Prepaid Debit Cards – A Poor Man’s Bank?
By Chris A Smith

For years check cashing shops have served that part of the financial market that did not have conventional bank accounts. For years check cashing shops have served that part of the financial market that did not have conventional bank accounts.

Pay checks, government checks and personal checks are all cashed for a fee that can range from 1.5% to 10% of the face value of the check. Typically people paid these rates simply because there are no conventional banks located in their community.

Enter the prepaid debit card. Both Mastercard and Visa have prepaid debit programs that have significant advantages over the traditional check cashing shop. Probably the biggest advantage is not having to carry around cash. If you have just cashed your weekly or bi-weekly paycheck, what do you do with the cash? Carry it on you? Hide it someplace at home?

With the prepaid debit card, your deposit is recorded and the card is the only thing you need to make purchases at a store, online, or get cash out of an ATM. Funding your card can be done by direct deposit or by reloading the card at one of thousands of stores that provide the service. There is no need to carry around more cash than you need. Because the debit card is using your own money and is not a credit card, there typically is no credit check and most persons are approved online immediately. Because there is no credit check there is no inquiry recorded on your credit report.

While carrying a debit card is safer than carrying cash, there is a downside when it comes to liability. Unlike a credit card which limits your liability for fraudulent use or broken or undelivered merchandise to $50, the debit card has stricter requirements. The card user must report the loss of his card or suspicion that the card has been compromised within 2 days of the event to limit his liability to $50. If the loss is reported after 2 days the liability jumps to $500. If the loss is not reported for 60 days, then there is no protection and your account could be wiped out. The big difference here is if you are disputing a fraudulent credit card charge, you are not out of money. If you report a fraudulent use of your debit card, the bank could take 10 days to investigate meaning you are out that unauthorized use for over a week.

So how do these cards make money for the issuers? If you are thinking about using a debit card, make sure you carefully read the terms and conditions and fee schedule. There are many programs available on the internet and they all have different fee schedules and features. Look for a card that does not charge you to reload if you use direct deposit. Look for a card that will allow you to see your balance online or via telephone without a charge. If you shop carefully, you will definitely save money compared to the check cashing shops.

Chris Smith is a contributor to the popular consumer credit news site http://trycreditfix.com where you can read his other articles on alternative banking, credit repair, budgets, the new Credit Card Holders Bill of Rights and much more.

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When starting a new business, if you’re trying to get approved for a business credit card there are several things of which you should be aware. You will be personally accountable to the credit card, you will need to know in advance if you will be keeping a balance, and you should be aware of possible low interest rates you can take advantage of. In this article I’ll take you through the knowledge you’ll need in each of these factors.

First, you’ll need to know that no credit company will issue a card to a new business without the owner giving his personal guarantee. In other words, they will look directly at your personal credit score and you’ll be responsible for repaying the debt if the business fails. A business card with no personal credit involved is the holy grail for most new business owners, but it simply isn’t possible until you build a history of business credit by opening Net 30 accounts with vendors that report to Experian, as well as registering your business with Dunn & Bradstreet. A long period of time in business, with a number of employees and a terrific business credit history is the only way you’ll even be considered for a business credit card with no personal guarantee. So forget about it for now.

Second, you’ll need to figure out if your business will be able to pay back its entire credit balance each month or not. Seriously, sit down and figure this out in advance.

Why?

The credit companies want you to keep a debt on your card as they can then charge you the rather high interest rate, or APR. This is how they make money. So they have incentive to keep you making purchases on your card. In tempting you to do so, they will often offer rewards for using the card, such as a percentage of cash back on certain purchases or frequent flyer miles. The strategy is not unlike retail stores using “loss leaders” to tempt you into the store in hopes you’ll also buy something more expensive.

In both of these situations you stand to save quite a bit of money by not falling into the trap the credit companies have set for you. So if you know for sure your business can consistently pay off the card balance each month, look for rewards related to your business.

For instance, if you will be flying a lot, look for frequent flyer miles related to your favorite airline. Even better, look for cash back on airline tickets. This can save even more than airlines miles. If you will be taking clients out for dinner, there are several cards that cater to the heavy restaurant user. Cash back as well. If there are services you’ll be using frequently, such as FedEx, there are cards that offer discounts on this as well. All these savings can add up over the long term and should definitely be taken advantage of. Again, if you can’t pay off your balance each month, the rewards systems will be worthless to you. However, even in this case there are still some choices for you.

Many business credit cards offer a 0% APR for the first six months to a year of your account. For a new business owner, this can lead to incredible savings. In a small way, this can even be seen as “venture capital” of sorts. Since many business cards can offer credit limits of $50,000, you could use this introductory APR to get your business off the ground and not owe any interest at all! In how many other situations can you do that?!

Of course, you must do your due diligence and realize that some 0% introductory cards will then go on to have a higher than average APR after the introductory period is over. And as I said earlier, as a new business owner you will be personally responsible for the debt. Don’t get in over your head.

So sit down, and figure out if you’ll be able to pay off your balance each month. If so, shop around for rewards that match your business needs. If not, look very carefully at cards with a 0% introduction period, making sure the ultimate APR is not higher than average. And just get over the thought of getting a business credit card as a new business owner without having to give your personal guarantee. It isn’t going to happen.

Jake Everett is a writer with many distinct interests. He owns several websites on a variety of topics, one of which is information about prostate cancer. See his article on new prostate treatment at http://prostaide.org/new-prostate-treatments-treating-prostate-cancer-new-way

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Knowing enough about the loan market will help you find the most attractive offers and plans. There are numerous lenders and institutions, finding the one you need, can be a daunting task, if you are not aware of their differences, the suggested rates and terms. Credit union loans can help you find the most suitable one.

In order to ask for the right type of Loan you need to define what your budget is. Keep in mind that the average price for a house is approximately 170.000$ – although during a financial crisis prices are much lower, like rates are. The interest rate in mortgages is lower in comparison with other types of loans. Terms and regulations for credit union loans are monitored by the Servicing Act and the Mortgage Lending, ensuring the legal and reliable character of the transaction. Once the lender and borrower agree on the terms and the loan procedure starts, no fees are allowed. The lender is obliged to provide the borrower a series of information, such as the balance of the escrow account, the unpaid sum, the due dates and the overall credit.

If your credit history and score are bad, you don’t need to worry. If you contact the credit union, you will acquire the loan you want. There are many institutions that offer mortgages to people with bad credit. Rates might be a little lower, or the terms might not be that loose or friendly as in other cases, but you can still do it. Some lenders require you to submit a full application with your social security number in advance, so that they can check your credit score. Once the evaluation process is done, you will be notified whether you qualify for a loan or not.

Finding the right lender could be a daunting task. You can ask for recommendations or hire a broker; however it is recommended to do some research online. Most institutions publish the terms and regulations regarding mortgages online, therefore it will be easy for you to browse through the available loans and mortgages. A thorough research can help you find the most suitable type of mortgage and lender.

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Establishing credit can be a difficult, time consuming, and lengthy process, however; it is one of the most important aspects of becoming an adult. Credit is not automatically given to anyone; you must prove that you are responsible enough and worthy of credit. Creating a positive credit report takes years, whereas it can take a few months to build a negative profile. As someone who is a new credit customer, there are certain things you can do to increase your chances of success. Consider taking out credit at department stores, placing utilities in your name, applying for a secured credit card, practice good credit, and take out (and repay) a small loan.

It is generally easier to get new credit at department stores through their credit cards. Stores such as Kohls and Macy’s offer “store credit cards” that can only be used in their retail or online venues. These cards work just like a credit card, meaning you do not pay anything up front. Payments are made monthly based on your total balance, however; a cardinal rule is to make your payment twice as much as the minimum payment (balance permitting). Like regular credit cards, missing and late payments are reported to credit bureaus.

Credit impacts your daily life, from buying a home, paying for college, and even having electricity. Consider having a utility registered in your name, such as the cable or power. Even if household members split the utilities, ensure you can pay the bill even if they do not contribute. Since the utility is in your name, late or missed payments affect you, not your housemates. Other utilities include the telephone, cellular phone, Internet, and municipal utilities.

Secured credit cards are a starting point for those wishing to establish credit or reinvent their credit. “Secured” means that the cardholder pays a deposit equal to the credit limit. For example, a $300 deposit will result in a balance maximum of $300. Secured credit cards are issued by Visa and MasterCard and available at many banks, including Bank of America. A secured card shows up on your credit report and helps build a solid credit history. Once a time period has passed, cards are available for “graduation” to unsecured status.

Practicing good credit is essential to your prolonged success. Do not apply for credit cards you know you won’t be approved for – such as a Gold or Platinum Visa. Applying for cards hurts your overall credit score, thus “queries” to your credit report should be kept to a minimum. Ensure that you make more than the minimum payment to avoid having high balances. Having high balances on multiple cards can decrease your credit score, as you risk overextending yourself. Ensure that you monitor your credit report and note how your score changes based on behavioral patterns. Avoid late fees, balance transfers, and cash advances as these increase your interest rate.

Lastly, new credit can be built by taking out a small loan with a cosigner. Student loans are a great example, as most lenders view them as an investment rather than a true debt. Student loans have lengthy repayment plans, which allow for smaller payments over a longer period. Taking out a small loan with a cosigner shows responsibility, signifies you understand how loans operate, and helps you establish credit.

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