases at Apple’s stores or using Apple subscriptions or the Apple app stores.

Alternatives to the Apple Credit Card

The Apple credit card is obviously not right for everyone. If you don’t have an iPhone, prefer Android or aren’t interested in using any or much technology for your financial management, you may want to opt for a different kind of credit card account.

For those who don’t fit the target audience for the Apple credit card, plenty of other rewards cards are available. Here are a few you might consider.

  • The Chase Freedom® Unlimited card comes with 3% cash back on your first $20,000 in purchases your first year as a cardholder. After that, you can earn 1.5% cash back on every purchase.The extra cash back your first year makes this card ideal in order to maximize your rewards. And the 1.5% after that is nothing is nothing to sneeze at.
  • The American Express® Gold card, which does require decent credit but offers some spectacular perks for those who love a fine dining experience or are always chasing the next fun foodie adventure. This card is also known as a great travel rewards card.
  • The Capital One® Quicksilver® card, which offers unlimited 1.5% cash back without limits. That makes this card an ideal daily swiper. And an APR of 0% intro on purchases for 15 months lets you double your rewards by making a large purchase and paying it off without interest in the first year or so.
  • The Credit One Bank® Platinum Visa® with Cash Back Rewards is a rewards card option for people with bad, poor or fair credit. It lets cardholders earn 1% cash back rewards on eligible purchase (some terms apply).

Apple isn’t the only—or first—company to enter the market of branded credit cards. If you like the idea of rewards that are brand-based, but you don’t use an iPhone or spend a lot at the Apple store, consider some of the options below.

  • The Montgomery Ward credit card that lets you buy now and pay later for hundreds of brands at Montgomery Ward.
  • The Kroger REWARDS Prepaid Visa® card that lets you earn rewards to use for free groceries and to save on gas.
  • The Official NASCAR® Credit card from Credit One Bank® that pays you double cash back on items purchased from the NASCAR.com Superstore (terms apply) and 1% cashback on all other purchases too.

Ultimately, there’s a credit card option for almost any spending or financial goal. Browse the selection of offers on Credit.com to find a card that works for your needs and preferences, including:

  • Cards for building or repairing credit, which usually start with lower limits that grow as you handle the account responsibly.
  • Balance transfer cards, which let you move balances from higher-interest accounts and pay them down faster to save money.
  • Rewards cards, which let you earn money on expenses you would be paying anyway, including travel, utilities, food and clothing.
  • Cards with no annual fee that let you avoid paying the card issuer to use your credit card.

Whether or not you’re approved for the Apple credit card or any of these other card offers depends on your creditworthiness. Review the information about each credit card carefully, ensuring you understand the offers, fees and rewards structures. Then, check your credit score—for free—and apply for a credit card on Credit.com.

1 https://www.cnbc.com/2019/03/26/apple-credit-card-read-the-fine-print.html

Note: It’s important to remember that interest rates, fees and terms for credit cards, loans and other financial products frequently change. As a result, rates, fees and terms for credit cards, loans and other financial products cited in these articles may have changed since the date of publication. Please be sure to verify current rates, fees and terms with credit card issuers, banks or other financial institutions directly.

The post What You Need to Know About the New Apple Credit Card appeared first on Credit.com.

Source: credit.com

Best startup business credit cards

If you want to start a business, you’re going to need a business credit card. While many entrepreneurs fund the initial phases of their small business out of pocket, taking out a business credit card proves that you mean business – literally.

But which business credit card is right for your growing startup? We’ve got a list of the best startup business credit cards that meet a variety of business needs – whether you’re looking for a travel card to help make business trips a little more comfortable or a corporate card to issue to your new employees. We’ve also got tips on how to choose the best business card for your startup, how to increase your odds of getting accepted for a business credit card and how to make the most of your new card once you’ve got it.

Best credit cards for startups

  • No personal guarantee: Brex Corporate Card for Startups
  • Fair credit: Capital One® Spark® Classic for Business
  • Financing a startup: American Express Blue Business Cash™ Card
  • Cash back: Capital One® Spark® Cash for Business
  • Travel rewards: The Business Platinum Card® from American Express

Brex Corporate Card for Startups

Brex 30 Card

Our rating: 4.4 out of 5
Score required: Excellent
Type of card: Corporate travel
Spending categories: Rideshares, travel, restaurants, software subscriptions

Read full review

  • 8X points on rideshares, 5X on travel, 4X on restaurants, 3X on eligible Apple purchases and 3X on software subscriptions when you make daily card payments. Those rewards are 7X points on rideshares, 4X on travel, 3X on restaurants, 3X on Apple purchases and 2X on software subscriptions with 30-day card payments
  • 1 point per dollar on other purchases
  • 30,000 bonus points upon sign up and waived card fees for life (equal to $300+ value)
  • $5,000 credit for Amazon Web Services and 20% discount on annual Zoom subscription, along with other software discounts in your first year
  • $0 annual fee

Our take: With an application process that makes qualifying faster and easier than usual and a unique rewards program that offers up to 8X points on ride-sharing, the Brex Corporate Card is well-attuned to the needs of startup companies.

Why it’s the best startup business credit card with no personal guarantee

If your startup is at the point where you have a significant revenue stream and an office full of employees, you might be ready for a corporate card. Unlike your typical business credit card, which can be used by small business owners of any size (including solopreneurs and freelancers), corporate cards are designed to meet the needs of growing corporations.

In this case, that means no-cap rewards on four major spending categories – 8X Brex Rewards points on rideshares, 5X on travel, 4X on restaurants and 3X on software subscriptions depending on whether you make your card payments every 30 days or on a daily basis with Brex cash – as well as 1 point per dollar on all other purchases. Your startup will also be eligible for discounts on popular services, such as Amazon Web Services, Zoom and Dropbox, as well as a 30,000-point sign-up bonus.

Plus, it only takes a few minutes to get approved for the Brex Corporate Card. All you need to do is provide basic information about your business and link your corporate account. There’s no personal guarantee required, though you do need a minimum of $100,000 in your corporate bank account to be eligible for this card. The Brex Corporate Card has no annual fee and you’ll get five employee cards at no cost, but it’ll cost you $5 per month for each additional employee card beyond that.

As you use your Brex Corporate Card, your credit activity and payments will be reported to Experian and Dun & Bradstreet, both of which will help your business build its credit history.

Capital One® Spark® Classic for Business

Capital One® Spark® Classic for Business

Our rating: 2.6 out of 5
Score required: Fair to good
Type of card: Cash back
Spending categories: N/A

Read full review

  • 1% cash back on every purchase
  • Build business credit with responsible use
  • $0 annual fee

Our take: The Spark Classic card doesn’t offer the lowest APR or juiciest rewards; but it does help cardholders with damaged credit build a better credit score and earn a modest amount of cash back, so they can qualify for more generous cards over time.

Why it’s the best startup business credit card for fair credit

Your credit score shouldn’t hold you back from small business success – so don’t let your less-than-perfect credit prevent you from taking advantage of all the benefits a small business credit card can provide. Use the Capital One Spark Classic for Business credit card to help you build your business and your credit at the same time.

When you use the Spark Classic for Business, you’ll earn 1 percent cash back on every purchase. That’s a little lower than what you might earn with the top business credit cards, but if you practice responsible credit habits like making on-time payments and maintaining a low credit utilization ratio, your score should improve month-over-month – which means you might be eligible for an even better business credit card before you know it.

The Spark Classic for Business has no annual fee, which is one more reason why it’s a great card for people who want to get their business – and their credit – off the ground.

American Express Blue Business Cash™ Card

American Express Blue Business Cash™ Card

Our rating: 3.9 out of 5
Score required: Good to excellent
Type of card: Cash back
Spending categories: N/A

Read full review

  • 2% cash back on up to $50,000 in purchases per calendar year
  • 1% cash back on all purchases after that
  • 0% introductory APR on new purchases for the first 12 months (13.24-19.24% variable thereafter)
  • Spend over your credit limit with no penalty (as long as you stay within the over-the-limit amount)
  • Apply for 30-, 60- or 90-day Working Capital terms after first 6 months of membership
  • $0 annual fee

Our take: The Blue Business Cash card is a great option for small business owners seeking to create cash flow for a new or expanding business, thanks to its flexible credit limit and working capital terms.

Why it’s the best startup business credit card for large purchases

Startups often come with startup costs – which means you’re going to want a credit card that rewards big spending. The American Express Blue Business Cash Card is one of the top business cash back cards on the market, offering 2 percent cash back on up to $50,000 in purchases per calendar year and 1 percent cash back on all additional purchases.

This isn’t the only reason why you’ll want to use the Blue Business Cash Card to help you finance your startup costs. You’ll also get access to a flexible credit limit, making it possible to fund extra purchases during those months when you really need to invest in your business. (Be aware that you’ll need to cover both your minimum payment and your above-limit spending at the end of your billing cycle.) Plus, once you’ve had your Blue Business Cash Card for six months, you’ll be able to apply for working capital terms, a feature in which Amex will pay your vendors up front, and you’ll pay off the costs in 30, 60 or 90 days.

Capital One® Spark® Cash for Business

Capital One® Spark® Cash for Business

Our rating: 4.1 out of 5
Score required: Good to excellent
Type of card: Cash back
Spending categories: N/A

Read full review

  • 2% cash back on every purchase
  • $500 cash back if you spend $4,500 in first 3 months
  • $95 annual fee (waived first year)

Our take: If you want a simple business credit card with a superb cash-back rate, you will love the Spark Cash card.

Why it’s the best startup business credit card for cash back

If you want to earn as much cash back on your purchases as possible, consider the Capital One Spark Cash for Business card. Like the Blue Business Cash Card, the Spark Cash for Business offers 2% cash back – but unlike the Blue Business Cash Card, those cash back rewards don’t end once you spend $50K in a calendar year. Instead, you get an unlimited 2% cash back on every purchase.

You also get a welcome bonus – if you spend $4,500 in your first three months as a cardholder, you’ll earn a one-time $500 cash bonus. Just think about how you could use that money to grow your business (or to pay off your credit card balance).

The Spark Cash for Business credit card does include a $95 annual fee, but it’s waived the first year – and don’t forget that business credit card fees are tax-deductible.

The Business Platinum Card® from American Express

The Business Platinum Card® from American Express

Our rating: 4.4 out of 5
Score required: Excellent
Type of card: Travel
Spending categories: Flights, hotels

Read full review

  • 5X points on flights and prepaid hotels on amextravel.com
  • 2X points on travel purchases on amextravel.com
  • 1 point per dollar on other purchases
  • 50% more points (1.5 points per dollar) on purchases of $5,000 or more (up to 1 million bonus points per year)
  • 85,000 points if you spend $15,000 in first 3 months
  • Get 35% points back on a designated airline each year (up to 500,000 bonus points per year) when you pay with points and book your flight on amextravel.com
  • $595 annual fee

Our take: The Business Platinum Card from American Express offers generous bonus points and great travel perks – including the best lounge access around – for frequent business travelers.

Why it’s the best startup business credit card for travel

If your startup requires you to spend a lot of time working out of hotel rooms, you’re going to want a credit card that rewards travel spending. The Business Platinum Card for American Express is ready to help get you where you need to go.

Earn 5X Membership Rewards points per dollar when you purchase flights and prepaid hotel rooms through amextravel.com, 2X points on additional travel purchases made through amextravel.com and 1 point per dollar on all other purchases – unless you make a purchase of $5,000 or more, at which point you’ll earn 1.5 points per dollar. You’ll also be able to access an incredible welcome bonus in your first three months of membership: 85,000 points after you spend $15,000 on qualifying purchases.

Want to maximize those Membership Rewards points after you’ve earned them? We’ve got a guide to help you get started, but here’s one tip: Use Membership Rewards Pay with Points to book a flight with your selected qualifying airline, and you can get 35 percent of your points back (for up to 500,000 bonus points per calendar year).

The Business Platinum credit card also gets you access to the American Express Global Lounge Collection, a year of complimentary Platinum Global Access from WeWork (for cardholders who enroll between Feb. 15 and Dec. 31, 2019) and a $200 airline fee credit, among other perks. Be prepared to pay a $595 annual fee for the privilege of using this card – but if you travel often enough, it’ll be more than worth it.

Compare top startup business credit cards

Rewards Annual fee
Brex 30 Card
  • 7X points on rideshares, 4x on travel, 3x on restaurants and 2x on software subscriptions
  • 1 point per dollar on other purchases
  • 30,000 bonus points upon sign up
$0
Capital One® Spark® Classic for Business
  • 1% cash back on every purchase
$0
American Express Blue Business Cash™ Card
  • 2% cash back on up to $50,000 in purchases per calendar year
  • 1% cash back on all purchases after that
$0
Capital One® Spark® Cash for Business
  • 2% cash back on every purchase
  • $500 cash back if you spend $4,500 in first 3 months
$95 (waived first year)
The Business Platinum Card® from American Express
  • 5X points on flights and prepaid hotels on amextravel.com
  • 2X points on travel purchases on amextravel.com
  • 1.5X points on eligible purchases over $5,000
  • 1 point per dollar on other purchases
  • 85,000 points if you spend $15,000 in first 3 months
$595

How to choose a business credit card

Ask these questions before choosing which business credit card might be best for your growing startup:

How will you use the card?

If you’re going to use your business credit card to finance a large purchase, look for a card with a long 0% introductory APR period. That way, you can maximize the time you have to pay off your purchase without paying anything extra in interest. 

If you’re just going to use it for day-to-day expenses, think about what those expenses are. Look for a card that will reward your everyday purchases – like travel, office supplies or utilities – at a boosted rate.

Lastly, think about who will be using the card. If you want your employees to be authorized users, look for a card that offers free employee cards or custom spending limits. 

What kind of rewards do you want?

Are you hoping to earn some cash back on your everyday purchases, or are you shooting for rewards-funded travel? If you’re searching for a travel rewards card, it’s important to consider additional perks and benefits, like rental car insurance and airport lounge access.

What is your credit score?

Your personal credit will probably be pulled when you apply for a business credit card. If your score isn’t great, apply for a card that’s within your range. Otherwise, it’s a good idea to work on building your credit before you apply. 

Getting a line of credit in your business’s name can also be useful if you’re going to take out a business loan in the near future. Your business has a credit score too, and a positive borrowing history can contribute to a good business credit score, giving you a lower interest rate when you apply for business loans. If that’s important to you, make sure that the card you’re applying for reports to at least one – or all three – of the dominant business credit bureaus. 

How to apply and get approved for a business credit card

Applying for a business credit card is a lot like applying for a personal credit card. You’ll need to provide basic personal information, such as your name, address and income. You’ll also need to provide basic business information, such as your business’s name, address and revenue. Once you’ve filled out the application, expect a hard pull on your credit as the credit card issuer determines whether you are eligible for the card.

If you want to increase your odds of getting approved, here are a few tips:

  • Check your credit score to learn where you stand. If you don’t already have access to your credit score, use a free service to learn whether your credit is fair, good, excellent or needs work – and then use that information to find credit cards designed for people with your credit score.
  • Build your personal credit score before applying for a business credit card. Lenders check your personal credit history before issuing business credit cards, so consider doing some basic maintenance on your credit score before applying. Disputing errors on your credit report, paying off revolving balances and requesting credit limit increases can all improve your score and make you eligible for more business credit cards.
  • Use our CardMatch service to quickly identify which credit cards might be right for you. There’s no impact on your credit score, and you might receive special offers and pre-qualified matches.

Pros and cons of using a credit card for your startup

There are a lot of advantages (as well as some disadvantages) to using a credit card to help fund your startup:

Pros

  • Credit card financing is easily obtainable if you already have good credit and credit cards in your name.
  • You can cover business expenses during periods of low cash flow or finance a large purchase that will help you attract more customers and grow your revenue.
  • You can also use earn rewards on everyday expenses or earn points that you can put towards business travel – both of which can save your business money in the long run.
  • With timely payments, you can use a business credit card to build a credit history for your new business.
  • You can use credit card purchase and travel protections to insure purchases for your business.
  • Many business cards offer valuable perks for small business owners, such as airport lounge access, discounts on business purchases or credits toward commonly purchased items.
  • Credit cards can make expense tracking easier – many cards allow you and your employees to upload and track your receipts from your mobile phone and to download your expenses to Quickbooks and other accounting software.
  • You can automate repeating purchases, such as software licenses.

Cons

  • For financing a business, a small business loan might offer lower interest rates than a business credit card.
  • Likewise, using crowdfunding to get seed money (and customer buy-in) before launching a new product might be a better option than putting all your expenses on credit.
  • If the card requires a personal guarantee, your business credit card could affect your personal credit score.
  • Credit cards have high interest rates. Unless your business card comes with a 0 percent offer for new purchases, it can be very expensive to carry a balance on it.
  • Credit cards can foster sloppy financial habits if you’re not disciplined about paying off your balance each month.
  • Overall, since they’re usually linked to your personal credit history and charge high interest, credit cards can be a very risky means of funding a startup.

See related: Should you fund your startup business with a credit card?

Final thoughts

Getting a business credit card is an important part of growing a small business. For many small business owners, it’s one of the first big steps in separating your personal finances from your business finances. When it’s time to apply for a business card for your startup, think about which problems you’d like your business credit card to solve – and then look for cards that provide the solution you’re looking for. Think of it like writing a job description and finding the candidate that’s the best fit.

As your startup continues to grow, start thinking beyond business credit cards. The next step might be a small business loan, a crowdfunding project or a group of investors. Business credit cards are excellent tools to help you cover day-to-day expenses while earning rewards, but they aren’t the only way to finance a startup – and you’ll know when it’s time to start exploring other options.

Source: creditcards.com

What’s a Good Credit Score?

Whats a good credit score?

Your credit score is incredibly important. In fact, this number is so influential on various financial aspects of life that it can determine your eligibility to be approved for credit cards, car loans, home mortgages, apartment rentals, and even certain jobs. Knowing what your credit score is, and what range it falls under, is important so you can decide what loans you can to apply for, and if necessary, if steps need to be taken to improve your score.

So what constitutes a good credit score?

The Credit Score Range Scale

The most common credit score used by lenders and other business entities is the FICO score, which ranges from 300 to 850. The bigger the number, the better. To create credit scores, FICO uses information from one of the three major credit bureau agencies – Equifax, Experian or TransUnion. Knowing this range is important because it will help you understand where your specific number fits in.

Know what factors influence a good credit score to help improve your own credit health.

As far as lenders are concerned, the lower a consumer’s number on this scale, the higher the risk. Lenders will often deny a loan application for those with a lower credit score because of this risk. If they do approve a loan application, they’ll make consumers pay for such risk by means of a much higher interest rate.

Understand Your Credit Score

Within the credit score range are different categories, ranging from bad to excellent. Here is how credit score ranges are broken down:

Bad credit: 630 or Lower

Lenders generally consider a credit score of 630 or lower as bad credit. A number of past activities could have landed you in this category, including a string of late or missed credit card payments, maxed out credit cards, or even bankruptcy. Younger people who have no credit history will probably find themselves in this category until they have had time to develop their credit. If you’re in this bracket, you’ll be faced with higher interest rates and fees, and your selection of credit cards will be restricted.

Whats a good credit score?

Fair Credit: 630-689

This is considered an average score. Lingering within this range is most likely the result of having too much “bad” debt, such as high credit card debt that’s grazing the limit. Within this bracket, lenders will have a harder time trusting you with their loan.

Good Credit: 690-719

Having a credit score within this range will afford you more choices when it comes to credit cards, an easier time getting approved for various loans, and being charged much lower interest rates on such loans.

Excellent Credit: 720-850

Consider your credit score excellent if your number falls within this bracket. You’ll be able to take advantage of all the fringe benefits that come with credit cards, and will almost certainly be approved for loans at the lowest interest rates possible.

Understand the factors that make up a good credit score.

Whats a good credit score?

What’s Your Credit Score?

Federal law allows consumers to check their credit score for free once every 12 months. But if you want to check more often than this, a fee is typically charged. Luckily, there are other avenues to take to check your credit score.

Mint has recently launched an online tool that allows you to check your credit score for free without the need for a credit card. Here you’ll be able to learn the different components that affect your score, and how you can improve it.

You’ll be able to see your score with your other accounts to give you a complete picture of your finances. Knowing what your credit score is can help determine if you need to improve it to help you get the things you need or want. Visit Mint.com to find out more about how you can access your credit score – for free.

Lisa Simonelli Rennie is a freelance web content creator who enjoys writing on all sorts of topics, including personal finance, investing in stocks, mortgages, real estate investments, and anything else to do with the world of economics.

The post What’s a Good Credit Score? appeared first on MintLife Blog.

Source: mint.intuit.com