Tag: Building Credit

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How Do Secured Credit Cards Work?

Do you have bad credit and want to repair it?  Maybe you have no credit history and need a place to start.  One way to build your credit score is by using a secured credit card!  By making monthly payments with a low credit limit, you will gradually be able to improve your credit history and qualify for better banking products in the future!

People get hit by tough times.  Maybe you lost your job or had some unexpected medical expenses.  In the process, you racked up the debt and your current credit score reflects those woes.  Credit cards, even secured credit cards, are not for everybody.  Let’s face it, to qualify for an auto or home loan, you need to have a decent credit score.  Using a secured credit card is not an instant fix, but the odds of getting approved increase dramatically by demonstrating to lenders that you can consistently make monthly payments and carry low monthly balances.

What Is A Secured Credit Card?

Secured credit cards get their name because they require a security deposit to start using it.  Non-secured cards, the most common type of credit cards, do not require a security deposit to use and are only issued to people with fair, good, or excellent credit cards as they are less likely to miss monthly payments.

Secured credit cards work identical as non-secured credit cards but normally have higher fees and lower credit limits.  A secured credit card is a credit card that requires an initial security deposit the same amount as the credit limit.  Credit card issuers require the security deposit in case the cardholder cannot pay the monthly balance, similar to landlords and new renters.  As an example, a secured card with a credit limit of $1,000 will require a $1,000 security deposit that is normally put in a Certificate of Deposit account.  If the cardholder has a balance of $750 for the month and cannot pay it off, then the issuer (aka “the Bank”) will pull from the security deposit to cover the loss.  The bank doesn’t lose any money, but the cardholder still needs to pay off the balance to keep using the card.  If the card is closed, the holder will get the security deposit back minus any outstanding balance.

Although a secured credit card sounds very similar to a prepaid debit card, the secured card has a monthly bill that needs to be paid.  If you miss the due date, the issuer can charge additional fees, interest, and report the event on your credit report (damaging your credit history).  The security deposit cannot pay the monthly balance and is only in place to protect the bank from paying from their own pocket if the cardholder becomes delinquent in payments.

Who Can Use A Secured Credit Card?

Secured credit cards are intended for people with poor or no credit that typically do not qualify for non-secured credit cards.

The following potential credit cardholders might benefit from a secured credit card:

  • Those who have declared bankruptcy or defaulted on a loan within the previous five years.
  • Currently 30 or days late on a credit card or loan payment.
  • Have little or no credit history.

A secured card is great for somebody that wants to build a credit history without the temptation of high credit limits offered by non-secured cards.  A prepaid debit card does not build a credit history, but a secured credit card will.  The secured credit card has a higher initial expense due to the security deposit, but the ability to establish a credit history can be worth it.

How To Choose A Secured Credit Card

Here are some of the best secured credit cards , although your personal bank probably offers a secured card too.

Here are several factors you will want to consider when applying for a secured card:

  • Annual Fee
    • Most cards require a fee ranging from $25-$35 annually.
  • Security Deposit
    • As the security deposit amount determines the credit limit, certain issuers will permit higher credit limits.
  • Interest & Fees
    • Interest rates & fees for secured cards can vary widely between card issuers. If missing a payment is a large concern of yours, consider cards with a lower APR & fee.
  • Rewards
    • Point & Rewards are normally reserved for non-secured cards, but some issuers will put the security deposit into a “high-yield” savings or CD account. It might not amount to much but anything is better than nothing.

As the primary intent for most who have a secured credit card is to build or repair their credit history, you will want to ensure the prospective issuer reports the payment history to the three credit bureaus: Equifax, Experian, and TransUnion.  When applying for a loan in the future, you do not know what bureau the lender will acquire your credit history from so it’s important to verify this before applying for a card, as each application will pull your credit history and temporarily reduce your credit score.

Also, ask the prospective issuer if they will “flag” the credit card as a secured card.  Flagging your card may prevent the credit history from improving your credit score.

You will also want to apply for the highest credit limit possible.  This might depend largely on how much of a security deposit you can afford, but you do not want to “max out” your card every month.  The same principle applies to non-secured credit cards too, but your goal should be to keep your monthly balance lower than 30% of the total credit limit.  For example, your monthly balance shouldn’t be higher than $300 if you only have a $1,000 credit limit.  Keeping the monthly balance below the 30% mark will help improve your credit score quicker.  Making monthly payments is essential, but this practice helps the process.

How Long To Keep A Secured Credit Card

After getting accepted for a secured credit card, the next question is how long you need to make on-time payments before you can either apply for a non-secured card or a new loan.

Your card issuer will periodically review your file and may offer you the opportunity to upgrade to a non-secured card within one year!  You might also start receiving offers in the mail for non-secured cards from other companies.  Of course, you can always monitor your credit score yourself and ask your issuer to upgrade as well.  If they say yes, you can close your secured account and the issuer will refund the security deposit.

With any application for new credit, do not apply for too many at once.  Each application will penalize your credit score & you might have to wait even longer to get qualified for a loan or non-secured credit card.

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Tips to Raise Your FICO Credit Score

Your FICO credit score is one of the major factors a lender will consider when determining whether or not to approve you for credit. There are many things that go into your FICO score, which means that there are things that you can do to improve it. Careful attention to your FICO score can help you build your credit.

Here are tips that can help build and raise your FICO score

Apply for credit cards

You may be wondering if applying for credit cards can hurt your credit, but, just the opposite is true when you use them responsibly. The same goes for installment loans. Those with no credit will be a higher credit risk than someone who has demonstrated responsibility by making payments regularly and on time.

Make every payment on time

When you make your payments late, this shows up on your credit report. Lenders do not like to see you making a habit of late payments. As your FICO score is computed, 35% of the score is dependent upon you making timely payments for credit cards and loans. Never missing a payment is the best way to get the most from this factor. The longer the history that you have of making payments on time, the better this part of your score will be.

Pay off balances in full each month

While this is difficult for some, especially those who have accumulated large amounts of debt, making the largest payments you can afford is smart. This will help you lower the balances. Once you get your credit cards paid off, try to pay the entire amount that you owe each month. Never make less than the minimum payment required. The lower your overall balance, or credit utilization, the better your FICO score will be.

Communicate with creditors if there are problems

If you fall on hard times financially, contact your creditors before you begin to miss payments. Often they can work out a temporary solution, or negotiate a payment plan with you before your credit is adversely affected. When you are making regular payments, even when you are struggling financially, you can often keep your credit score from dropping too far.

Don’t rush to close credit cards to raise your FICO score

Closing credit card accounts can actually have a negative impact on your FICO score, especially if you have had the credit card for a long time. If you close credit cards that are paid in full, yet you still have others open that you carry a balance on, then you are going to see your credit score drop because your credit utilization will increase. This means that you will be using a higher percentage of your available credit. You are going to be better off keeping cards open when they have a zero balance, particularly if you have a long history with that creditor.

Keep track of your credit utilization

If you have a high credit utilization or a high debt-to-credit ratio, contact your creditors to see if you can have your credit limit raised. This can help improve your ratio and also your FICO score.

Don’t open too many accounts too close together

This is especially important for new credit users. When you are just starting out, one or two cards is plenty. Even if you have well-established credit, opening too many credit cards in too short a time period will have a negative impact on your FICO score.

Make sure your creditors know how to reach you

Always notify your credit card companies if you have an address change. If you miss a bill because they moved, it will not be their fault. You will likely see a change in your FICO score as a result. This is a common mistake, and one that is completely avoidable.

Immediately report if your card is lost or stolen

Reporting a lost or stolen card as soon as you are aware of it is crucial. Most credit card companies will not hold you liable for unauthorized purchases under these circumstances. If you do not promptly report it, you could be held responsible for large purchases. This will also affect your FICO score.

Check your credit report regularly

You should check your credit report at least once a year. Make sure that there are no inaccuracies. Most free credit reports will get information from the three major credit bureaus—TransUnion, Equifax, and Experian. Checking your credit report will not hurt your credit score. It will help you keep tabs on any accounts that you are responsible for. If you notice any inaccuracies, contact those creditors immediately to have the issue resolved.

Your FICO score is important. You should know what it is and make efforts to keep it solid or improve it. Use these tips to keep your credit great!

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Why You Should Apply for a Business Credit Card

If you own a small business, you probably should consider establishing some credit in the name of the business, rather than relying entirely on your personal credit. You might be surprised to know that fewer than 50% of small business owners are using business credit cards that are in the name of the business and not their personal name! Keeping everything in your own name may put your personal assets at risk, so read on and consider these great reasons to apply for a business credit card!

Tips For When You Apply For A Business Credit Card

So what should you look out for when you apply for a business credit card? Here are a couple of tips to consider.

Keep Business Expenses Separate

Keeping business expenses separate not only comes in handy at tax time, but it helps you stick to both a business AND a personal budget. When you are simply comingling all of your money and spending it as needed, it can be difficult to know how much money you are making from your business and how much you may be investing towards the future.

When you carefully keep everything separated, you are protected by a “corporate veil,” which allows you to be separately responsible for profits and losses. Your personal assets will have protection. Having a business credit card helps you to reinforce that protection, and reduce the risk to your personal assets.

Details, Details, Details

When you use a business credit card, it is far easier to keep detailed records of any expenses related to running your business. Whether you keep your own books or use a bookkeeper, the tasks will be monumentally easier when you keep your finances seperate. Business credit cards often offer you special spending reports and graphs that can help you build a balanced budget and stick to it. It also makes it easier for you to quickly see your profits and losses.

Establishing Credit

One final, and very important reason for getting a business credit card is that you can establish a credit history for your business. When it comes time to apply for a loan or any other kind of financing, you will have a solid credit history and be able to show that your company is credit-worthy. You won’t have to worry about depending on your personal credit history. Plus, you will be eligible for different rates and terms for loans as they pertain to a business, rather than an individual.

Additionally, it is important to keep your business credit separate from your personal credit, especially if you are going to incur any significant business debt. You don’t want this appearing in your personal credit history and bringing down your credit score.

Here’s what you need to know before you apply for a business credit card:

Consider the type of business credit card that you need.

How much of a credit limit do you need? Will you be considering a secured or unsecured card? Are you hoping to get a rewards credit card? There are many things to think about before applying!

Find out your credit score.

This means you need to know your personal credit score, as well as any credit score for your business if you have any credit established yet.

Don’t be blinded by perks.

Sure, special benefits and great perks can draw you to a particular card. But, don’t rely only on the perks. Know the actual terms of the credit card—annual fees, APRs, any other charges, and fees, etc., before applying. Make sure you know whether or not any special offers are going to expire after an introductory period, too.

Be selective.

Don’t apply for a ton of business credit cards. In most cases, one is probably sufficient. If you have employees, then make sure you look for a business credit card that offers low cost or free additional users, because these are the kinds of charges that can add up quickly.

Always be careful when applying for credit, whether for business or personal use. You need to protect your personal—and business—assets and maximize profits. When you are educated about the various terms and conditions, and understand what you are getting into, you will be able to make the right decision for your company.

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You May Be Eligible For A Credit Card Retention Bonus

Earning miles and points from your credit card is fun—especially when the annual fee is waived for the first year. Once that anniversary comes around, however, you may be required to pay an annual fee—which might not be what you planned. Since you have earned tons of points, you don’t want to simply cancel the card. Let’s talk a little bit about your options and what might be available to you.

Consider the Retention Bonus

Many of the bigger credit card companies will offer you a special “retention bonus” on your anniversary date. This can range from a tidy sum of extra bonus points to a free baggage check, to a free night in a hotel, and more. Often the value of the retention bonus is far greater than the cost of the annual fee—so consider this part carefully when you are thinking of canceling the card. It might be well worth it to keep the card. While there are some cards that have pretty hefty annual fees, taking a look at what you get is a wise move. See if it is worth it to keep.

Consider the Credit Impact

Closing a credit card can negatively affect your credit score, so consider this move carefully. Now, this doesn’t mean that you should automatically keep a card with an expensive annual fee just because you don’t want a short-term ding on your credit. But, you should not be opening and closing credit cards on a whim if you want your credit to stay clear and clean.

Take an inventory of all of the cards you have and consider the fees and benefits. Also, consider your history with them and your available credit. Then, and only then, should you determine whether or not to close a card when your annual fee is up. Don’t rush to close a card simply because the fee is due.

Make Your Plea

You may not realize this, but you can actually request that the fee is waived for another year. Keep in mind that if you are a good customer, the credit card company will not want to lose your business. They may agree to waive the fee for another year. Sure, that will put you in the same position next year, but that gives you time.

Ask for a Downgrade

Many credit cards offer no-fee versions of their more expensive cards. The perks are fewer, but you don’t have to close the card and take the hit on your credit score. If you have a good history with the credit card, consider this option. When you can keep the line of credit open for free, and not have a hit on your credit card, this is really a win-win.

Final Thoughts

You will hear about loopholes and how you can exploit the system by getting a retention bonus just before the anniversary and canceling. Alternatively, you can pay the annual fee for a huge retention bonus and then cancel and keep the bonus. But the reality is, many of the best credit cards out there will offer you some sort of incentive to stay.

Whether you get a companion certificate, bonus points, or something else, it is up to you to determine if that is worth it for you to stay. Don’t impulsively cancel a credit card. You may regret it when it hits your credit score. As with any decision related to your credit, be careful and do your homework to figure out what is going to be the best decision for your personal situation. Often you won’t be able to reapply for a card once you cancel, so make sure it’s really what you want to do!

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Why Your Credit Score Might Dip When You Pay off Your Debt

When you start reading the advice of financial advisors, you will discover that most of those experts agree that the first step toward getting out of debt is paying off your credit cards. This will make your budget more flexible when you do not have to make credit card payments each month.

But what they don’t tell you is that your credit score may drop a little as a result. Doesn’t make sense? Well, there are a few reasons why it happens. However, it is not usually a serious problem. Let’s discuss some of the reasons so that you can understand and be prepared if this happens to you.

How Good Your Credit Score Is Matters

If your credit score is already high (over 720), then you probably have nothing to worry about when you pay off your credit. You might see a slight, temporary dip in your credit score, but when you have a solid credit history you have nothing to worry about.

Having an 850 is not necessarily required. There is a range when it comes to “excellent” credit. Generally anything in the mid-700s and above will get you approved for any financing you need.

Why Does A Credit Score Drop?

It might seem strange to have your credit score drop when you show that you can pay off what you owe. But, when you understand the various things that go into figuring a credit score, and you understand the concept of credit utilization, it might make more sense.

For most of the credit bureaus, 30% of your credit score is based on credit utilization. While you should aim to keep this figure low—by owing no more than 30% of what you can borrow, having no credit utilization is not necessarily the best thing.

What Should I Do To Keep My Credit Score High?

For the best credit scores, it is wise to utilize your credit cards regularly. Do so within the appropriate credit utilization recommendations, and pay off your credit card monthly. When you do this, your credit score will stay high. Plus, you will show that you are responsible and creditworthy. You will not suffer by having to pay any interest charges.

Applying for more and more credit is not a good idea though. Keep a small number of cards, and choose them well (i.e., based on terms and conditions, rewards, or whatever factors are most important to you). Monitor your credit report regularly to ensure that it is accurate. Immediately address any problems should there be any.

What’s the Bottom Line?

The bottom line is that, when it comes to good credit, you have plenty of control. Make wise credit decisions. Don’t spend beyond what you can pay off. Make every single payment on time. Don’t have more credit than you need.

This is how you can get the best credit score, or raise a poor credit score most effectively! Don’t worry too much if your score dips slightly when you pay off your card. Simply get back to your good credit habits and you will be fine.

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How To Improve Your Small Business Credit Score

It’s probably very likely that you know that you have a personal credit score, and, if you are really on top of things then you probably even know what that score is. But, as a small business owner, do you realize that your business also has a credit score?

Is a Business Credit Score the Same as a Personal Credit Score?

A business credit score does not follow the same index as a personal credit score, typically FICO. Your personal credit score is a three-digit number that ranges from 400-850 (ideally much closer to the top of that range!). Your business credit score is probably based on the most common business credit score system, called Paydex. This index gives your business a score between 0-100, with 75 or above being considered the “good to excellent” range.

Why Do I Need a Business Credit Score?

Building up your business credit score is just as important as your personal credit score. It will help you expand your business over time by being able to secure business loans or get financing for expansions, equipment, and investments. Instead of relying on your personal credit score to get loans and financing, you can get the financing you need based on your business credit score.

Also, it is important to be able to separate your business and personal finances. This is not only important for tax purposes, but also for liability and other reasons. In the event that your business fails, your personal credit will not be affected. That may allow you to head in a different business direction or rebuild, without harming your personal credit. If you had to file bankruptcy because of a failed business, you may have that follow you for up to 10 years.

How Can I Raise My Business Credit Score?

There are several important things that you should do if you want your business credit score to stay strong or improve. Here are four great tips:

  1. Make every payment on time. Just like your personal credit, your business credit score will be affected by your payments. Making every payment on time will help keep your business credit score strong. It will also help it continue to rise as your business looks like a good credit consumer. Not only does this help your credit, you also avoid penalties and late fees!
  2. Keep your debt at a manageable level. Even if you need to take out a loan, you want to make sure that you are not overutilizing your available credit. Monitor any revolving debt to make sure that your ratios stay in a healthy range. If your credit utilization becomes too high, your credit score will drop.
  3. Use the credit that you do have. Don’t just let your business credit card sit there and gather dust. It should not be reserved just for emergencies! Make regular purchases and payments. This will help you to establish and build credit. Plus, if you use the right business credit card, you can accumulate rewards points and get cash back or other rewards!
  4. Monitor your business credit report. Just like your personal credit report, you need to monitor your business credit report. Make sure that the information contained within it is accurate and current. Any inaccuracies should be immediately reported.

When you can build up a great credit score for your business, it becomes easier to separate your business and personal expenses, taxes, and liabilities. Build a stronger business by developing a credit history specific to the business. You will find it easier to invest, build, and watch the business grow.

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What Effect Do Student Loans Have on Your Credit Score?

should i refinance my student loans

It’s no surprise that the average college student graduates with well over $30,000 in student loan debt. However, too many people fail to realize that not paying their student loans, or not paying them in a timely manner, can seriously hurt their credit. A student loan is just like any other loan. It must be paid back according to the terms and conditions that were agreed upon at the time the loan was given.

Paying a student loan is a great way for college grads to build up credit. A good credit history makes it easy to get a car loan or qualify for a nice place to live. A good credit history can also help students qualify for a credit card.

Making Your Student Loans Work In Favor of Your Credit

Unfortunately, there isn’t a magical solution to this. One of the best things that you can do for your credit is to pay your student loans on time and pay off your student loans as agreed. So, for those who feel frustrated by paying student loans, realize that there is something very positive that can come from having student loans.

Additionally, when you make your student loan payments on time each month, the three major credit bureaus will be notified. You will appear to be a responsible, low-risk borrower. That will open more opportunities for you.

What If You Cannot Make Your Payments?

Defaulting on your loan, or just not paying it, is the least desirable option. Defaulting on a loan has terrible consequences for your credit. A loan default will leave you struggling with your credit for years. Not only will it affect your ability to get loans and credit, but some employers and landlords check credit to see how trustworthy you are. Seeing a defaulted student loan doesn’t leave the best impression.

If you find that you are struggling to make your student loan payments, you should contact the lender before you actually fall behind. If you explain your situation, you might be able to negotiate a smaller payment or even get a temporary deferment. When you try to work with the lender, you may be able to protect your credit, which you definitely will not be able to do if you default on the loan.

What About Interest Rates?

You should realize that when you defer on a loan, the interest continues to accumulate. Hence, you will end up paying more in the long run. But, when you can’t make the full payments, or any payments at all (which is more common than you might think), paying what you can and getting through is important enough. In some cases, it can help justify the deferment.

You’ve spent the last several years carefully attending your classes, completing your projects, and making sure you had a great GPA. You don’t want to disregard the next part of your life—becoming a responsible adult with a good credit score. Make your student loan payments on time each month. Slowly but surely, the amount you owe will go down. Someday it will be paid in full!

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Can a Credit Card Improve My Poor Credit Score?

We’ve all been there when it comes to credit cards: your credit limit is expanded by even the smallest margin, and we suddenly assume that we can buy absolutely everything and anything with little to no consequences attached. A few late payments go by that you don’t cover and before you know it, you are in some pretty deep debt, and your lack of funds to dig yourself out of the nice little hole you have dug yourself has left your credit score in tatters.

 

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Fear not, for the path out of a ruined credit score is a lot smoother than you might think. Below is a breakdown of how you can use the very same credit card that ruined your credit score to climb your way back up the credit score ladder.

Credit cards are loans

Before we can tell you how to fix the problem, it’s good to know what your problem is. Your credit score is where you place on a meter in which institutions can see just how responsible you are with money as a loan, as represented on a numerical scale. The scale displays a three-digit number that places you on a range to gauge how creditworthy you are as seen from “Poor” to “Excellent”.

The scale gets its points system from how reliable you are in paying debts in a timely manner and in full amounts. How can you get and keep a good score? Pay your bills in full and on time. How can you wreck your credit score? Stop paying your bills in full and on time. It sounds silly, but life just isn’t as easy as it sounds to pay bills fully and on time. Things come up unexpectedly and sure enough, you have missed a single payment and your credit score has slipped from “Excellent” to “Fair”. It doesn’t take much.

Find out what your score is

To fix your score, you need to gauge the damage to understand just how hard you need to work to fix it. Checking your score too often however can actually end up being harmful to your score if checked too often, so look up the exact number with caution. Although this news may be troubling, there are still ways you can check how you are holding up in the credit score department that do not harm your score in any way.

There are three institutions that monitor your credit score, and each of these institutions release one free copy of your credit score per year: Equifax, TransUnion, and Experian, all of which run off AnnualCreditReport.com. So for those keeping track, that equals up to three different times that you can check your score per year with no penalty to your score. (They have differing scales on how they display your scores, but the information they use is for the most part universal).

Plan on taking advantage of these opportunities because knowing an exact number can be the difference between sleepless nights from all the stress of what it could be, and a good night’s sleep from knowing that your score is safe and in the green.

If you can pay it off, make it happen

When it comes to credit card debt, you need to get that paid off as soon as you can. If you are in a position to wipe it out in one clean sweep, then by all means make that happen. If you cannot knock out the entire debt, then make it a priority to wipe it out in payable increments as soon as possible. Having your debt accumulate acts as a cancer to your score and as time goes by, your score dips lower and lower. Pay off your credit card debt(s) in whole as soon as you can and by doing so, you can actually get started in turning your score around and head back uphill.

Spend not a penny more than half of your credit limit

If you use your credit card often, keep the amount you place onto the card under half of what your credit limit is, and if at all possible keep it under 30%. This may look pretty nit-picky, but by showing restraint with how much you place onto the credit card, you are telling the banks that you are responsible enough to show discipline in how much you do spend as compared to how much you can spend. Show them that you are responsible in using your credit and keep to using only 30%.

NOTE: For those with very small credit limits on any particular credit cards, you can call and see if you qualify to have your limit raised, therefore making your usable 30% bigger.

Make payments before the bill shows up

Don’t wait for the bank to tell you that “You can now pay off your credit card bill” at the end of every month. Beat them to the punch and make your payments throughout the month instead of one lump payment at the end. The more you show that you are reliable in making payments in regularity and in full, the more your score will go up.

Treat it like a debit card

When it comes to how you should think of your credit card, think of it as a debit card, but attached to an account that isn’t yours.

If you don’t have the money to pay for what you are buying with the credit card, then maybe you shouldn’t be making this purchase to begin with. Buy what you can afford, or at the very least pay off as close to immediately as possible. This train of thought will prevent you from making frivolous purchases and keep your budget more accurate to what it truly is instead of what your credit card makes it look like it is. A tighter leash on how often you whip out the card will avoid interest rates making the purchase even more expensive, and avoid even more decreases in your already bleeding credit score.

Keep accounts open

Don’t be so quick to close down a credit card account. When lenders and other score checkers look to see your number, having open and running accounts keep your score up, and also leaves the door open to opportunities to tidy up your score yourself by applying the methods discussed above. Only close down credit card accounts as an absolute last resort.

Don’t be afraid to negotiate

Before you throw in the towel and start pondering how bad declaring bankruptcy actually would be to go through, you still have one last tool in the box: negotiation. Call up your credit card service and considering if you have kept a close record of your credit card uses, go through and ask them if they would be willing to remove a few payments, or all of them altogether (this sounds ridiculous, but all it takes is a phone call with a nice person on the other end of the line).

State your case and if they are willing to listen, they may be willing to forgive at least one of your late payments, which would in turn boost your credit score up a few notches. Ask and you will receive.

Keeping your credit score in a solid place doesn’t have to be the hardest thing you have ever done, it just requires you to really pay attention as to how often you are pulling out the credit card when you could just as easily pull out cash or your debit.

That’s really the secret of how to get a good credit score: Only take out the plastic if you have a realistic plan to make the payment in the future fully and as soon as possible. Don’t let all the perks of credit cards lure you into a false sense of financial security. Think realistically, and swipe responsibly.

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5 Best Business Cards for Travel Rewards, Winter 2014

Some might argue that the recent announcement by Chase offering a bonus of 70,000 points for signing up for the Ink Plus business card makes it the greatest offer out there. But, don’t be afraid to explore the options, there are currently some great deals floating around that you might want to take advantage of. Here are just a few of the top business cards that we have found.

Ink Plus Business Card

As mentioned, this current offering from Chase gives cardholders a bonus of 70,000 points after they spend $5,000 within the first three months of having the card. Cardholders earn a whopping 5 points per dollar spent on office supplies, cell phone services, internet services, and cable and landline services. Earn 2 points per dollar spent at hotels and gas stations, and one point per dollar elsewhere. All points can be redeemed through the very flexible Chase Ultimate Rewards online portal, for a wide variety of options.

With an annual fee of $95, some may shy away from this card, but the many perks, including complimentary Lounge Club membership for several airlines. Recent news indicates that this offer may be ending soon, so if it interests you, then you had better act fast to take advantage.

Citi Business AAdvantage World MasterCard

This business card offers cardholders a bonus of 50,000 AAdvantage miles after spending $3,000 in the first three months after approval. You can earn 2 AAdvantage points per dollar spent on American Airlines purchases, and also when you spend money on office supplies, car rentals and telecommunications services. There is an annual fee of $95, but it is waived for the first year. With a high sign-up points bonus, this is a great card. When you consider this bonus, plus the first year’s annual fee waived, the Citi Business AAdvantage World MasterCard ranks high among the best business cards available this season.

United MileagePlus Explorer 

The United MileagePlus Explorer Business card not only has a great sign-up bonus of 50,000 after spending $1,000 in the first three months, but you also get a free checked bag when traveling on United flights, which can be up to a $50 savings every time you fly. Earn 2 miles per dollar spent on purchases at restaurants and gas stations, as well as on business supplies at office supply stores. Earn 2 points for every dollar spent on United Airlines purchases.

Get an additional bonus of 10,000 miles when you spend $25,000 in one calendar year. There is an annual fee of $95, but this is waived during the first year. With no foreign transaction fees, this card is great for international travel.

Business Platinum Card from American Express

The Business Platinum Card from American Express offers a great sign-up bonus of 40,000 points after you spend $5,000 in the first 3 months of having the card. There are occasional offers that are even better, sometimes up to 75,000 or 100,000 points for sign-up. With additional perks including Priority Pass membership, Delta SkyClub benefits, a $200 airline rebate, TSA PreCheck application and more, this card is worth considering.

It does have a hefty annual fee of $450, but if you play your cards right (pun intended), then you can make the most of the perks and make it worthwhile. Travel rewards are available at a rate of 1.25 cents per point, so each point has a great value. Tons of extra discounts are also available, including discounts for Hertz, Hyatt, FedEx and Barnes & Noble.

Starwood Preferred Guest 

Amex has a great business version of its popular Starwood Preferred Guest card, the Starwood Preferred Guest American Express Business Card. This great business card offers a 25,000 point sign-up bonus in the form of 10,000 points after cardholders make their first purchase and an additional 15,000 points after cardholders spend $5,000 in the first 6 months that they have the card.

Enjoy two points earned for every dollar spent on Starwood purchases, and one point for every dollar spent elsewhere. One of the great benefits is the ability to earn elite status qualification after 2 stays, and redeem that for 5 nights credit at any Starwood location. Gold Status is achieved when you spend $30,000 in the first year that you have the card. The annual fee is $65, which is not only reasonable, but also waived for the first year. Because Starwood Preferred Guest points are considered to be among the best in the industry right now, and it is easy to earn elite status, this is a card that you might want to seriously consider.

Do You Need a Business Card?

Not everyone needs a business card, but there certainly are many advantages. These advantages may be magnified when a person has a personal and a business version of the same card and can combine points and rewards to really maximize the returns. Often the sign-up bonuses are much larger for business credit cards and can help you build up a large rewards account. You don’t have to own a large company to get a business credit card, most allow you to sign up as a sole proprietor using your own credit history and social security number.

Conclusion

If you have been thinking about exploring the benefits of getting a business credit card, now is a great time with several terrific offers out there for you to check out. Your business credit can be separate from your personal credit, allowing you to build credit for your business, just like you would for yourself. This may ultimately lead to some new business opportunities for you! Check out these offers today!

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Why Student Loans Aren’t So Bad

If you believe everything that you read, you will be horrified by the numbers pertaining to the average amount of student loan debt, and the harm that it is causing to millions of people. The reality is, those who have student loans tend to have higher incomes, better credit scores (and therefore lower interest rates on their student loans, as well as any other loans that they get), and longer, better loan terms. This does help take the sting out of the high price tag for a college education.

College costs have risen significantly over the past couple of decades, and, while many may have been able to finance an education with a side job or some help from their parents, most college students are now using loans to finance their education, meaning that they eventually have to pay back a pretty large sum.

A Bad Rap

Student loans have been sensationalized over the past few years, and made to look pretty bad. Some reports have shown how nobody can get on their feet financially with the burden of student loans, other reports talk about all of the senior citizens who are facing student loans after retirement. An article in the New York Times recently reported that about two million senior citizens have student loans with an average balance of over $20,000.

This sounds like a huge problem, but, when you consider the actual numbers and what they mean, you may not be as horrified. This number of senior citizens is only about 3% of the people over the age of 60 years old. And, the amount that they owe is about the same as the average loan. Plenty of senior citizens have car loans, and nobody is carrying on about that.

The Standard

Fortunately, the average student loan payment has remained fairly stable over the past 20 years. The average college student can expect to pay 3-4% of their monthly income toward their student loans. Again, the amount may seem high, but the proportion to the average income has remained stable, and 3-4% is not too bad, when you consider that you got a college education out of the deal. Yes, you do have to pay it back for many years, but, it is an investment, after all, not designed for instant gratification.

The Real Problem

It is not only college grads who have to deal with paying back student loans, it is also the college dropouts who did not earn a degree. The college grads are more likely to land a job that will allow them a little more comfort when paying back their loans, but, sadly, those who do not complete a degree program will be expected to pay back the loan, as agreed, even if they only have a part time job and have to continue living with mom and dad.

This means that millions of borrowers end up defaulting on their student loans—and, this is the crisis that should be discussed. Not the loans of those who graduate, get good jobs and make their payments as agreed, which is about 80% of those who take on student loans in the first place.

The Discussion Gets Heated

There is certainly a long standing debate when it comes to whether or not student loans are worth it. Some fear getting a degree and never being able to repay their loans, arguing that they should avoid taking on any student loans in the first place. Still others will point out that the odds of landing a great job that pays well are far greater when you have a degree.

This is an issue that really does have two sides, but, unless you opt to enter a field known for low paying positions, then incurring a modest, or average amount of about $40,000 in student loans is not insurmountable once you graduate. Obviously, everyone can cite an example of someone they know about who graduated with $100,000 in loans and is struggling to repay them, even with a great job. But, perhaps this is a discussion better suited for “where” to attend college, not “if” you should attend.

Better Responsibility, Better Outcomes

If you go to college, and take on student loans, and then expect to graduate, buy a brand new sports car, travel and buy tons of stuff for a new house, then perhaps you shouldn’t wonder about why it is so difficult to make your monthly student loan payments. Part of being a borrower is being responsible. You agree to the terms of the loan long before you have to repay the loan, making it come as a bit of a shock when you get that first bill.

But, if you plan properly, work hard and spend responsibly—without getting yourself into other huge debt or living beyond your means—then student loans can be well worth it. For those with patience and discipline, it is often possible to eventually get the things you want, the things you think you deserve after working so hard!

Protect Your Credit!

Your student loan is a real loan. Failing to pay it as agreed will lead to a huge black mark on your credit report, and a low credit score. However, the flip side of this is, you can often qualify for a student loan with no credit. You can’t do this with other types of loans or credit cards. So, you can use your student loan to build credit and show responsibility.

When you make your student loan payments on time each month, you are going to show the credit bureaus that you are responsible. And, then, you will be able to get other loans—auto loans, credit cards, even mortgages. Just remember to protect your credit carefully with responsible spending!