Apply for a Business Credit Card? Here Are 5 Things You Need to Know

Did you just apply for a business credit card? Nice work! You’ve taken an important step in your career as an entrepreneur.

But if you’ve never used business plastic before, you’re entering new and unknown territory. Take a look at the details below for five things you should know about your new card.

1. You’re now in a good position to keep business and personal expenses separate

As your company grows, it’s important to start separating personal and business finances. Here’s why: An expanding business is going to incur lots of expenses, and you’ll need to diligently track them to keep your venture profitable. If you mingle personal and business purchases, this task becomes nearly impossible.

But keeping a credit card just for business purchases makes it much easier to keep tabs on your company’s spending. Plus, when tax time rolls around, you’ll have a handy backup record of exactly what can be written off (you should also be keeping detailed notes about this, of course). Win-win!

2. You’ll probably get a bevy of business perks – use them!

If you shopped around carefully for a business credit card, you probably applied for one that offers a host of perks that will benefit your business. These often include:

• High spending limits


• Ability to issue cards to employees (see below)


• Extra rewards on office supplies and services


• Expense tracking features


• Travel benefits, such as priority boarding and extra rewards on travel spending

Be sure to take advantage of the great extras your card offers. If you find that you’re not getting a lot of value out of them, don’t hesitate to shop around for a different business credit card. With so many on the market these days, there’s bound to be one that’s a better fit!

3. You don’t have the same protections as with your consumer card

The CARD Act of 2009 put an end to a lot of questionable issuer practices, such as jacking up interest rates without warning and charging excessive late fees. However, it’s important to remember that the new protections we’re enjoying only apply to consumer credit cards – they won’t apply to your new business credit card.

Assuming that you pay your bills on time and in full every month, you probably won’t notice that your business credit card isn’t subject to the rules laid out in the CARD Act. But it’s something to be aware of; keep a close watch on your account and contact your issuer if you see something about your card’s terms (such as the interest rate) suddenly changes.

4. You probably made a personal guarantee to pay the bill

Getting a credit card in your business’s name and using it for company purchases establishes an important boundary between your personal and professional finances. But it’s crucial to recognize that you probably made what’s known as a “personal guarantee” when you signed on to your business credit card. This means that if the company flounders and you can’t pay the bill from its profits, you’ll be expected to use your personal funds to do so.

Again, assuming that you’re careful with your spending and your business’s finances, this probably won’t be something you’ll ever have to worry about. But in the event that your business goes under, you won’t necessarily be off the hook for the credit card bill.

5. You can now issue cards to employees

One of the best things about getting a business credit card is that you can easily issue additional cards to your employees. This makes tracking their spending on purchases and travel a breeze, and frees up some of your time. Now you don’t have to be the only one doing the business purchasing!

Choosing which employees to give a card to is a decision that should be taken very seriously. Although you’ll be able to see what they’re charging, it could still cause a lot of headaches to give a card to a worker who’s not totally trustworthy.

And once you’ve carefully selected who gets a card, it’s a good idea to explicitly lay out your rules about what employees are permitted to charge to the company and what they’re not. Being clear from the outset will help prevent misunderstandings before they arise.

Business credit card image via Shutterstock

Source Article :http://bit.ly/YKmtVx

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`Masquerading’ Wire Fraud Targets Gullible Executives

Financial fraud is constantly evolving and becoming a more and more difficult to fight, whether companies or consumers are targeted. Recently, a relatively sophisticated scheme has emerged that uses “spoofing,” a type of identity theft, to trick business people into telling their bankers to send corporate cash to scammers.

These new email and wire-fraud techniques, dubbed “masquerading” by David Pollino, the fraud prevention officer at San Francisco-based Bank of the West, usually siphon money from the victimized business’s account and have it sent electronically (by wire) to a phony offshore firm. Often, the thief poses as a high-level officer – such as the chief executive or the chief financial officer – of the targeted company.

Wire fraud incidents rose last year, affecting 14% of businesses in a payments fraud survey by the Association of Financial Professionals, up from 11% in 2012. Losses for some victims topped $800,000, according to federal authorities. Pollino says businesses can take steps to prevent such schemes from succeeding. But first they need to understand how they work.

The masquerade

Typically, fraudsters must do some homework first.

“For example, criminals might go through social media to figure out who the CEO is of a construction company,” Pollino says.

Then they hack into the business’s email system. After gaining access, the scammer, using the name of a high-level executive, sends an authentic-looking message through the company’s computers to a subordinate with access to the cash, such as the controller or a financial manager, ordering a wire transfer from the firm’s bank to a third-party account. Even if the bank raises questions, it is often ignored because the email that prompted the order is regarded as genuine, Pollino says.

The fraudsters “try to scam or fool the person internal to the company,” Pollino says. Often, the order is marked confidential, making it harder for the recipient to raise questions, he says.

The scammer will create a fake email address that is only slightly different from the CEO or CFO’s real e-mail address – perhaps just a character changed or added – so the employee doesn’t notice that it’s phony. Typically, the bogus message will include an attachment with the wire transfer instructions. Moving funds this way tends to work well for thieves because custody of the money changes in an instant, putting the cash out of the victim’s reach before the scheme is discovered.

On average, businesses have lost about $55,000 when these and similar schemes succeed, but some have reported losing more than $800,000, according to the federal Internet Crime Complaint Center. The scams appear to be Nigerian-based, and most of the victims are from the U.S., U.K. and Canada, according to a recent fraud alert.

Whether there’s any chance for the business to recoup such a loss may depend on its insurance and/or any agreements it has with the financial services provider regarding the handling of wire transfers.

“Each case is unique and if a loss is incurred, it might be up to the individual arrangement that the business has with the bank” to determine who is liable, Pollino says.

Masquerade prevention

With spoofing attacks like these on the rise, companies should put together a strong business process to ensure all wire transfers are legitimate, Pollino says.

“An e-mail should not be enough for a large financial transaction to take place – or even a phone call claiming to be from the CEO,” Pollino says. “There should be additional processes in place to ensure the details of the transaction – the amount, the timing and its legitimacy – are authorized.”

Other good preventive measures to take include verifying the source of the email ordering the transfer, double or even triple-checking email addresses, and establishing a multi-person approval process for transactions above a certain amount, Pollino says. Be suspicious of confidentiality, he adds, as it often masks a fraud attempt.

“With good supplemental business processes, it should be easier for companies to detect this type of masquerading,” Pollino says. Strengthening procedures should also help prevent mistakes and errors, like sending an incorrect amount or addressing it to the wrong account, and internal fraud.

If your business has been victimized, the Federal Trade Commission says to call the money transfer company immediately to report it, then file an online complaint with the agency.

Wire fraud image via Shutterstock

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

Read More

`Masquerading’ Wire Fraud Targets Gullible Executives

Financial fraud is constantly evolving and becoming a more and more difficult to fight, whether companies or consumers are targeted. Recently, a relatively sophisticated scheme has emerged that uses “spoofing,” a type of identity theft, to trick business people into telling their bankers to send corporate cash to scammers.

These new email and wire-fraud techniques, dubbed “masquerading” by David Pollino, the fraud prevention officer at San Francisco-based Bank of the West, usually siphon money from the victimized business’s account and have it sent electronically (by wire) to a phony offshore firm. Often, the thief poses as a high-level officer – such as the chief executive or the chief financial officer – of the targeted company.

Wire fraud incidents rose last year, affecting 14% of businesses in a payments fraud survey by the Association of Financial Professionals, up from 11% in 2012. Losses for some victims topped $800,000, according to federal authorities. Pollino says businesses can take steps to prevent such schemes from succeeding. But first they need to understand how they work.

The masquerade

Typically, fraudsters must do some homework first.

“For example, criminals might go through social media to figure out who the CEO is of a construction company,” Pollino says.

Then they hack into the business’s email system. After gaining access, the scammer, using the name of a high-level executive, sends an authentic-looking message through the company’s computers to a subordinate with access to the cash, such as the controller or a financial manager, ordering a wire transfer from the firm’s bank to a third-party account. Even if the bank raises questions, it is often ignored because the email that prompted the order is regarded as genuine, Pollino says.

The fraudsters “try to scam or fool the person internal to the company,” Pollino says. Often, the order is marked confidential, making it harder for the recipient to raise questions, he says.

The scammer will create a fake email address that is only slightly different from the CEO or CFO’s real e-mail address – perhaps just a character changed or added – so the employee doesn’t notice that it’s phony. Typically, the bogus message will include an attachment with the wire transfer instructions. Moving funds this way tends to work well for thieves because custody of the money changes in an instant, putting the cash out of the victim’s reach before the scheme is discovered.

On average, businesses have lost about $55,000 when these and similar schemes succeed, but some have reported losing more than $800,000, according to the federal Internet Crime Complaint Center. The scams appear to be Nigerian-based, and most of the victims are from the U.S., U.K. and Canada, according to a recent fraud alert.

Whether there’s any chance for the business to recoup such a loss may depend on its insurance and/or any agreements it has with the financial services provider regarding the handling of wire transfers.

“Each case is unique and if a loss is incurred, it might be up to the individual arrangement that the business has with the bank” to determine who is liable, Pollino says.

Masquerade prevention

With spoofing attacks like these on the rise, companies should put together a strong business process to ensure all wire transfers are legitimate, Pollino says.

“An e-mail should not be enough for a large financial transaction to take place – or even a phone call claiming to be from the CEO,” Pollino says. “There should be additional processes in place to ensure the details of the transaction – the amount, the timing and its legitimacy – are authorized.”

Other good preventive measures to take include verifying the source of the email ordering the transfer, double or even triple-checking email addresses, and establishing a multi-person approval process for transactions above a certain amount, Pollino says. Be suspicious of confidentiality, he adds, as it often masks a fraud attempt.

“With good supplemental business processes, it should be easier for companies to detect this type of masquerading,” Pollino says. Strengthening procedures should also help prevent mistakes and errors, like sending an incorrect amount or addressing it to the wrong account, and internal fraud.

If your business has been victimized, the Federal Trade Commission says to call the money transfer company immediately to report it, then file an online complaint with the agency.

Wire fraud image via Shutterstock

Source Article :http://bit.ly/1tzV6qC

Read More

Is Overdraft Protection Must-Have Coverage?

You don’t have to be broke or even bad at managing your money to occasionally overdraw your bank account. With 90% of American adults using checking services, overdrafts are relatively common. Despite this, new research indicates that many consumers remain confused about debit card overdrafts, the associated fees and whether they should opt for the coverage it provides.

One in 10 Americans who use a debit card tied to a checking account got slapped with at least one overdraft charge and another 5% paid a funds transfer fee to cover a transaction that exceeded their balance last year, according to The Pew Charitable Trusts. The costs stem from optional services that customers must agree to have applied to their accounts under rules regarding electronic funds transfers that took effect in 2010. Those regulations are supposed to make overdraft coverage and fees simpler to understand and less expensive for consumers who have debit cards, but confusion abounds as more than half of affected customers surveyed by Pew didn’t recall accepting the service, called “opting in.”

Protection versus coverage

When it comes to overdraft protection, there are three basic options:

1. Default setting: where the debit transaction is rejected by the bank or credit union because of nonsufficient funds in the account.


2. Overdraft protection: where the financial institution transfers money into the checking account from a linked fund, such as savings, to provide enough to cover the transaction when the balance is too low.


3. Overdraft coverage: where the bank or credit union pays on the transaction, producing a negative balance in the checking account – what amounts to a personal loan until it’s reimbursed.

Fees generally are charged for both overdraft protection and coverage, although some financial institutions offer accounts that provide the services at no charge. Generally, the fee for overdraft protection involving a funds transfer ranges from $10 to $12 per item. For coverage – when the bank pays for you – the fees are considerably higher, often as much as $35 or more per transaction. Also, if the negative balance persists for days or longer, many banks charge more until the condition is eliminated.

Neither of these overdraft services protect against rejected payments, which can happen when a deposit or share account contribution isn’t honored by the check’s issuer. In such cases, the amount will be deducted from your balance and a returned item fee, often from $12 to $19, will be charged.

Opt in or not?

The decision to accept overdraft protection or coverage should reflect how often you overdraw your account. In general, NerdWallet recommends declining, or staying with the default setting.

Typically, debit card purchases blocked at the point of sale aren’t worth the cost of the protection, according to 68% of the respondents to the Pew survey who have overdrawn an account. They said they would prefer to have such transactions refused rather than pay the fees associated with coverage. The median value of an overdraft for a debit card user is $24, according to the U.S. Consumer Financial Protection Bureau. The agency says those who opt in tend to have far more overdrafts than those who don’t accept the services.

While a declined charge for a cup of coffee or a fuel purchase may be easy to shrug off, more important transactions could be disastrous if rejected. So if the majority of activity in the account deals with important payments – for groceries, for instance – overdraft protection could be a good idea.

Keep in mind, personal checks and regularly recurring debits – like those bills scheduled for automatic payments­­ – will be subject to your financial institution’s regular procedures for handling overdrafts, whether or not you opted in for debit card coverage, and you may face charges that result if your balance isn’t adequate, according to the Federal Reserve.

Another option, particularly smart for those who may overdraw their account relatively often, is finding an online-only bank or a credit union that charges lower fees. Capital One’s 360 account, for example, treats overdrafts like a line of credit loan and charges interest on the balance outstanding until it’s refunded. It does, however, charge a $9 fee for bounced checks. Others, such as Grow Financial Federal Credit Union in the Tampa, Fla., area offer low-cost coverage through account transfers.

Check out NerdWallet’s checking account comparison tool for other options.

So if a low balance means nothing more than embarrassment at a favorite coffee shop on the rare occasion when a debit transaction is rejected, overdraft protection may not be worth the cost. But for those in more tenuous financial circumstances who sometimes need an extension of credit to stave off disasters like disconnected electricity, coverage may be more a necessity than a discretionary option. In such cases, it may pay to find a financial institution that won’t penalize you too severely for the protection it provides.

Fee-stung depositor image via Shutterstock

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

Read More

Is Overdraft Protection Must-Have Coverage?

You don’t have to be broke or even bad at managing your money to occasionally overdraw your bank account. With 90% of American adults using checking services, overdrafts are relatively common. Despite this, new research indicates that many consumers remain confused about debit card overdrafts, the associated fees and whether they should opt for the coverage it provides.

One in 10 Americans who use a debit card tied to a checking account got slapped with at least one overdraft charge and another 5% paid a funds transfer fee to cover a transaction that exceeded their balance last year, according to The Pew Charitable Trusts. The costs stem from optional services that customers must agree to have applied to their accounts under rules regarding electronic funds transfers that took effect in 2010. Those regulations are supposed to make overdraft coverage and fees simpler to understand and less expensive for consumers who have debit cards, but confusion abounds as more than half of affected customers surveyed by Pew didn’t recall accepting the service, called “opting in.”

Protection versus coverage

When it comes to overdraft protection, there are three basic options:

1. Default setting: where the debit transaction is rejected by the bank or credit union because of nonsufficient funds in the account.


2. Overdraft protection: where the financial institution transfers money into the checking account from a linked fund, such as savings, to provide enough to cover the transaction when the balance is too low.


3. Overdraft coverage: where the bank or credit union pays on the transaction, producing a negative balance in the checking account – what amounts to a personal loan until it’s reimbursed.

Fees generally are charged for both overdraft protection and coverage, although some financial institutions offer accounts that provide the services at no charge. Generally, the fee for overdraft protection involving a funds transfer ranges from $10 to $12 per item. For coverage – when the bank pays for you – the fees are considerably higher, often as much as $35 or more per transaction. Also, if the negative balance persists for days or longer, many banks charge more until the condition is eliminated.

Neither of these overdraft services protect against rejected payments, which can happen when a deposit or share account contribution isn’t honored by the check’s issuer. In such cases, the amount will be deducted from your balance and a returned item fee, often from $12 to $19, will be charged.

Opt in or not?

The decision to accept overdraft protection or coverage should reflect how often you overdraw your account. In general, NerdWallet recommends declining, or staying with the default setting.

Typically, debit card purchases blocked at the point of sale aren’t worth the cost of the protection, according to 68% of the respondents to the Pew survey who have overdrawn an account. They said they would prefer to have such transactions refused rather than pay the fees associated with coverage. The median value of an overdraft for a debit card user is $24, according to the U.S. Consumer Financial Protection Bureau. The agency says those who opt in tend to have far more overdrafts than those who don’t accept the services.

While a declined charge for a cup of coffee or a fuel purchase may be easy to shrug off, more important transactions could be disastrous if rejected. So if the majority of activity in the account deals with important payments – for groceries, for instance – overdraft protection could be a good idea.

Keep in mind, personal checks and regularly recurring debits – like those bills scheduled for automatic payments­­ – will be subject to your financial institution’s regular procedures for handling overdrafts, whether or not you opted in for debit card coverage, and you may face charges that result if your balance isn’t adequate, according to the Federal Reserve.

Another option, particularly smart for those who may overdraw their account relatively often, is finding an online-only bank or a credit union that charges lower fees. Capital One’s 360 account, for example, treats overdrafts like a line of credit loan and charges interest on the balance outstanding until it’s refunded. It does, however, charge a $9 fee for bounced checks. Others, such as Grow Financial Federal Credit Union in the Tampa, Fla., area offer low-cost coverage through account transfers.

Check out NerdWallet’s checking account comparison tool for other options.

So if a low balance means nothing more than embarrassment at a favorite coffee shop on the rare occasion when a debit transaction is rejected, overdraft protection may not be worth the cost. But for those in more tenuous financial circumstances who sometimes need an extension of credit to stave off disasters like disconnected electricity, coverage may be more a necessity than a discretionary option. In such cases, it may pay to find a financial institution that won’t penalize you too severely for the protection it provides.

Fee-stung depositor image via Shutterstock

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

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I Make a Small Income – How Can I Qualify for a Credit Card?

Let’s face it: Prior to the 2008 recession, it was probably a little too easy to qualify for a credit card. Since then, issuers have definitely tightened up their standards.

But for responsible people who make a small income, trying to get approved for a credit card can be a frustrating experience. After all, you need to get credit to build credit – so what’s a consumer with a tiny paycheck to do? Don’t worry, the Nerds are here to help. Take a look at the details below!

Why income matters when you’re trying to get a credit card

When you’re applying for a credit card (or any other type of loan), one of the major factors banks look at is your income, and this has always been the case. Here’s why: They’re trying to determine if you have the means to pay back the money you’ve borrowed.

But remember, income isn’t the only thing they’re looking at. Other considerations that affect whether or not you’ll be approved include:

• Your credit score


• Your other monthly obligations


• Your employment status


• Your age (in the case of credit cards)

All of this is important, but credit card issuers were forced to start paying special attention to income after the passage of the CARD Act in 2009. It specifies that banks must now look at an applicant’s independent ability to pay when deciding whether or not to extend credit. In the past, it was acceptable to use an applicant’s household income in making that determination. As a result, people without a high, steady income of their own can no longer qualify for credit based on what others in their household are making.

Nerd note: A 2013 amendment to the CARD Act now makes it possible for stay-at-home spouses to qualify for a credit card in his or her own name. As long as the non-working spouse has “reasonable access” to household income and assets, banks are allowed to approve these applications.

There are options for those with small incomes

The income requirements for credit card applicants specified by the CARD Act are probably preventing some shaky borrowers from getting in over their heads. But these rules also make it difficult for some low-income folks to get a credit card. This, in turn, makes it hard for this population to build good credit.

But there are steps you can take to improve your chances of getting approved:

Get a cosigner – If someone in your life who has good credit is willing to cosign your credit card, this is probably the easiest way to qualify with a low income.

Accept a low limit (and manage it carefully) – In lieu of a cosigner, another option is to work with a few issuers to see if one of them will approve you for a card with a very low credit limit. This is a good way to get your foot in the door, but it’s important to manage this card very carefully. You should never use more than 30% of your available credit, and if your limit is low, this is an easy threshold to hit.

Consider a secured card – If you have the cash to put down an up-front deposit, a secured credit card is a good choice. You’ll be tapping a credit line, so your credit score will improve if you use the card responsibly. Eventually, you should be able to graduate to an unsecured card.

Bump up your income – Issuers aren’t just looking at your income from your primary job when they’re evaluating your application. If you can increase your income by starting a side business or getting a second job, this might be just the ticket.

A final word of advice

Aside from the tips above, it’s also worthwhile to head over to your local bank or credit union to see if they’re willing to work with you. Small lenders are often in a position to take on borrowers that big banks won’t consider; getting a credit card with one of these institutions might be an option if your income is preventing you from qualifying with other issuers.

Getting a credit card when you have a small income is a challenge, but it’s an important one to take on. Check back often with the Nerds for updates, tips and tricks – we’re always here to share our best advice about this important matter!

Frustrated credit card applicant image via Shutterstock

Source Article :http://bit.ly/1voghx9

Read More

I Make a Small Income – How Can I Qualify for a Credit Card?

Let’s face it: Prior to the 2008 recession, it was probably a little too easy to qualify for a credit card. Since then, issuers have definitely tightened up their standards.

But for responsible people who make a small income, trying to get approved for a credit card can be a frustrating experience. After all, you need to get credit to build credit – so what’s a consumer with a tiny paycheck to do? Don’t worry, the Nerds are here to help. Take a look at the details below!

Why income matters when you’re trying to get a credit card

When you’re applying for a credit card (or any other type of loan), one of the major factors banks look at is your income, and this has always been the case. Here’s why: They’re trying to determine if you have the means to pay back the money you’ve borrowed.

But remember, income isn’t the only thing they’re looking at. Other considerations that affect whether or not you’ll be approved include:

• Your credit score


• Your other monthly obligations


• Your employment status


• Your age (in the case of credit cards)

All of this is important, but credit card issuers were forced to start paying special attention to income after the passage of the CARD Act in 2009. It specifies that banks must now look at an applicant’s independent ability to pay when deciding whether or not to extend credit. In the past, it was acceptable to use an applicant’s household income in making that determination. As a result, people without a high, steady income of their own can no longer qualify for credit based on what others in their household are making.

Nerd note: A 2013 amendment to the CARD Act now makes it possible for stay-at-home spouses to qualify for a credit card in his or her own name. As long as the non-working spouse has “reasonable access” to household income and assets, banks are allowed to approve these applications.

There are options for those with small incomes

The income requirements for credit card applicants specified by the CARD Act are probably preventing some shaky borrowers from getting in over their heads. But these rules also make it difficult for some low-income folks to get a credit card. This, in turn, makes it hard for this population to build good credit.

But there are steps you can take to improve your chances of getting approved:

Get a cosigner – If someone in your life who has good credit is willing to cosign your credit card, this is probably the easiest way to qualify with a low income.

Accept a low limit (and manage it carefully) – In lieu of a cosigner, another option is to work with a few issuers to see if one of them will approve you for a card with a very low credit limit. This is a good way to get your foot in the door, but it’s important to manage this card very carefully. You should never use more than 30% of your available credit, and if your limit is low, this is an easy threshold to hit.

Consider a secured card – If you have the cash to put down an up-front deposit, a secured credit card is a good choice. You’ll be tapping a credit line, so your credit score will improve if you use the card responsibly. Eventually, you should be able to graduate to an unsecured card.

Bump up your income – Issuers aren’t just looking at your income from your primary job when they’re evaluating your application. If you can increase your income by starting a side business or getting a second job, this might be just the ticket.

A final word of advice

Aside from the tips above, it’s also worthwhile to head over to your local bank or credit union to see if they’re willing to work with you. Small lenders are often in a position to take on borrowers that big banks won’t consider; getting a credit card with one of these institutions might be an option if your income is preventing you from qualifying with other issuers.

Getting a credit card when you have a small income is a challenge, but it’s an important one to take on. Check back often with the Nerds for updates, tips and tricks – we’re always here to share our best advice about this important matter!

Frustrated credit card applicant image via Shutterstock

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

Read More