Rejected for a Bank Loan? Here’s Where to Turn Next

Newly launched businesses that lack a track record of financial success may find it difficult to obtain loans from banks and credit unions. With half of all new enterprises folding within five years, financial institutions are often wary of businesses defaulting on their loans. Fortunately, budding entrepreneurs can take advantage of a number of other options to raise the capital they need. Here’s a look at some of the more popular lending alternatives available to small business owners.

1. Crowdfunding

As the name suggests, crowdfunding raises capital by pooling together contributions from a group of people, typically using websites like Indiegogo or Kickstarter to give an entrepreneur a platform on which to pitch his or her business idea and to collect the money. In most cases, contributions are made in return for some sort of reward related to the startup in question, like exclusive offers on whatever product or service the business provides. In equity-based campaigns, investors receive shares in the company in exchange for their investments.

Crowdfunding has gained steam over the past few years in part because it doubles as an excellent marketing vehicle for new businesses. Even if contributions to your cause aren’t overwhelming, a crowdfunding campaign can still spur discussion about your business. If you aren’t collecting funds as effectively as you hoped you would, you’ll know that your pitch requires some additional tweaks. This makes crowdfunding especially helpful for early-stage businesses and first-time entrepreneurs. Having lent over $700 million since its inception in 2010, Funding Circle is a crowdfunding platform that focuses exclusively on small businesses, making it a popular destination for budding businessmen and women.

2. Peer-to-peer (P2P) lending

Unlike crowdfunding, P2P lending more closely resembles the type of lending offered by banks and credit unions. Online platforms like Prosper and Lending Club help borrowers locate and get in touch with potential investors. Though P2P lending can be risky because loans aren’t insured, it can provide greater returns for investors and lower interest rates for borrowers. Investors don’t receive a stake in the business they’ve invested in, which makes this type of fundraising especially attractive to entrepreneurs who want to maintain complete control of their enterprise.

3. Lending circles

Lending circles provide yet another alternative for small business owners looking for cash. Groups are typically small, consisting of about six to 10 people. To begin with, the collective decides on a dollar amount to be raised every month—say, $500. Each participant pitches in equally to meet that sum, with one person receiving the entire amount each month until everybody has had a turn and all loans are paid off. Third-party facilitators, like San Francisco-based Mission Asset Fund, help gather the money and make sure members’ contributions arrive on time. Though small business owners will likely have to look beyond lending circles to raise all the money they need, this credit score-boosting mechanism can help loan applicants look much more appealing to banks and credit unions.

4. Asking family and friends

Small business owners with extensive personal connections may want to pursue crowdfunding campaigns that specifically target family and friends. Several websites are dedicated to helping entrepreneurs ask for funds from close acquaintances and loved ones. One such platform, TrustLeaf, provides all the necessary legal documents, keeps track of payments, and makes it easy to communicate with your potential investors. Using a website like TrustLeaf adds organization, structure and legitimacy to your fundraising campaign, and may make hesitant family members and friends more willing to pitch in.

5. PayPal and Square

Avid online shoppers will be familiar with paying for goods or receiving payments via PayPal or Square. It may come as a surprise to some, though, that both digital payment websites have ventured into the small business lending world. Business owners with over $20,000 in sales on PayPal over the last year qualify for the website’s Working Capital program to receive up to $60,000 in loans. Instead of asking for monthly repayments, PayPal simply takes a cut—typically between 10% and 30%—of the business’s daily sales.

On the other hand, Square’s service, called LendSquare, is much more rooted in traditional lending. Borrowers make monthly payments (with interest) to their investors. Like other crowdfunding websites, businesses use LendSquare’s website to promote their enterprise and attract investors.

6. Nonprofit organizations

Though primarily a source of microloans, nonprofit lending institutions can also serve as a helpful stepping stone in receiving more sizeable loans. While smaller organizations like the Colorado Enterprise Fund focus on developing small businesses in their states, larger nonprofit networks, like Accion USA, have offices throughout the country that provide loans to local businesspeople. Regardless of their size, most nonprofit lenders typically offer rates and terms that are more flexible than those found at banks and credit unions. Offering both loans and financial education, nonprofits like Accion tend to focus on low- to moderate-income business owners.

7. Turn to the SBA

For entrepreneurs that are steadfast on acquiring traditional loans from banks or credit unions, the U.S. Small Business Administration (SBA) can be a valuable resource. Although the SBA doesn’t directly provide loans, it places a government-backed guarantee on any loan that it helps facilitate, which offsets much of the risk for banks and credit unions. Businesses can apply for a range of loan programs through the SBA, including microloans of up to $50,000 for day-to-day expenses, equipment and renovation, and larger loans of up to $5 million for more ambitious projects, giving entrepreneurs plenty of choices. To find SBA-approved lenders near you, check out the SBA’s search tool.

Though it may sting, having your loan application rejected by a bank or credit union doesn’t have to spell the end of the road for your small business. With so many alternatives out there, your biggest challenge could be determining which funding option is best for your business.

---

Helping hand image via Shutterstock.

The post Rejected for a Bank Loan? Here’s Where to Turn Next appeared first on NerdWallet Credit Card Blog.

Source Article http://ift.tt/1y39EC7

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Rejected for a Bank Loan? Here’s Where to Turn Next

Newly launched businesses that lack a track record of financial success may find it difficult to obtain loans from banks and credit unions. With half of all new enterprises folding within five years, financial institutions are often wary of businesses defaulting on their loans. Fortunately, budding entrepreneurs can take advantage of a number of other options to raise the capital they need. Here’s a look at some of the more popular lending alternatives available to small business owners.

1. Crowdfunding

As the name suggests, crowdfunding raises capital by pooling together contributions from a group of people, typically using websites like Indiegogo or Kickstarter to give an entrepreneur a platform on which to pitch his or her business idea and to collect the money. In most cases, contributions are made in return for some sort of reward related to the startup in question, like exclusive offers on whatever product or service the business provides. In equity-based campaigns, investors receive shares in the company in exchange for their investments.

Crowdfunding has gained steam over the past few years in part because it doubles as an excellent marketing vehicle for new businesses. Even if contributions to your cause aren’t overwhelming, a crowdfunding campaign can still spur discussion about your business. If you aren’t collecting funds as effectively as you hoped you would, you’ll know that your pitch requires some additional tweaks. This makes crowdfunding especially helpful for early-stage businesses and first-time entrepreneurs. Having lent over $700 million since its inception in 2010, Funding Circle is a crowdfunding platform that focuses exclusively on small businesses, making it a popular destination for budding businessmen and women.

2. Peer-to-peer (P2P) lending

Unlike crowdfunding, P2P lending more closely resembles the type of lending offered by banks and credit unions. Online platforms like Prosper and Lending Club help borrowers locate and get in touch with potential investors. Though P2P lending can be risky because loans aren’t insured, it can provide greater returns for investors and lower interest rates for borrowers. Investors don’t receive a stake in the business they’ve invested in, which makes this type of fundraising especially attractive to entrepreneurs who want to maintain complete control of their enterprise.

3. Lending circles

Lending circles provide yet another alternative for small business owners looking for cash. Groups are typically small, consisting of about six to 10 people. To begin with, the collective decides on a dollar amount to be raised every month—say, $500. Each participant pitches in equally to meet that sum, with one person receiving the entire amount each month until everybody has had a turn and all loans are paid off. Third-party facilitators, like San Francisco-based Mission Asset Fund, help gather the money and make sure members’ contributions arrive on time. Though small business owners will likely have to look beyond lending circles to raise all the money they need, this credit score-boosting mechanism can help loan applicants look much more appealing to banks and credit unions.

4. Asking family and friends

Small business owners with extensive personal connections may want to pursue crowdfunding campaigns that specifically target family and friends. Several websites are dedicated to helping entrepreneurs ask for funds from close acquaintances and loved ones. One such platform, TrustLeaf, provides all the necessary legal documents, keeps track of payments, and makes it easy to communicate with your potential investors. Using a website like TrustLeaf adds organization, structure and legitimacy to your fundraising campaign, and may make hesitant family members and friends more willing to pitch in.

5. PayPal and Square

Avid online shoppers will be familiar with paying for goods or receiving payments via PayPal or Square. It may come as a surprise to some, though, that both digital payment websites have ventured into the small business lending world. Business owners with over $20,000 in sales on PayPal over the last year qualify for the website’s Working Capital program to receive up to $60,000 in loans. Instead of asking for monthly repayments, PayPal simply takes a cut—typically between 10% and 30%—of the business’s daily sales.

On the other hand, Square’s service, called LendSquare, is much more rooted in traditional lending. Borrowers make monthly payments (with interest) to their investors. Like other crowdfunding websites, businesses use LendSquare’s website to promote their enterprise and attract investors.

6. Nonprofit organizations

Though primarily a source of microloans, nonprofit lending institutions can also serve as a helpful stepping stone in receiving more sizeable loans. While smaller organizations like the Colorado Enterprise Fund focus on developing small businesses in their states, larger nonprofit networks, like Accion USA, have offices throughout the country that provide loans to local businesspeople. Regardless of their size, most nonprofit lenders typically offer rates and terms that are more flexible than those found at banks and credit unions. Offering both loans and financial education, nonprofits like Accion tend to focus on low- to moderate-income business owners.

7. Turn to the SBA

For entrepreneurs that are steadfast on acquiring traditional loans from banks or credit unions, the U.S. Small Business Administration (SBA) can be a valuable resource. Although the SBA doesn’t directly provide loans, it places a government-backed guarantee on any loan that it helps facilitate, which offsets much of the risk for banks and credit unions. Businesses can apply for a range of loan programs through the SBA, including microloans of up to $50,000 for day-to-day expenses, equipment and renovation, and larger loans of up to $5 million for more ambitious projects, giving entrepreneurs plenty of choices. To find SBA-approved lenders near you, check out the SBA’s search tool.

Though it may sting, having your loan application rejected by a bank or credit union doesn’t have to spell the end of the road for your small business. With so many alternatives out there, your biggest challenge could be determining which funding option is best for your business.

---

Helping hand image via Shutterstock.

The post Rejected for a Bank Loan? Here’s Where to Turn Next appeared first on NerdWallet Credit Card Blog.

Source Article :http://bit.ly/1yi1Ttp

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How to Keep Your Credit or Debit Card Information Secure

Hackers are getting smarter. Data breaches were up 30% last year, according to the Identity Theft Resource Center. Those incursions exposed nearly 92 million pieces of information. Your Social Security number, bank account information and credit or debit card numbers could have been among them.

Fraud and other misdeeds that can result from identity theft can wreak havoc on your credit score – a measure of risk used by lenders. A low score can make it hard to borrow money, get approved as a renter or land a new job. That’s why protecting your private financial information is an important part of managing your money.

The best defense is using secure account passwords and changing them frequently. But you also have to watch your accounts closely so you know right away if you’ve been victimized. Then it’s your job to respond quickly to alert your financial institutions, card issuers and other authorities.

Here are some steps to protect yourself from hackers and fraudsters:

1. Change your passwords – all of them, regularly. Change them at least every few months.


2. Monitor your credit, debit and financial accounts for activity you didn’t initiate.


3. Freeze compromised accounts by contacting the card issuer, bank or credit union involved as soon as you see suspicious activity.


4. Issue a fraud alert with Experian, Equifax or Trans Union, the three major consumer credit rating agencies. Fraud alerts are free, last for 90 days and prevent anyone from opening new accounts in your name.

---

Infographic by Brian Yee

Credit card fraudster image via Shutterstock.

The post How to Keep Your Credit or Debit Card Information Secure appeared first on NerdWallet Credit Card Blog.

Source Article http://ift.tt/1y39EC7

Read More

How to Keep Your Credit or Debit Card Information Secure

Hackers are getting smarter. Data breaches were up 30% last year, according to the Identity Theft Resource Center. Those incursions exposed nearly 92 million pieces of information. Your Social Security number, bank account information and credit or debit card numbers could have been among them.

Fraud and other misdeeds that can result from identity theft can wreak havoc on your credit score – a measure of risk used by lenders. A low score can make it hard to borrow money, get approved as a renter or land a new job. That’s why protecting your private financial information is an important part of managing your money.

The best defense is using secure account passwords and changing them frequently. But you also have to watch your accounts closely so you know right away if you’ve been victimized. Then it’s your job to respond quickly to alert your financial institutions, card issuers and other authorities.

Here are some steps to protect yourself from hackers and fraudsters:

1. Change your passwords – all of them, regularly. Change them at least every few months.


2. Monitor your credit, debit and financial accounts for activity you didn’t initiate.


3. Freeze compromised accounts by contacting the card issuer, bank or credit union involved as soon as you see suspicious activity.


4. Issue a fraud alert with Experian, Equifax or Trans Union, the three major consumer credit rating agencies. Fraud alerts are free, last for 90 days and prevent anyone from opening new accounts in your name.

---

Infographic by Brian Yee

Credit card fraudster image via Shutterstock.

The post How to Keep Your Credit or Debit Card Information Secure appeared first on NerdWallet Credit Card Blog.

Source Article :http://bit.ly/1tqlgdn

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With Trust, Joint Checking Accounts Can Make Family Finances Easier

Whether you’ve just gotten married or have a college-bound child, a joint checking account can help you manage your shared finances. It can also spur healthy conversations about budgeting and spending habits. However, things can quickly sour if you aren’t on the same page with your financial partner, especially if he or she spends extravagantly while you aren’t quite as quick to whip out your wallet.

Here’s a closer look at some of the pros and cons of joint checking accounts, and three scenarios in which opening one would make sense.

After tying the knot

After the honeymoon, newlyweds returning to Earth may start focusing on shared expenses. Using funds from a joint account to pay household bills, rent and other shared expenses can add a much-needed degree of financial transparency to a marriage. Sometimes, though, that openness can lead to unexpected trouble.

“Because each person has unfettered access to the account, one person could fill the account while the other drains it,” says Andy Tilp, a certified financial planner and the founder and president of Trillium Valley Financial Planning in Portland, Oregon.

To avoid money-related arguments, some experts recommend retaining individual bank accounts when couples become partners.

“I tell my clients to set up three bank accounts – yours, mine and ours,” says Lisa C. Decker, a certified divorce financial analyst and the founder and chief executive of Divorce Money Matters in Kennesaw, Georgia. “This way, each spouse can contribute to the joint account for household bills and then put money into their own accounts to be spent on what they want without asking or getting approval from the other.”

Keeping an eye on your child’s finances

A joint checking account can be a great way to monitor your teenagers’ finances once they head off to college. While it’s best to avoid Big Brother-type surveillance, a shared account also ensures that your newly matriculated undergrad doesn’t have to navigate the complex world of personal finance completely alone.

“A joint account can help the student avoid a costly mistake like overdrawing,” says Curt Sheldon, a certified financial planner and the president of C.L. Sheldon and Co. in Alexandria, Virginia. “It also allows the parent to see where their money is being spent.”

A shared account can also simplify adding funds.

“If the account is at the same institution as the parent’s primary checking account, then it is quick and easy to add funds,” Tilp says. “This can be done online on an as-needed basis, or as a regular payment.”

If you want your child to learn financial independence, though, avoid becoming his or her personal bank. Make clear that there’s a limited amount available and you won’t refill the account every time funds run low. This will help your teen learn the importance of financial restraint and living within a budget.

Helping out a parent

Keeping track of bills and credit card statements can become difficult as people grow older. Joint checking accounts can make it easier for adult children to help their parents manage their finances. As with any shared account, establishing trust is important.

“The aging parent must be able to trust their son or daughter,” says Larry McClanahan, a certified financial planner in Portland. “If the adult child is a spendthrift, those joint checking assets can legally be spent down to nothing.”

Opening a joint account

Once you’ve decided that a joint checking account is right for you, opening one is fairly straightforward. You’ll need the same information that’s required when opening an individual account, including Social Security numbers and addresses for both parties.

Before taking this leap, be sure to engage in a frank conversation about spending expectations and monthly budgets. Once the account is established, maintain a regular dialogue about finances to avoid headaches.

---

Check and cash image via Shutterstock.

The post With Trust, Joint Checking Accounts Can Make Family Finances Easier appeared first on NerdWallet Credit Card Blog.

Source Article :http://bit.ly/1qHOp9x

Read More

With Trust, Joint Checking Accounts Can Make Family Finances Easier

Whether you’ve just gotten married or have a college-bound child, a joint checking account can help you manage your shared finances. It can also spur healthy conversations about budgeting and spending habits. However, things can quickly sour if you aren’t on the same page with your financial partner, especially if he or she spends extravagantly while you aren’t quite as quick to whip out your wallet.

Here’s a closer look at some of the pros and cons of joint checking accounts, and three scenarios in which opening one would make sense.

After tying the knot

After the honeymoon, newlyweds returning to Earth may start focusing on shared expenses. Using funds from a joint account to pay household bills, rent and other shared expenses can add a much-needed degree of financial transparency to a marriage. Sometimes, though, that openness can lead to unexpected trouble.

“Because each person has unfettered access to the account, one person could fill the account while the other drains it,” says Andy Tilp, a certified financial planner and the founder and president of Trillium Valley Financial Planning in Portland, Oregon.

To avoid money-related arguments, some experts recommend retaining individual bank accounts when couples become partners.

“I tell my clients to set up three bank accounts – yours, mine and ours,” says Lisa C. Decker, a certified divorce financial analyst and the founder and chief executive of Divorce Money Matters in Kennesaw, Georgia. “This way, each spouse can contribute to the joint account for household bills and then put money into their own accounts to be spent on what they want without asking or getting approval from the other.”

Keeping an eye on your child’s finances

A joint checking account can be a great way to monitor your teenagers’ finances once they head off to college. While it’s best to avoid Big Brother-type surveillance, a shared account also ensures that your newly matriculated undergrad doesn’t have to navigate the complex world of personal finance completely alone.

“A joint account can help the student avoid a costly mistake like overdrawing,” says Curt Sheldon, a certified financial planner and the president of C.L. Sheldon and Co. in Alexandria, Virginia. “It also allows the parent to see where their money is being spent.”

A shared account can also simplify adding funds.

“If the account is at the same institution as the parent’s primary checking account, then it is quick and easy to add funds,” Tilp says. “This can be done online on an as-needed basis, or as a regular payment.”

If you want your child to learn financial independence, though, avoid becoming his or her personal bank. Make clear that there’s a limited amount available and you won’t refill the account every time funds run low. This will help your teen learn the importance of financial restraint and living within a budget.

Helping out a parent

Keeping track of bills and credit card statements can become difficult as people grow older. Joint checking accounts can make it easier for adult children to help their parents manage their finances. As with any shared account, establishing trust is important.

“The aging parent must be able to trust their son or daughter,” says Larry McClanahan, a certified financial planner in Portland. “If the adult child is a spendthrift, those joint checking assets can legally be spent down to nothing.”

Opening a joint account

Once you’ve decided that a joint checking account is right for you, opening one is fairly straightforward. You’ll need the same information that’s required when opening an individual account, including Social Security numbers and addresses for both parties.

Before taking this leap, be sure to engage in a frank conversation about spending expectations and monthly budgets. Once the account is established, maintain a regular dialogue about finances to avoid headaches.

---

Check and cash image via Shutterstock.

The post With Trust, Joint Checking Accounts Can Make Family Finances Easier appeared first on NerdWallet Credit Card Blog.

Source Article http://ift.tt/1y39EC7

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7 Black Friday Credit Card Tips You Can’t Afford to Miss

Admit it: You can’t wait to get started on your holiday gift shopping. But if you’re planning to lean heavily on your credit card this Black Friday, the Nerds have a few important tips you can’t afford to miss.

Check out the details below for everything you need to know to swipe smart this holiday season (and beyond):

1.Shop with a rewards credit card to rack up serious points

The most important thing you can do to make the most of this holiday shopping season is select a card that provides a steady return on your spending in the form of points, miles, or cash back. Then, use it consistently. After all, you’re going to be shelling out big bucks anyway – you might as well get rewarded for it!

2.Use bonus malls to score even more rewards when you shop online

Apply Now

on Discover's

secure website

A lot of people forget about the online shopping portals (often known as “bonus malls”) operated by their credit card issuers. If you choose to make your online purchases through these platforms, you stand to earn even more rewards on your credit card spending.

One of the best bonus malls out there is the one operated by Discover, known as Discover Deals. If you use your Discover it® and shop through Discover Deals, you could score extra cash back, a statement credit, or instant savings at checkout. This is a great way to help your dollars go the extra mile this holiday season.

3.Use your Chase Freedom® - $200 Bonus for department store shopping

Apply Now

on Chase's

secure website

If you’re planning to buy a lot of gifts at department stores this Black Friday, be sure to use your Chase Freedom® - $200 Bonus. With it, you’ll earn 5% cash back until December 31, 2014 at select department stores, aw well as Amazon.com and Zappos.com (up to $1,500 spent). Plus, you’ll earn unlimited 1% cash back on all other purchases.

And don’t forget: If you also have the Chase Sapphire Preferred® Card, you can transfer all the Ultimate Rewards points you’re racking up with the Chase Freedom® - $200 Bonus over to it and cash them in for travel. Talk about a win-win!

4.Look into your credit card issuer’s extended warranty policy, pronto

Lots of people buy electronics on Black Friday, and many retailers try to hock extended warranty coverage at unsuspecting consumers. But it’s highly likely that your credit card already has your back. Every major network (Visa, MasterCard, American Express and Discover) offers some kind of extended warranty on most purchases made with the card.

However, exclusions apply and every card provides slightly different benefits. Consequently, placing a quick call to your card’s customer service line to see what it covers before you hit the mall is a smart idea.

5.Keep a watch on your balance

Holiday cheer can be a powerful force, but don’t let it cause you to overspend on your plastic. Using more than 30% of the available credit on any of your cards at any time during the month could do damage to your credit score. If you’re starting to get close to that threshold, make a payment as soon as you can.

6.Use a card that offers price protection to be sure you’re getting the best deal

According to a 2014 NerdWallet analysis, Black Friday “deals” aren’t always the absolute lowest prices of the season. To ensure that you’re getting the best price on every gift you buy, shop with a card that offers price protection. MasterCard, Discover, and Citi all provide the opportunity to get some a refund if an item you’ve bought with your card drops in price within a certain window of time.

Again, this functions slightly differently from card to card and there are restrictions to keep in mind. Be sure to read your plastic’s terms and conditions carefully for the ins and outs of its price protection program.

7.Be sure to pay your bills on time

If you’re juggling several credit cards to maximize rewards on your holiday shopping, take steps to stay organized. Missing a payment on one of them could cause your credit score to take a serious hit, so set calendar alerts for your billing due dates. This way, you’ll be getting the best deals with your cards and keeping your credit in good shape.

Black Friday image via Shutterstock

The post 7 Black Friday Credit Card Tips You Can’t Afford to Miss appeared first on NerdWallet Credit Card Blog.

Source Article :http://bit.ly/1BPn5uG

Read More

7 Black Friday Credit Card Tips You Can’t Afford to Miss

Admit it: You can’t wait to get started on your holiday gift shopping. But if you’re planning to lean heavily on your credit card this Black Friday, the Nerds have a few important tips you can’t afford to miss.

Check out the details below for everything you need to know to swipe smart this holiday season (and beyond):

1.Shop with a rewards credit card to rack up serious points

The most important thing you can do to make the most of this holiday shopping season is select a card that provides a steady return on your spending in the form of points, miles, or cash back. Then, use it consistently. After all, you’re going to be shelling out big bucks anyway – you might as well get rewarded for it!

2.Use bonus malls to score even more rewards when you shop online

Apply Now

on Discover's

secure website

A lot of people forget about the online shopping portals (often known as “bonus malls”) operated by their credit card issuers. If you choose to make your online purchases through these platforms, you stand to earn even more rewards on your credit card spending.

One of the best bonus malls out there is the one operated by Discover, known as Discover Deals. If you use your Discover it® and shop through Discover Deals, you could score extra cash back, a statement credit, or instant savings at checkout. This is a great way to help your dollars go the extra mile this holiday season.

3.Use your Chase Freedom® - $200 Bonus for department store shopping

Apply Now

on Chase's

secure website

If you’re planning to buy a lot of gifts at department stores this Black Friday, be sure to use your Chase Freedom® - $200 Bonus. With it, you’ll earn 5% cash back until December 31, 2014 at select department stores, aw well as Amazon.com and Zappos.com (up to $1,500 spent). Plus, you’ll earn unlimited 1% cash back on all other purchases.

And don’t forget: If you also have the Chase Sapphire Preferred® Card, you can transfer all the Ultimate Rewards points you’re racking up with the Chase Freedom® - $200 Bonus over to it and cash them in for travel. Talk about a win-win!

4.Look into your credit card issuer’s extended warranty policy, pronto

Lots of people buy electronics on Black Friday, and many retailers try to hock extended warranty coverage at unsuspecting consumers. But it’s highly likely that your credit card already has your back. Every major network (Visa, MasterCard, American Express and Discover) offers some kind of extended warranty on most purchases made with the card.

However, exclusions apply and every card provides slightly different benefits. Consequently, placing a quick call to your card’s customer service line to see what it covers before you hit the mall is a smart idea.

5.Keep a watch on your balance

Holiday cheer can be a powerful force, but don’t let it cause you to overspend on your plastic. Using more than 30% of the available credit on any of your cards at any time during the month could do damage to your credit score. If you’re starting to get close to that threshold, make a payment as soon as you can.

6.Use a card that offers price protection to be sure you’re getting the best deal

According to a 2014 NerdWallet analysis, Black Friday “deals” aren’t always the absolute lowest prices of the season. To ensure that you’re getting the best price on every gift you buy, shop with a card that offers price protection. MasterCard, Discover, and Citi all provide the opportunity to get some a refund if an item you’ve bought with your card drops in price within a certain window of time.

Again, this functions slightly differently from card to card and there are restrictions to keep in mind. Be sure to read your plastic’s terms and conditions carefully for the ins and outs of its price protection program.

7.Be sure to pay your bills on time

If you’re juggling several credit cards to maximize rewards on your holiday shopping, take steps to stay organized. Missing a payment on one of them could cause your credit score to take a serious hit, so set calendar alerts for your billing due dates. This way, you’ll be getting the best deals with your cards and keeping your credit in good shape.

Black Friday image via Shutterstock

The post 7 Black Friday Credit Card Tips You Can’t Afford to Miss appeared first on NerdWallet Credit Card Blog.

Source Article http://ift.tt/1y39EC7

Read More

Small Business Saturday Tips Can Help Your Firm Compete

Running a small business takes a lot of hard work and forces entrepreneurs to wear multiple hats, often at the same time. What’s more, keeping up with some of the bigger retailers during the holiday season can be a real challenge.

In an effort to help level the playing field, American Express launched “Small Business Saturday” in 2010. The annual event aims to promote and celebrate the millions of small businesses that provide important goods and services to communities throughout the nation. Small Business Saturday encourages customers to visit and shop at some of the smaller, locally-owned merchants located in their neighborhoods. Online businesses can benefit as well.

This year, Small Business Saturday falls on Nov. 29. Here’s a look at how small business owners can make the most out of the big day.

Free marketing tools

From printable signage to digital banners for their websites, participating small business owners can download free advertising materials by visiting the event’s official website. Amex will also draft promotional emails for small businesses that can be sent to customers as well as create social media content for merchants’ Facebook or Twitter accounts.

Stores that accept American Express cards qualify for additional perks, including free online ads and a spot on the Shop Small Map, which is designed to help potential customers get a better sense of the participating stores in their area.

Extend hours and call in reinforcements

Chances are good that Small Business Saturday will generate an uptick in customers for participating businesses. Small business owners may want to consider extending store hours to accommodate the increased traffic. Recruiting family or friends to help manage the additional shoppers could also be worthwhile. Stores should be fully stocked to maximize revenue, and items that small business owners think may sell well should be prominently displayed.

Spread the word

American Express has partnered with several companies to help supply the materials and manpower necessary for another successful Small Business Saturday event. Merchants can, for example, visit Eventbrite’s website to organize parties featuring DJs and giveaways for customers. This could help draw crowds without having to dramatically slash prices.

Stay informed

This year’s Small Business Saturday is a great opportunity for small business owners to spark interest in their enterprises. If history is any indicator, participating businesses will be glad they joined the movement: in 2012, Small Business Saturday helped generate an estimated $5.5 billion in revenue for small businesses.

For the most up-to-date information about the event, be sure to follow it on Facebook, Twitter, and Instagram. Posts include additional tips on how entrepreneurs can prepare for the day as well as individual success stories describing how vendors made the most out of last year’s event.

---

Open sign image via Shutterstock.

The post Small Business Saturday Tips Can Help Your Firm Compete appeared first on NerdWallet Credit Card Blog.

Source Article :http://bit.ly/1qXKjor

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Small Business Saturday Tips Can Help Your Firm Compete

Running a small business takes a lot of hard work and forces entrepreneurs to wear multiple hats, often at the same time. What’s more, keeping up with some of the bigger retailers during the holiday season can be a real challenge.

In an effort to help level the playing field, American Express launched “Small Business Saturday” in 2010. The annual event aims to promote and celebrate the millions of small businesses that provide important goods and services to communities throughout the nation. Small Business Saturday encourages customers to visit and shop at some of the smaller, locally-owned merchants located in their neighborhoods. Online businesses can benefit as well.

This year, Small Business Saturday falls on Nov. 29. Here’s a look at how small business owners can make the most out of the big day.

Free marketing tools

From printable signage to digital banners for their websites, participating small business owners can download free advertising materials by visiting the event’s official website. Amex will also draft promotional emails for small businesses that can be sent to customers as well as create social media content for merchants’ Facebook or Twitter accounts.

Stores that accept American Express cards qualify for additional perks, including free online ads and a spot on the Shop Small Map, which is designed to help potential customers get a better sense of the participating stores in their area.

Extend hours and call in reinforcements

Chances are good that Small Business Saturday will generate an uptick in customers for participating businesses. Small business owners may want to consider extending store hours to accommodate the increased traffic. Recruiting family or friends to help manage the additional shoppers could also be worthwhile. Stores should be fully stocked to maximize revenue, and items that small business owners think may sell well should be prominently displayed.

Spread the word

American Express has partnered with several companies to help supply the materials and manpower necessary for another successful Small Business Saturday event. Merchants can, for example, visit Eventbrite’s website to organize parties featuring DJs and giveaways for customers. This could help draw crowds without having to dramatically slash prices.

Stay informed

This year’s Small Business Saturday is a great opportunity for small business owners to spark interest in their enterprises. If history is any indicator, participating businesses will be glad they joined the movement: in 2012, Small Business Saturday helped generate an estimated $5.5 billion in revenue for small businesses.

For the most up-to-date information about the event, be sure to follow it on Facebook, Twitter, and Instagram. Posts include additional tips on how entrepreneurs can prepare for the day as well as individual success stories describing how vendors made the most out of last year’s event.

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Snapchat Rolls Out Snapcash Peer-to-Peer Payment App

Another player jumped into the mobile payments market the other day: Snapchat.

The ephemeral photo-sharing app now lets you send money to friends with Snapcash, a feature that works through the app’s chat function. It was developed with Square, the San Francisco-based mobile payments company, which will process money sent through the service.

To start, users 18 and older enter their Visa or MasterCard debit card information in the app, where it’s saved and used for transactions. To send your Snapchat friends money, type the dollar amount into a message—for example, “$20 for dinner.” The app will recognize the dollar symbol and turn the yellow “send” button into a green Snapcash button. When you press the green button, your money will be directly transferred to your contact’s debit card and processed in one or two business days.

You can send up to $250 a week, or upgrade to send up to $2,500. If you send more than $250 in a week, you’ll be asked to enter your full name, birth date and Social Security number for verification. You can receive up to $1,000 over a 30-day period, and will also be prompted to give your personal information if more than that is sent to you. The service only works within the 50 U.S. states.

Whether users will adopt the new feature remains to be seen, especially with a slew of other peer-to-peer payment platforms already established, including Venmo, Paypal and Square Cash. Mobile payments are expected to grow to a $142 billion industry in five years, according to Forrester Research.

“It’s questionable whether people who feel comfortable using Snapchat to send silly pictures to their friends will feel comfortable entering their debit card information,” says Heidi Liebenguth, managing partner at Crone Consulting, which advises clients on mobile payments strategies.

Skeptics took to Twitter to express doubts about Snapcash, including security concerns, almost as soon as the service was announced. Some cited an incident in which hackers made public thousands of private Snapchat photos last month.

“Soo a bunch of snaps get leaked and now they expect me to give them my bank info, no thanks #snapcash,” Twitter user Alex George said. On its website, Snapchat said Oct. 14 that the hack breached a third-party site that stores images sent with the app and warned that users of such add-ons may put themselves at risk by giving out their personal information.

The possibility of Snapcash being used to charge for pornography sent over Snapchat raises other security concerns, says Richard Crone, Crone Consulting’s founder. While pictures sent with the app display for no more than 10 seconds, delivering cash to the sender means providing your debit card information to Snapchat—and that won’t disappear.

“If anything, Snapchat is the antithesis of safety and security and authentication,” he says. “Snapchat is expired, perishable, vulnerable communication. You don’t want a funds transfer to be vulnerable.”

To protect against fraud, users can opt to be prompted to enter their debit card security code, called a CVV number, with every transaction. Additionally, since Square Cash processes the payments, money sent through Snapcash undergoes Square’s encrypted security process.

Katie Baynes, spokeswoman for Square, calls Snapchat a “natural gathering place” for discussing activities with friends that may call for money to change hands, such as buying concert tickets or party supplies. Snapcash will allow users to chip in “directly from their conversation,” she says.

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Image of Snapchat app via Shutterstock.

The post Snapchat Rolls Out Snapcash Peer-to-Peer Payment App appeared first on NerdWallet Credit Card Blog.

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Snapchat Rolls Out Snapcash Peer-to-Peer Payment App

Another player jumped into the mobile payments market the other day: Snapchat.

The ephemeral photo-sharing app now lets you send money to friends with Snapcash, a feature that works through the app’s chat function. It was developed with Square, the San Francisco-based mobile payments company, which will process money sent through the service.

To start, users 18 and older enter their Visa or MasterCard debit card information in the app, where it’s saved and used for transactions. To send your Snapchat friends money, type the dollar amount into a message—for example, “$20 for dinner.” The app will recognize the dollar symbol and turn the yellow “send” button into a green Snapcash button. When you press the green button, your money will be directly transferred to your contact’s debit card and processed in one or two business days.

You can send up to $250 a week, or upgrade to send up to $2,500. If you send more than $250 in a week, you’ll be asked to enter your full name, birth date and Social Security number for verification. You can receive up to $1,000 over a 30-day period, and will also be prompted to give your personal information if more than that is sent to you. The service only works within the 50 U.S. states.

Whether users will adopt the new feature remains to be seen, especially with a slew of other peer-to-peer payment platforms already established, including Venmo, Paypal and Square Cash. Mobile payments are expected to grow to a $142 billion industry in five years, according to Forrester Research.

“It’s questionable whether people who feel comfortable using Snapchat to send silly pictures to their friends will feel comfortable entering their debit card information,” says Heidi Liebenguth, managing partner at Crone Consulting, which advises clients on mobile payments strategies.

Skeptics took to Twitter to express doubts about Snapcash, including security concerns, almost as soon as the service was announced. Some cited an incident in which hackers made public thousands of private Snapchat photos last month.

“Soo a bunch of snaps get leaked and now they expect me to give them my bank info, no thanks #snapcash,” Twitter user Alex George said. On its website, Snapchat said Oct. 14 that the hack breached a third-party site that stores images sent with the app and warned that users of such add-ons may put themselves at risk by giving out their personal information.

The possibility of Snapcash being used to charge for pornography sent over Snapchat raises other security concerns, says Richard Crone, Crone Consulting’s founder. While pictures sent with the app display for no more than 10 seconds, delivering cash to the sender means providing your debit card information to Snapchat—and that won’t disappear.

“If anything, Snapchat is the antithesis of safety and security and authentication,” he says. “Snapchat is expired, perishable, vulnerable communication. You don’t want a funds transfer to be vulnerable.”

To protect against fraud, users can opt to be prompted to enter their debit card security code, called a CVV number, with every transaction. Additionally, since Square Cash processes the payments, money sent through Snapcash undergoes Square’s encrypted security process.

Katie Baynes, spokeswoman for Square, calls Snapchat a “natural gathering place” for discussing activities with friends that may call for money to change hands, such as buying concert tickets or party supplies. Snapcash will allow users to chip in “directly from their conversation,” she says.

---

Image of Snapchat app via Shutterstock.

The post Snapchat Rolls Out Snapcash Peer-to-Peer Payment App appeared first on NerdWallet Credit Card Blog.

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Small Business Success Story: Netrepid’s Collaboration with the U.S. Small Business Administration

The road to being named “Veteran Small Business Person of the Year” by the U.S. Small Business Administration’s Philadelphia District Office wasn’t always an easy one for Sam Coyl, president of Netrepid, an IT company based in Harrisburg, Pennsylvania. Times were often so tough—and those times so frequent—that Coyl’s children had a special name for the rocky periods.

“My kids used to call them ‘Cheerios Weeks’ because, you know, owners get paid last, so my kids would open the cupboards and all they’d see is cereal and a bag of Tostitos,” Coyl says.

After nearly 10 years of bootstrapping his business, Coyl decided that Netrepid, along with his own financial stability, would benefit from outside funding. After hiring a chief financial officer in the summer of 2012, Coyl and Co. began looking for investors.

Tracking Netrepid’s growth

Netrepid’s current mission of helping clients “figure out how to evolve their technologies from traditional to cloud-based structures,” as Coyl describes it, was influenced by the numerous jobs he held prior to establishing the company in 2004. In addition to serving in the Marine Corps for eight years, Coyl gained valuable experience in the private sector, working for a firm that built Wi-Fi networks for hospitals and other businesses.

“Many clients would either severely underbuy or overbuy hardware and software without forecasting what their technology needs were going to be,” Coyl says.

The more Coyl encountered those types of scenarios, the faster the wheels in his head turned. A company that could provide IT consultation and support, Coyl figured, would be a welcome addition to the local business community. The budding entrepreneur also believed that cloud infrastructure would be the next big thing and that it should serve as the backbone of his business.

After initial success in the mid-2000s, Netrepid’s growth began to stall.

“We were kind of chugging along in a pretty bootstrapped environment, and it was working, but it was not going to give us the capacity we needed to grow,” Coyl says. “And as far as I’m concerned, if you’re stagnant, you’re dying.”

It was that mantra that motivated Coyl to look to the SBA for funding at a time when no one else was willing to take that risk.

Netrepid’s work with the SBA

Although it doesn’t directly provide loans, the SBA, which is backed by the U.S. government, works with traditional lenders like banks and credit unions to facilitate loans to businesses such as Netrepid.

“The SBA works with banks and credit unions, basically offering them loan guarantees from anywhere from 50% to 85-90% on the principle balance of the loan,” says Michael Kane, branch manager at SBA’s District Office in Harrisburg.

Those guarantees, says Kane, mitigate risk for lending institutions, which makes them more willing to offer loans to businesses that don’t have an extensive track record of success and growth. The SBA also provides financial counselling to business owners to empower them to make smart decisions with their money.

“No matter which way you slice it, some business owners are going to fall just outside the credit box that a lender has,” Kane says. “This program can really help push that small business over the finish line to get that capital that they need.”

With the help of the SBA and other outside investors, Netrepid raised about $3.5 million. According to Coyl, those funds have enabled him and his “phenomenal” 12-person-strong team to “refresh some of the technologies we needed to upgrade” and “to go after some much bigger clients with a much broader solution set.”

“Other companies that start with a $20 million investment blow all their cash in 15 months because they don’t know how to make smart decisions,” Coyl says. “We treated the funds like we didn’t have any money.”

Tips for small business owners

Based on his own experience, Coyl stresses the importance of finding the right team of advisors to work with. Although doing so took some time, it has proven to be a valuable asset for Netrepid.

“It took me a long time to build a little core of mentors that could really sit down with me and be my coaches,” Coyl says. “They’re not my board of directors; they’re the guys who are there to coach me.”

Working with people with strong operational backgrounds has helped Coyl plan Netrepid’s growth as he looks to “expand its geographical footprint.”

Kane, meanwhile, underlines the importance of knowing the ins and outs of one’s business community.

“In general, small business owners need to make sure they are aware of who is lending in their community,” he says. “If you are looking for an SBA-guaranteed loan, you have to know who is actually lending in your marketplace.

“Many district offices will put out lender loan volume reports on a monthly basis, which outlines how much lending they are doing, in terms of the number of loans and the aggregate dollar amount of these loans,” Kane says.

For Sam Coyl, doing the necessary homework before reaching out to his local SBA office sparked Netrepid’s growth and helped ensure that the phrase “Cheerios Weeks” is merely a relic of more frugal times.

The post Small Business Success Story: Netrepid’s Collaboration with the U.S. Small Business Administration appeared first on NerdWallet Credit Card Blog.

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Small Business Success Story: Netrepid’s Collaboration with the U.S. Small Business Administration

The road to being named “Veteran Small Business Person of the Year” by the U.S. Small Business Administration’s Philadelphia District Office wasn’t always an easy one for Sam Coyl, president of Netrepid, an IT company based in Harrisburg, Pennsylvania. Times were often so tough—and those times so frequent—that Coyl’s children had a special name for the rocky periods.

“My kids used to call them ‘Cheerios Weeks’ because, you know, owners get paid last, so my kids would open the cupboards and all they’d see is cereal and a bag of Tostitos,” Coyl says.

After nearly 10 years of bootstrapping his business, Coyl decided that Netrepid, along with his own financial stability, would benefit from outside funding. After hiring a chief financial officer in the summer of 2012, Coyl and Co. began looking for investors.

Tracking Netrepid’s growth

Netrepid’s current mission of helping clients “figure out how to evolve their technologies from traditional to cloud-based structures,” as Coyl describes it, was influenced by the numerous jobs he held prior to establishing the company in 2004. In addition to serving in the Marine Corps for eight years, Coyl gained valuable experience in the private sector, working for a firm that built Wi-Fi networks for hospitals and other businesses.

“Many clients would either severely underbuy or overbuy hardware and software without forecasting what their technology needs were going to be,” Coyl says.

The more Coyl encountered those types of scenarios, the faster the wheels in his head turned. A company that could provide IT consultation and support, Coyl figured, would be a welcome addition to the local business community. The budding entrepreneur also believed that cloud infrastructure would be the next big thing and that it should serve as the backbone of his business.

After initial success in the mid-2000s, Netrepid’s growth began to stall.

“We were kind of chugging along in a pretty bootstrapped environment, and it was working, but it was not going to give us the capacity we needed to grow,” Coyl says. “And as far as I’m concerned, if you’re stagnant, you’re dying.”

It was that mantra that motivated Coyl to look to the SBA for funding at a time when no one else was willing to take that risk.

Netrepid’s work with the SBA

Although it doesn’t directly provide loans, the SBA, which is backed by the U.S. government, works with traditional lenders like banks and credit unions to facilitate loans to businesses such as Netrepid.

“The SBA works with banks and credit unions, basically offering them loan guarantees from anywhere from 50% to 85-90% on the principle balance of the loan,” says Michael Kane, branch manager at SBA’s District Office in Harrisburg.

Those guarantees, says Kane, mitigate risk for lending institutions, which makes them more willing to offer loans to businesses that don’t have an extensive track record of success and growth. The SBA also provides financial counselling to business owners to empower them to make smart decisions with their money.

“No matter which way you slice it, some business owners are going to fall just outside the credit box that a lender has,” Kane says. “This program can really help push that small business over the finish line to get that capital that they need.”

With the help of the SBA and other outside investors, Netrepid raised about $3.5 million. According to Coyl, those funds have enabled him and his “phenomenal” 12-person-strong team to “refresh some of the technologies we needed to upgrade” and “to go after some much bigger clients with a much broader solution set.”

“Other companies that start with a $20 million investment blow all their cash in 15 months because they don’t know how to make smart decisions,” Coyl says. “We treated the funds like we didn’t have any money.”

Tips for small business owners

Based on his own experience, Coyl stresses the importance of finding the right team of advisors to work with. Although doing so took some time, it has proven to be a valuable asset for Netrepid.

“It took me a long time to build a little core of mentors that could really sit down with me and be my coaches,” Coyl says. “They’re not my board of directors; they’re the guys who are there to coach me.”

Working with people with strong operational backgrounds has helped Coyl plan Netrepid’s growth as he looks to “expand its geographical footprint.”

Kane, meanwhile, underlines the importance of knowing the ins and outs of one’s business community.

“In general, small business owners need to make sure they are aware of who is lending in their community,” he says. “If you are looking for an SBA-guaranteed loan, you have to know who is actually lending in your marketplace.

“Many district offices will put out lender loan volume reports on a monthly basis, which outlines how much lending they are doing, in terms of the number of loans and the aggregate dollar amount of these loans,” Kane says.

For Sam Coyl, doing the necessary homework before reaching out to his local SBA office sparked Netrepid’s growth and helped ensure that the phrase “Cheerios Weeks” is merely a relic of more frugal times.

The post Small Business Success Story: Netrepid’s Collaboration with the U.S. Small Business Administration appeared first on NerdWallet Credit Card Blog.

Source Article http://ift.tt/1y39EC7

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Libraries Offer Pre-Paid Visa Debit Cards to Patrons

Institutions in three states offer library cards that double as prepaid Visa debit cards, under a program started last summer by SirsiDynix, a Lehi, Utah-based software company. Participating libraries get a portion of the fees paid for the service, while patrons get a less expensive alternative to opening a checking account, if they don’t have one.

As a library service, the cards may be a boon to people who don’t know that prepaid debit cards are even an option for storing money and paying for merchandise without a bank account. Reloadable prepaid cards are most popular among younger Americans, who are also less likely than older consumers to have bank accounts, says the Federal Deposit Insurance Corp., a U.S. bank regulator.

“Given their multiple functions, financial services cards are often marketed as an alternative to a traditional checking account and are frequently targeted to the unbanked or underbanked, students, and recent immigrants,” the agency said about reloadable prepaid debit cards in a 2009 report.

Unbanked and underbanked

Last year, 7.7% of American households were unbanked, or didn’t have a bank account, the FDIC says. Another 20% were underbanked, meaning they had an account but also used alternative financial services such as prepaid cards.

Libraries in poorer communities are more likely to serve unbanked or underbanked patrons. Kelli Staley, a library department manager in Lansing, Illinois, says she heard about the SirsiDynix program at a professional meeting. Most of those there worked at libraries in wealthier cities, and they weren’t interested in it. But Staley says it excited her because some people in Lansing don’t have access to banking services.

Staley anticipates the program, called I Love My Library Card by SirsiDynix, will help those who lack bank accounts gain access to modern financial services and convenience, such as the ability to have funds directly deposited to their cards. That way they can avoid check-cashing stores, where fees vary widely but tend to be costly. For example, 7-Eleven stores charge 0.99% of the check amount, while at Wal-Mart-Stores it costs $3 for sums under $1,000. Avoiding such expenses may help offset the price of using a prepaid card from the library.

Card’s costs

In addition to a one-time enrollment fee of $5.95, users pay a $5.95 monthly service charge. That’s higher than the monthly cost for the best prepaid debit cards chosen by NerdWallet, which ranges from zero to $5. Using the library debit card in an automated teller machine costs $2.50, and there’s a $1.95 charge for using a personal identification number (PIN) in a transaction. While adding money to the card and direct deposits of paychecks, tax returns or government benefits are free, merchant fees may apply to loading cash onto the card at a gas station or a store.

Some prepaid debit cards issued by banks or other companies that appear to have lower monthly fees actually come with hidden charges like making you pay to speak to a customer service representative, says Justin Swain, a spokesman at SirsiDynix, which makes library software. “Really, what it comes down to is transparency on the fees,” he says.

Responding to consumer and regulatory concerns, the U.S. Consumer Financial Protection Bureau has proposed new rules governing fee disclosure, fund safety and other aspects of the increasingly popular cards and other prepaid debit accounts.

Appealing aspects

Ideally, library staff members would help patrons research debit card options to find the best mix of fees and services, rather than promoting one that pays the institution for acquiring new users. There’s no question a savvy shopper could find a prepaid debit card with lower fees than this one.

Staley expects some interest from patrons who have bank accounts but see other value in prepaid cards, such as information security.

“I’ve been trying to promote the fact that you can put on a certain amount of money and it’s safer in the event of a data breach,” Staley says. The cards may also appeal to people who see them as a way to help their library financially. Separately, the card offer may provide a way to stay relevant and attract young people to the library.

So far, Staley’s institution has issued 216 cards, but only 15 have been activated by their holders. Libraries in Maryland’s Frederick County and Mississippi’s Lamar County also participate in SirsiDynix’s program. Among the three, about 100 debit cards have been activated and generated around $600 in library revenue.

Swain, the SirsiDynix spokesman, says the cards can serve as an educational tool to help people learn how to pay with plastic in a responsible way. Because users can’t overdraw their funds on the cards, they can’t run up big unpaid balances as can happen with a credit card.

While the debit card program may increase financial literacy among some users, it can help libraries financially while also broadening the scope of the services they provide in a quickly changing world. So it may be worth a look if it becomes an option at your library.

---

Money book image via Shutterstock.

The post Libraries Offer Pre-Paid Visa Debit Cards to Patrons appeared first on NerdWallet Credit Card Blog.

Source Article http://ift.tt/1y39EC7

Read More

Libraries Offer Pre-Paid Visa Debit Cards to Patrons

Institutions in three states offer library cards that double as prepaid Visa debit cards, under a program started last summer by SirsiDynix, a Lehi, Utah-based software company. Participating libraries get a portion of the fees paid for the service, while patrons get a less expensive alternative to opening a checking account, if they don’t have one.

As a library service, the cards may be a boon to people who don’t know that prepaid debit cards are even an option for storing money and paying for merchandise without a bank account. Reloadable prepaid cards are most popular among younger Americans, who are also less likely than older consumers to have bank accounts, says the Federal Deposit Insurance Corp., a U.S. bank regulator.

“Given their multiple functions, financial services cards are often marketed as an alternative to a traditional checking account and are frequently targeted to the unbanked or underbanked, students, and recent immigrants,” the agency said about reloadable prepaid debit cards in a 2009 report.

Unbanked and underbanked

Last year, 7.7% of American households were unbanked, or didn’t have a bank account, the FDIC says. Another 20% were underbanked, meaning they had an account but also used alternative financial services such as prepaid cards.

Libraries in poorer communities are more likely to serve unbanked or underbanked patrons. Kelli Staley, a library department manager in Lansing, Illinois, says she heard about the SirsiDynix program at a professional meeting. Most of those there worked at libraries in wealthier cities, and they weren’t interested in it. But Staley says it excited her because some people in Lansing don’t have access to banking services.

Staley anticipates the program, called I Love My Library Card by SirsiDynix, will help those who lack bank accounts gain access to modern financial services and convenience, such as the ability to have funds directly deposited to their cards. That way they can avoid check-cashing stores, where fees vary widely but tend to be costly. For example, 7-Eleven stores charge 0.99% of the check amount, while at Wal-Mart-Stores it costs $3 for sums under $1,000. Avoiding such expenses may help offset the price of using a prepaid card from the library.

Card’s costs

In addition to a one-time enrollment fee of $5.95, users pay a $5.95 monthly service charge. That’s higher than the monthly cost for the best prepaid debit cards chosen by NerdWallet, which ranges from zero to $5. Using the library debit card in an automated teller machine costs $2.50, and there’s a $1.95 charge for using a personal identification number (PIN) in a transaction. While adding money to the card and direct deposits of paychecks, tax returns or government benefits are free, merchant fees may apply to loading cash onto the card at a gas station or a store.

Some prepaid debit cards issued by banks or other companies that appear to have lower monthly fees actually come with hidden charges like making you pay to speak to a customer service representative, says Justin Swain, a spokesman at SirsiDynix, which makes library software. “Really, what it comes down to is transparency on the fees,” he says.

Responding to consumer and regulatory concerns, the U.S. Consumer Financial Protection Bureau has proposed new rules governing fee disclosure, fund safety and other aspects of the increasingly popular cards and other prepaid debit accounts.

Appealing aspects

Ideally, library staff members would help patrons research debit card options to find the best mix of fees and services, rather than promoting one that pays the institution for acquiring new users. There’s no question a savvy shopper could find a prepaid debit card with lower fees than this one.

Staley expects some interest from patrons who have bank accounts but see other value in prepaid cards, such as information security.

“I’ve been trying to promote the fact that you can put on a certain amount of money and it’s safer in the event of a data breach,” Staley says. The cards may also appeal to people who see them as a way to help their library financially. Separately, the card offer may provide a way to stay relevant and attract young people to the library.

So far, Staley’s institution has issued 216 cards, but only 15 have been activated by their holders. Libraries in Maryland’s Frederick County and Mississippi’s Lamar County also participate in SirsiDynix’s program. Among the three, about 100 debit cards have been activated and generated around $600 in library revenue.

Swain, the SirsiDynix spokesman, says the cards can serve as an educational tool to help people learn how to pay with plastic in a responsible way. Because users can’t overdraw their funds on the cards, they can’t run up big unpaid balances as can happen with a credit card.

While the debit card program may increase financial literacy among some users, it can help libraries financially while also broadening the scope of the services they provide in a quickly changing world. So it may be worth a look if it becomes an option at your library.

---

Money book image via Shutterstock.

The post Libraries Offer Pre-Paid Visa Debit Cards to Patrons appeared first on NerdWallet Credit Card Blog.

Source Article :http://bit.ly/1qTvpiX

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Love Your Chase Freedom® Credit Card? Here’s What to Look Forward to in 2015

If you’re a loyal Chase Freedom® user, you probably already know you’ve made a great credit card choice. It’s one of the Nerds’ favorite cash-back cards, and will really come in handy during the 2014 holiday shopping season.

But the great news is that the Chase Freedom® has some tricks up its sleeve for 2015. Ready to find out more? Let’s dig in.

Chase Freedom®: The basics

Before diving into the new information, here’s a quick reminder of what the Chase Freedom® offers:

• You’ll earn 5% cash back in rotating quarterly bonus categories, up to $1,500 spent per quarter. For the fourth quarter of 2014, you’ll score 5% cash back on every dollar spent at select department stores, Zappos.com and Amazon.com.


• You’ll also earn unlimited 1% cash back on all other purchases throughout the year.


• You’ll have the opportunity to score a signup bonus: Get a $200 Bonus after spending $500 on purchases in your first 3 months from account opening.


• The annual fee is $0

It’s also worth noting that with the Chase Freedom® you’re earning Chase Ultimate Reward points. You can redeem them for cash back, but if you also have the Chase Sapphire Preferred® Card, you also have the option to transfer them to that account and cash them in for a trip. If you shop smart and take advantage of the Chase Freedom®’s 5% categories, this could add up to a lot of points to travel with.

Finally, if you’re an iPhone 6 user, don’t forget that your Chase Freedom® is compatible with Apple Pay. As more and more retailers begin installing the infrastructure to accept mobile payments, you’ll be able to easily rack up Ultimate Rewards points with a single tap.

Exciting news about the Chase Freedom® in 2015

As if all the perks above weren’t enough, the Nerds just got some exciting information about what’s new for the Chase Freedom® in 2015. Let’s start with rewards: For the first quarter of 2015, you’ll be able to earn 5% cash back on every dollar spent at grocery stores (except Target and WalMart), movie theaters and Starbucks. Remember, you’ll earn the bonus cash back up to $1,500 spent between January and March 2015. After that, you’ll earn the standard (and unlimited) 1% cash back.

Also, newly issued and reissued Chase Freedom® will start coming with EMV chip technology. This upgrade is beginning in November 2014 and will continue throughout 2015. Getting a Chase Freedom® with a chip will help you prepare for the U.S. transition to EMV, which is expected to be complete by October 2015. This will lead to safer credit card transactions, and, consequently, more peace of mind for consumers.

Other tips for getting the most out of your Chase Freedom®

The Chase Freedom® offers a lot of great benefits, but here are a few Nerd tips for getting even more value out of the card:

• Explore all of your redemption options. In addition to using your points for cash back or transferring them to your Chase Sapphire Preferred® Card for travel, you can also use them for gift cards or to make purchases through Amazon.com. This flexibility means you’ll have an easy time finding something that has value for you.


• When you’re buying items online, try to shop through the Chase Ultimate Rewards bonus mall. You could earn 2%-15% back on your purchases.


• Sign up for alerts so that you’ll know when to go online and opt into new 5% categories. Although you can earn the bonus cash back retroactively, it would be a shame to totally miss out on the chance to score extra rewards.

For all the reasons described above, the Chase Freedom® is a great choice for 2015 and beyond. Be sure to keep it in mind, and check back with the Nerds as often as you can for other important updates!

Excited face image via Shutterstock

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Love Your Chase Freedom® Credit Card? Here’s What to Look Forward to in 2015

If you’re a loyal Chase Freedom® user, you probably already know you’ve made a great credit card choice. It’s one of the Nerds’ favorite cash-back cards, and will really come in handy during the 2014 holiday shopping season.

But the great news is that the Chase Freedom® has some tricks up its sleeve for 2015. Ready to find out more? Let’s dig in.

Chase Freedom®: The basics

Before diving into the new information, here’s a quick reminder of what the Chase Freedom® offers:

• You’ll earn 5% cash back in rotating quarterly bonus categories, up to $1,500 spent per quarter. For the fourth quarter of 2014, you’ll score 5% cash back on every dollar spent at select department stores, Zappos.com and Amazon.com.


• You’ll also earn unlimited 1% cash back on all other purchases throughout the year.


• You’ll have the opportunity to score a signup bonus: Get a $200 Bonus after spending $500 on purchases in your first 3 months from account opening.


• The annual fee is $0

It’s also worth noting that with the Chase Freedom® you’re earning Chase Ultimate Reward points. You can redeem them for cash back, but if you also have the Chase Sapphire Preferred® Card, you also have the option to transfer them to that account and cash them in for a trip. If you shop smart and take advantage of the Chase Freedom®’s 5% categories, this could add up to a lot of points to travel with.

Finally, if you’re an iPhone 6 user, don’t forget that your Chase Freedom® is compatible with Apple Pay. As more and more retailers begin installing the infrastructure to accept mobile payments, you’ll be able to easily rack up Ultimate Rewards points with a single tap.

Exciting news about the Chase Freedom® in 2015

As if all the perks above weren’t enough, the Nerds just got some exciting information about what’s new for the Chase Freedom® in 2015. Let’s start with rewards: For the first quarter of 2015, you’ll be able to earn 5% cash back on every dollar spent at grocery stores (except Target and WalMart), movie theaters and Starbucks. Remember, you’ll earn the bonus cash back up to $1,500 spent between January and March 2015. After that, you’ll earn the standard (and unlimited) 1% cash back.

Also, newly issued and reissued Chase Freedom® will start coming with EMV chip technology. This upgrade is beginning in November 2014 and will continue throughout 2015. Getting a Chase Freedom® with a chip will help you prepare for the U.S. transition to EMV, which is expected to be complete by October 2015. This will lead to safer credit card transactions, and, consequently, more peace of mind for consumers.

Other tips for getting the most out of your Chase Freedom®

The Chase Freedom® offers a lot of great benefits, but here are a few Nerd tips for getting even more value out of the card:

• Explore all of your redemption options. In addition to using your points for cash back or transferring them to your Chase Sapphire Preferred® Card for travel, you can also use them for gift cards or to make purchases through Amazon.com. This flexibility means you’ll have an easy time finding something that has value for you.


• When you’re buying items online, try to shop through the Chase Ultimate Rewards bonus mall. You could earn 2%-15% back on your purchases.


• Sign up for alerts so that you’ll know when to go online and opt into new 5% categories. Although you can earn the bonus cash back retroactively, it would be a shame to totally miss out on the chance to score extra rewards.

For all the reasons described above, the Chase Freedom® is a great choice for 2015 and beyond. Be sure to keep it in mind, and check back with the Nerds as often as you can for other important updates!

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5 Hidden Hazards of Using a Reloadable Debit Card

General-purpose reloadable debit cards have some advantages over traditional checking accounts or even credit cards. No bank account is required, plus there’s no risk of overdraft fees or racking up credit card debt.

But some prepaid debit cards that let you add money to them impose hefty charges and have features that can make them a dangerous alternative to other types of accounts.

Recently, the Consumer Financial Protection Bureau proposed new rules that could make prepaid cards safer and more user-friendly. A major change would include new protections for lost cards and fraudulent transactions, which have been unavailable for this type of plastic. The proposal would also limit fees (particularly “overdraft protection” charges for the type that let you spend more money than the card holds) and easier access to account statements.

While it could be several months before these proposed protections kick in—or longer, if they’re challenged—they should be welcomed by the rising number of people using prepaid debit cards. In 2003, consumers loaded $1 billion onto general-purpose reloadable cards; by 2012, that figure had ballooned to almost $65 billion and is still growing, according to the consumer bureau. Many people use the cards as alternatives to checking accounts.

“Prepaid card users are disproportionately unbanked and under-banked households,” Richard Cordray, the agency’s director, said in introducing its proposed regulations. “Many of these prepaid consumers are living paycheck to paycheck, and are engaged in a constant battle to make ends meet. They are some of the most economically vulnerable among us, and most of them have no idea that the prepaid cards they choose to purchase are largely unregulated at the federal level and carry few if any protections.”

Until the proposed changes come into play, watch out for these common pitfalls of using a reloadable prepaid debit card:

1. Fees, fees and more fees

Prepaid debit cards work very differently than those tied to a bank account. The reloadable type let you or a third party add funds. Some card issuers take advantage of this characteristic by charging a fee each time you load money on it.

Some issuers tack on additional fees, nickel-and-diming you when you activate your card, check its balance and withdraw cash. Monthly fees are also common. Before you select a card, take a close look at the fees. That isn’t always easy, and one of the proposed rules is designed to require better fee disclosure by card issuers.

2. No loss or theft protection

Credit cards and bank debit cards must limit liability for cardholders if the account is used for fraudulent purchases. This means if someone steals your card and uses it without your knowledge, you will likely owe little, if anything.

Some prepaid cards offer protection against unauthorized transactions, but according to the consumer agency, not all do. So for now, at least, if your prepaid card is stolen and used, it’s unlikely the card issuer will help you recover that money.

3. Automatic overdraft protection

Some prepaid cards come with automatic overdraft protection or linked lines of credit. If the user overspends, the card will still work but you pay major fees for the “benefit” of being allowed to overdraft the account. And with an automatic linked line of credit, you may run up unpaid balances without having intended to ever go above your limit—the kind of problem you can run into with a credit card. Look for one that doesn’t have automatic overdraft protection or lets you cancel it.

4. Binding arbitration

It’s common for prepaid debit cards to require users to submit to binding arbitration in cases where charges are disputed. This means you give up many of your legal rights.

These clauses “prevent cardholders from challenging unfair and deceptive practices or other legal violations in court, impairing individual rights and potentially allowing abuses to spread without legal or public scrutiny,” the Pew Charitable Trusts have warned.

5. Lack of insurance

Nearly all checking accounts at banks are federally insured. This protects your money in accounts of $250,000 or less if the financial institution ever fails. Prepaid cards generally don’t have such protections. If the prepaid card’s issuer goes bankrupt, you may be out of luck.

The consumer bureau’s rules deal with many of these issues, and others as well. But keep in mind that until they take effect, you may be paying too much and are at risk of losing your money by loading it onto a prepaid debit card.

---

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The post 5 Hidden Hazards of Using a Reloadable Debit Card appeared first on NerdWallet Credit Card Blog.

Source Article :http://bit.ly/1vi1MPy

Read More

5 Hidden Hazards of Using a Reloadable Debit Card

General-purpose reloadable debit cards have some advantages over traditional checking accounts or even credit cards. No bank account is required, plus there’s no risk of overdraft fees or racking up credit card debt.

But some prepaid debit cards that let you add money to them impose hefty charges and have features that can make them a dangerous alternative to other types of accounts.

Recently, the Consumer Financial Protection Bureau proposed new rules that could make prepaid cards safer and more user-friendly. A major change would include new protections for lost cards and fraudulent transactions, which have been unavailable for this type of plastic. The proposal would also limit fees (particularly “overdraft protection” charges for the type that let you spend more money than the card holds) and easier access to account statements.

While it could be several months before these proposed protections kick in—or longer, if they’re challenged—they should be welcomed by the rising number of people using prepaid debit cards. In 2003, consumers loaded $1 billion onto general-purpose reloadable cards; by 2012, that figure had ballooned to almost $65 billion and is still growing, according to the consumer bureau. Many people use the cards as alternatives to checking accounts.

“Prepaid card users are disproportionately unbanked and under-banked households,” Richard Cordray, the agency’s director, said in introducing its proposed regulations. “Many of these prepaid consumers are living paycheck to paycheck, and are engaged in a constant battle to make ends meet. They are some of the most economically vulnerable among us, and most of them have no idea that the prepaid cards they choose to purchase are largely unregulated at the federal level and carry few if any protections.”

Until the proposed changes come into play, watch out for these common pitfalls of using a reloadable prepaid debit card:

1. Fees, fees and more fees

Prepaid debit cards work very differently than those tied to a bank account. The reloadable type let you or a third party add funds. Some card issuers take advantage of this characteristic by charging a fee each time you load money on it.

Some issuers tack on additional fees, nickel-and-diming you when you activate your card, check its balance and withdraw cash. Monthly fees are also common. Before you select a card, take a close look at the fees. That isn’t always easy, and one of the proposed rules is designed to require better fee disclosure by card issuers.

2. No loss or theft protection

Credit cards and bank debit cards must limit liability for cardholders if the account is used for fraudulent purchases. This means if someone steals your card and uses it without your knowledge, you will likely owe little, if anything.

Some prepaid cards offer protection against unauthorized transactions, but according to the consumer agency, not all do. So for now, at least, if your prepaid card is stolen and used, it’s unlikely the card issuer will help you recover that money.

3. Automatic overdraft protection

Some prepaid cards come with automatic overdraft protection or linked lines of credit. If the user overspends, the card will still work but you pay major fees for the “benefit” of being allowed to overdraft the account. And with an automatic linked line of credit, you may run up unpaid balances without having intended to ever go above your limit—the kind of problem you can run into with a credit card. Look for one that doesn’t have automatic overdraft protection or lets you cancel it.

4. Binding arbitration

It’s common for prepaid debit cards to require users to submit to binding arbitration in cases where charges are disputed. This means you give up many of your legal rights.

These clauses “prevent cardholders from challenging unfair and deceptive practices or other legal violations in court, impairing individual rights and potentially allowing abuses to spread without legal or public scrutiny,” the Pew Charitable Trusts have warned.

5. Lack of insurance

Nearly all checking accounts at banks are federally insured. This protects your money in accounts of $250,000 or less if the financial institution ever fails. Prepaid cards generally don’t have such protections. If the prepaid card’s issuer goes bankrupt, you may be out of luck.

The consumer bureau’s rules deal with many of these issues, and others as well. But keep in mind that until they take effect, you may be paying too much and are at risk of losing your money by loading it onto a prepaid debit card.

---

Image of life preserver via Shutterstock.

The post 5 Hidden Hazards of Using a Reloadable Debit Card appeared first on NerdWallet Credit Card Blog.

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