Tips For Keeping Your Identity Safe

With the increases in identity theft, you have to be more careful than ever when doing your day-to-day financial transactions that you once took for granted as being safe. The simple tasks of withdrawing money from your bank account, doing the weekly grocery shopping or taking out an insurance policy has made many people victims of identity theft. Read more

What happens if your airline goes bust?

Over recent weeks two airlines have spectacularly gone bust, leaving many passengers stranded and many others wondering whether they will ever see the money that they forked out for their holiday again. The global credit crunch and the soaring cost of fuel has left many budget airlines really struggling, and over recent weeks both airline Zoom and holiday firm XL have had to call it a day. Read more

Reducing your credit card debts

Over recent years the UK has become a nation that has become more and more reliant on using plastic to pay for items. There are many reasons why people turn to credit cards for their purchases. Credit cards are far more convenience and far easier than having to carry cash around or deal with cheques. Credit cards also enable us to make purchases without having to pay up front, and we can even make purchases and spread the repayments, fuelling the buy now and pay later culture that has become so popular in the UK. Read more

Can you benefit from being a credit card rate tart?

There are so many different types of credit cards in circulation in the UK these days it can be difficult to determine which one might best suit your needs and circumstances. However, for some people getting value for money on credit cards means chopping and changing cards regularly to make sure that they are always getting the best rates, deals, and rewards. As a rate tart you can not only enjoy the convenience, flexibility, and benefits of credit card use, but you can even make money and rewards from spending on your credit card. Read more

Business credit cards V charge cards

If you run or own a small business you will probably know how difficult things can become when cash flow problems arise, and this can make it difficult to make purchases for your business as well as carry out other basic transactions. You will also know how messy and troublesome dealing with petty cash can be in terms of trying to tie up purchases and receipts, keeping petty cash slips in check, and dealing with the administrative side of petty cash transactions. Read more

Barclaycard acting irresponsibly

Credit card provider Barclaycard has been accused of acting irresponsibly after it was found that the financial giant had been contacting customers in order to try and encourage them to take money out on their credit cards. With many consumers strapped for cash in the current financial climate Barclaycard appears to have been taking advantage of the situation by trying to talk its credit card customers to use their cards in order to get their hands on instant cash. Read more

Benefiting from credit cards as a student

As a student in the UK it can be very difficult to maintain a healthy cash flow, and often students need a little flexibility and assistance when it comes to finances, whether it is for books, entertainment, or just general purchases such as travel costs or groceries. This is particularly true for students that are living away from home, who often aren’t able to get financial support as readily as those living at home with parents and who also have the added cost of bills and rent to deal with.

Read more

Avoiding credit card pitfalls

Credit cards have proven invaluable to consumers in the UK over the years, and with such a wide range of cards now available there is something to suit everyone, from those looking for interest free credit to those with poor credit who want a chance to try and rebuild their credit rating. Credit card offer many excellent benefits, including total ease and convenience, as well as the chance to take advantage of a range of rewards such as cash back, rewards, air miles and more. Many cards also offer benefits such as extended warranty on purchases, protection against loss or damage of purchases, emergency card replacement services, and more. Read more

Avoid being the victim of credit card fraud

When it comes to credit cards consumers can look forward to a wide range of benefits, ranging from interest free credit and total convenience to flexible repayments and even a choice of rewards with some cards. However, there are also pitfalls to watch out for with credit cards, and one major concern for many people is the risk of credit card fraud. Although security relating to credit card use has become more sophisticated over recent years, the various credit card scams in operation in the UK have also become increasingly advanced, and as a result many people find themselves the victims of credit card fraud. Read more

The importance of keeping your credit clean

Over the years more and more of us have become reliant on credit for the things that we need in life, whether it is a new home or a new car or whether it is to fund a wedding, and education, or even a luxury holiday.

Most of us would be lost without our credit cards, and the majority of us take the ability to be able to open a current account for granted. Yet, if you find yourself facing severe credit problems you could find all of these things impossible, leaving you to deal with a very bleak and difficult financial future.

This is why it is so important to keep your credit in good shape. Those with good credit can enjoy a far easier financial future, with access to a choice of financial services and products from a wide choice of lenders. People with good credit can get the best interest rates, making it more affordable to take out finance. Whether you are looking for a mortgage, a personal loan, a secured loan, a credit card, a store card, or any other type of finance you will find that having good credit can make a huge difference to the amount you pay on your borrowing – and whether you are even eligible to get the credit that you need.

Your credit can be affected in a number of ways. Firstly, it is important to remember that having no credit rating can be as bad as having a poor credit rating, as it means that lenders have no way of knowing whether you are going to be a viable risk when it comes to taking out finance. Therefore, it is important to kick start your credit as early on as possible. One thing that has a major effect on your credit rating is your repayment habits – those that pay their bills and debts on time, regularly, and for at least the amounts requested will enjoy a good credit rating and access to some great deals on finance.

If, however, you make regular late repayments on your financial commitments, or worse still you default on your financial obligations, you will find that your credit rating rapidly declines, and this is where you will start experiencing problems. Those with poor credit will find that their access to finance is greatly reduced, and many lenders will not take risks on those with damaged credit, particularly in the current economic climate. Those with very bad credit may find that they cannot get any form of unsecured finance, and will have to rely on credit that is secured against their homes – even then the interest rates charged are likely to be very high.

There are other factors that can adversely affect your credit, such as fraudulent activity, out of date information, or mistakes on your credit file. This is why it is advisable to order a copy of your credit report on a regular basis and checking through the information on the file. You may find that there are mistakes and inaccuracies that could having an adverse effect on your credit, out of date information that needs to be updated, or even suspicious transactions that could result in your credit rating taking a knock. If you pick up on anything like this you should contact the credit reporting agency as early on as possible to get it rectified.

You should also bear in mind that a log is made on your credit file each time you apply for finance, and the more rejected finance applications that are logged onto your file the more your credit rating will suffer. Therefore if you are turned down for finance you should resist the temptation to keep on making applications. Instead, try and find out what may have affected the lender’s decision by going through your credit report, and wait at least three months before you make another application.

Related articles:

• How To Build Up a Good Credit Rating
• Credit Building Tactics

External links:

• Credit Reports
  Every time a customer applies for a financial product such as a credit card, the credit company will consult that customer’s credit file. This file records all their financial activity in terms of credit applications and banking activity.
• Credit Cards Designed To Improve Your Credit
  Credit cards have become very popular over the years because of the ease, convenience, and flexibility that they provide, and these days there are many different types of credit card available
• Applying For Credit Cards When You Have Bad Credit
  For those with a poor credit score, getting a credit card is harder. However, there are solutions and we will discuss and offer these in the article.
• Using Your Credit Card To Build Credit History
  Let’s say you want to buy a house, but you need to get a mortgage to help pay for the house. However, you have no credit history to speak of, so how can you apply for the mortgage to get your dream home?

Organising your spending money when going abroad

When you are jetting off abroad there is a great deal to try and think about and organise – it can be easy to forget about something as simple yet important as sorting out your spending money.

However, it is important to organise your spending money properly when going abroad, otherwise you could face security issues or costly charges that could put the dampeners on your holiday. It is best not to rely on any one particular source for your spending, and there are a number of options that you should look at to fund your spending whilst on holiday.

Most people benefit from taking a combination of cash and traveller’s cheques when going on holiday in order to ensure that they increase security for themselves. It is a good idea to take a credit card along as well for emergencies. If you take just cash on holiday with you and your money then gets lost or stolen, you could find yourself without any comeback, and you could be stranded without any money of means of paying for anything. This is why it is important to take a smaller amount of cash rather than relying solely on cash for your holiday spending.

Of course it is important to take a small amount of cash. This includes English currency for when you are travelling to and from the airport or departure point, and for any purchases you may want to make whilst at the airport/ferry port/departure point. You should also take a small amount of cash in the currency used in the destination to which you are travelling for things such as cab fares when you arrive and any smaller purchases you may wish to make on your first day before you have got yourself organized.

Most people prefer to take the bulk of their spending money in the form of traveller’s cheques, which are available from banks, post offices, and other foreign currency providers. You can get traveller’s cheques in Sterling as well as in other currencies. Although it can take a little longer to make a purchase using a traveller’s cheque instead of cash, you have the added security that you can quickly get your cheques replaced in the event that they are stolen or lost, although you should remember to note down the cheque numbers and the contact details for replacement sot that you have these details to hand whilst you are away.

Taking a credit card along for emergencies is another good idea. However, if possible you should avoid using your card unless you really have to, as you could find that the charges imposed by credit card companies for each transaction made can quickly add up, and you could have a shock when your statement comes through. In particular you should avoid using your card to make cash withdrawals whilst abroad, as the combined charges for making even one withdrawal a day can be very high.

Be careful about becoming the victim of credit card or debit card fraud whilst abroad, as recent reports have suggested that Brits have seen a rise in card fraud whilst abroad. Always be vigilant when you do use your card, and if your card goes missing make sure that you report it right away so that the account can be frozen to minimise on any fraudulent transactions or theft carried out using your card.

Rewards Credit Cards - Compare Credit Card Rewards Programs Online

Credit card users in the UK can enjoy a good choice of cards these days to suit all needs and circumstances.

One popular type of card is the reward credit card, and these cards are available from a wide range of card issuers offering a variety of rewards. With rewards credit cards you can earn points or rewards when you spend on the card, and these points can then be exchanged for goods, vouchers, or money off purchases depending on the type of card and reward that you choose.

As with other types of credit cards it is best to avoid making cash transactions on rewards credit cards, as card companies tend to charge hefty rates of interest and expensive charges on cash transactions. Also, no reward is received on cash transactions, and therefore you will not receive the full benefit of the card and may offset the benefits of the card through having to pay interest and charges on your cash transactions.

The interest rates, reward levels, and types of rewards offered on reward credit cards can vary from one credit card company to another, and this means that it is important to compare a range of cards in order to find the best one for you. Those that will benefit the most from these reward credit cards are those that repay their balance in full at the end of each month.

If you repay your balance in full each month rather than spreading the repayments you can earn the loyalty or rewards points on purchases that you make on the card but you won’t have to pay any interest, which enables you to really make the most of this type of card.

You can get all sorts of rewards credit cards, such as branded rewards credit cards and rewards based cards from supermarkets that enable you to earn store loyalty points.

The more you spend on your rewards credit card the more rewards points you can earn, and the better the rewards. For those looking to spread repayments on their credit cards a low interest or 0% interest on purchases credit card is probably more beneficial that a rewards card.

If you are looking to apply for a rewards credit card to earn points or rewards when you spend you should bear in mind that the terms and conditions as well as the rewards can vary. You can compare the range of rewards credit card easily and conveniently online, where you can also make your application.

Compare Credit Cards - UK Credit Card Comparison

When looking for credit cards it is important to compare a range of cards to ensure that you find the right card for your needs.

There are many different credit cards to select from, offering everything from special interest rates or 0% interest to cash back and rewards. You can enjoy getting the best deals on a range of top credit cards when you take the time to run some comparisons, and this can be easily done online. Whether you are looking to conduct balance transfers or make purchases or whether you want to accrue rewards you will find a vast choice of cards to suit most needs.

For those wishing to transfer their balance from existing credit cards onto a 0% balance transfer card there is plenty of choice available. When you compare a range of credit cards you can find cards that offer the longest interest free periods on balance transfers, which will give you even more time to pay off your debt without incurring interest charges.

When it comes to finding the perfect credit card for purchases you can compare a range of cards that offer low interest rates and some that offer an interest free period on new purchases. These cards are ideal for those that want to make purchases on their credit cards, and wish to spread the repayments and pay minimal or no interest.

For those that tend to repay their balance in full each month rewards credit cards and cash back credit cards can be very effective, and you can find the best rewards cards by taking some time to compare different credit cards from a range of card issuers. You will find some great deals on many of the top rewards based credit cards and cash back credit cards online, and you can make comparisons quickly and easily.

Because the interest rates, benefits, and terms and conditions on credit cards can vary so widely it is important to make comparisons in order to increase the chances of finding the best card for your needs. Thanks to the power of the Internet you can now carry out these comparisons quickly and conveniently from the comfort of your own home.

Once you have compared a variety of credit cards and found the best one for your needs, you can also make your application online and in many cases you will receive an instant decision in principle on your application.

How To Build Up a Good Credit Rating

It is evidently not a good thing to have a bad credit rating. For example, it can limit your borrowing options. The sorts of thing that contributes to a poor credit rating are county court judgments, defaults on payments and bankcruptcy orders. In the case of circumstances such as these, the only way to get credit (loans, mortgages) is through the sub-prime market. Here the borrower is charged high rates of interest to reflect the apparent risk to the lender.

There are two main credit reference agencies who compile credit histories on individuals. These are Equifax and Experian. They take their information from sources such as the electoral roll, county court judgments and the payment of past debts. When anyone takes out a new form of credit it will leave a record which these credit agencies also draw upon. But it is not the credit agencies who make the decision about whether to offer credit to would-be borrowers. It is the lender who makes that decision, based on the information provided by the credit agencies and their own lending criteria.

Under the Data Protection Act, if a lender refuses you credit, it must tell you why. Under the Act, if scoring was used to help the lender decide not to give you credit, then you are entitled to ask for you application to be reviewed. Even it this doesn’t help you to get credit this time, you will be able to see your rating and where it might need improvement. Or it can highlight errors that may be on your record (and they do happen) and you can try to get them rectified.

If you do have a poor credit rating, it is a good thing to work to make it better. Although bankcruptcy remains on a rating for up to six years, a year of good credit practice should return a rating to a healthy state.

To begin with, you should ensure that you pay off your creditors on time. If you do have to miss a payment, tell the creditor and make sure that you make the payment the following month.

Even simple things like making sure you are on the electoral role and completing credit application forms correctly will help to improve your rating. Agencies allow people to explain why they may have had a poor credit performance, and a ‘notice of correction’ can be attached to their report explaining, for example, whey they missed payments.

It is worth buying access to your credit history from one of the agencies to make sure that everything is in order. As an example, if you have had a county court judgment, but have since paid the debt, make sure the payment is recorded on the file. If you have had a bankcruptcy order annulled, make sure a copy of the annulment or order of discharge is sent to credit agencies.

Another way of boosting your rating is to take out a store card and pay off the balance regularly and on time. The rating can be improved quickly by opening a variety of accounts, but make sure you do pay off the debt each month. You can also ask someone you know well (family or friend) with good credit history to co-sign for a small loan or credit card. This also helps your own rating.

It is a bad idea to keep applying for credit if you have already been refused by another lender. A lot of searches on history does not work in your favour. The tip is to ask the lender if you fir the profile of people they give credit to.

Having no credit record can be as bad as having a poor credit record. So if you have no credit record, start to build one up – a good one.

More Information:

• Credit Building Tactics
• Bad Credit-Credit Cards

Tom Smith
19th June 2007

Debit Card - It Was Twenty Years Ago Today

It may be hard to believe, but 3 June 2007 marked the twentieth anniversary of the first ever debit card to be launched. It was the Barclays Connect Card. It wasn’t long before the cards became popular with users, and within just nine months, the bank had issued a million debit cards. In the UK in 2007 there are around 68 million debit cards in issue, on which are made 143 purchases a second, totalling 6.8 billion transactions every year.

There are now more debit cards in circulation than credit cards, and there are 85% of adults who own one, compared with 66% who own a credit or charge card.

Debit cards haven’t stood still in twenty years, and they are now moving into the world of prepaid debit cards and ‘wave and pay’ technology. The former enables customers to out a positive balance onto the card before they begin to use it when on holiday or a shopping spree, and the latter technology lets consumers make relatively small purchases by simply waving their cards in front of the terminal.

Barclays’ own figures suggest that an average customer will make 210 debit card transactions in a year, with a total spend of very nearly £10,000 on the card. Apparently the biggest spenders come from Battersea who spent an average of £15,840 on their cards in 2006. At the other end of the scale, the lowest spenders were from Small Heath in Birmingham who use their cards only 92 times in a year average, with a spend of less than £5,000.

Other figures tell us that women use their cards a quarter as much again as men who actually spend 33% less than women, the figures being £52 for women and £39 for men, per transaction.

The frequency of debit card use is increasing year by year. They are most frequently used in supermarkets, where a third of all debit card transactions occur. This is followed by petrol stations where one in nine transactions take place, and departments stores take one in nineteen of all debit card transactions. Between these three destinations, they take more than half of all debit card transactions. There is a challenge, though, because the fastest growing purchase area is going to be, inevitably, from internet purchases.

Even popular games manufacturers have to move with the tide. Parkers, the makers of the Monopoly game board, have phased out cash in favour of debit cards in a new version. Instead of the garishly coloured bank notes, players will use Visa debit card instead to keep track of their money coming in and going out. There is an electronic machine which takes the card and the banker enters the details of the transaction.

Parker said it has to move with the times and its change to the game reflects the nature of society and technology advancements. Adults now use cash 70% less frequently than they did ten years ago. The electronic game is more expensive than the standard version, but if you’re short of cash…

Tom Smith
16th June 2007

Are You Paying For Your Cash Back Credit Card?

The offer seems to be too good to be true.  Spend money on your credit card and your provider will give you cash back on the card as part of your credit card loyalty program.  The more you spend, the more cash back you become entitled to. This all sounds well and good, but if you’re not careful you may very well find out that it is you who are paying for the cash back bonus you’re getting, not your UK credit card provider.

In order for your cash back reward program to work in your favor you need to be a disciplined credit card user.  This does not mean that you should not use your credit card, or only use it in certain circumstances.  In fact, you really should be using the card as often and as much as you can if you want to take the full benefit of the loyalty program.  What it does mean, however, is that you need to make sure that you clear your credit card balance at the end of each credit card statement billing date.  If you fail to clear your credit card balance on the statement due date, and you carry-over your credit card balance to the next month, then you start to become the person paying for your cash back rewards, not your credit card provider.

The reason why it is so important that you do not carry over a credit card balance to the next payment statement date is because you need to avoid incurring any interest or fees if you want to benefit from the cash back loyalty program.  As soon as you lose this, any benefit you would have got from your cash back credit card loyalty program will be cancelled out by the interest and fees you need to pay for carrying over a balance on the card.  Indeed, you may well find that the interest and fees you pay each month for carrying over the balance on your credit card will exceed any cash back you would be entitled to.  Unfortunately, this aspect of cash back credit cards is something that UK credit card providers are relying on in order to fund the cash back they’re offering you in the first place.

Consequently, if you are the type of UK credit card user who pays off their credit card statement balance at the end of each billing cycle, then having a cash back credit card loyalty program can prove to be very lucrative for you.  However, if like 60% or so of the other users of UK credit cards you are a borrower on your credit card, then it is very likely that you should look for some form of alternative loyalty program or, more importantly, a credit card that offers you a lower monthly interest rate than your current card provider offers, as, in the long run, this is very likely going to save you more money.

If you are in any doubt as to whether or not a UK cash back credit card is for you, be honest with yourself and ask yourself whether or not you have the discipline to pay off your credit card statement each month.  If the answer to this question is yes, then this card is working for you.  If the answer is no, you are paying for your credit card cash back loyalty program offer – and then some.

Richard Smith
13th May 2007

More Information:

• Cash Back or Rewards – What’s Your Preference?
• Available Types Of Credit Cards
• Credit Card Charges

External Links:

• More cash back credit card offers from CardGuide.co.uk
• Cash Back or Rewards - You Choose
  Not sure which would be the best for your spending levels? This article discusses the advantages and limitations of bothtype of credit card offers

Identity Theft

Identity theft is the fastest growing type of fraud in the UK today. So what is it?

Fundamentally, it is what it sounds like: somebody pretends to be you. Often the first thing you will know about it is when a bailiff turns up at your door demanding you repay the thousands of pounds you owe!

But identity fraud isn’t just about somebody pretending to be you. The fraudsters have access to the same technology that we all have (if not more so) and can easily pretend to be a financial institution on the Internet and you would never know. But you can take some steps to protect yourself.

What are you looking at?

‘Phishing’ is the practice by fraudsters of creating false websites so they look exactly like the genuine article. They can be used to obtain personal financial information from people who are enticed to visit those sites. Usually the targeted person will receive an email suggesting that their financial information has been breached. The email asks them to click on an embedded link to visit the false site to confirm their details. In so doing they are of course making the security breach happen.

What can I do about it?

If you ever receive an email suggesting that your financial or security details have been compromised, even if it’s from a company that you have dealings with, NEVER click on any link or go to any of the pages the email suggests. If you are in any doubt, contact the finance company by telephone and ask them about the request.

Once upon a time

Credit card theft can happen just as easily in real life as it can in cyberspace, so there is no need to become paranoid about using your credit card online. You do, however, need to be careful and think about how you use it.

These days nearly all credit card companies offer protection from fraudulent use. So if your card details are stolen on the internet the credit card company will usually absorb the cost of the fraudulent items, as long as you can prove them to be the work of somebody else without your knowledge.

If you ever suspect you may have revealed you financial details to somebody with malicious intent, notify the credit card company immediately and they will put a stop on your account and issue you with a new card and new account details. This is a minor inconvenience to them and it is far better to be safe than sorry.

On-going battle

Credit card companies have introduced measures to try to counter credit card fraud. The security code on the strip above your signature on the back is an example, as is the use of Chip and Pin cards.

If you prefer not to use your credit card online but still want to buy things on the internet then many sites operate using payment intermediaries such as PayPal. But beware, even these aren’t without their fraudster hangers-on and you need to look after your PayPal account details just as much as you do those of your credit card!

Under lock and key

Whenever you’re entering your financial details into a website always check on your browser that a small “lock” symbol is showing, usually in the bottom right hand corner. This indicates that the site is encrypted and at least offers some protection to you as a user.

Be wise be safe

When people first sign up to the Internet they inevitably experience a period of wide eyed wonder at it all. Some become so amazed by it that they accept whatever they see as genuine.

A seasoned user will often be far more sceptical about a many of the things they find on the Internet. After all, how many people do you know actually respond to that email from Nigeria asking if they may borrow your bank account!

More Information:

•  Federal Trade Commission - Identity Theft
• Identity Theft Resource Center - Features detailed guides for victims, current laws, media resources, and reference library.
• Identity Theft
  Identity theft is a major issue in the UK, and with good reason. It has been estimated that it can take up to sixty hours of work to recover a stolen identity, and in the worst cases, cost up to £8000 to put right. But what can be dome to prevent this?
• Home Office Identity Theft Home Page
• Take Charge: Fighting Back Against Identity Theft

Bad Credit-Credit Cards

In the red and on the blacklist

What is bad credit, how do you become somebody who has bad credit and how does it affect your daily life? How do you get a credit card even if you are on the credit blacklist? There are ways and means…

The cost of credit repair

If you are refused a mortgage, a loan or even a credit card it may be that you are regarded as either a bad risk or that the lender can’t see how they will make money from you, which, when it comes down to it, is the same thing.

But I haven’t done anything!

When you apply for any kind of loan the company you are approaching conducts what is called a credit check. Every time you have enquired about finance it has been recorded on a central database and lenders access this database to see how well you repaid your loans and any other debt management you have exercised.

If you have missed a few payments on a loan, defaulted on a mortgage for whatever reason, or perhaps failed to pay household bills on time, it will be recorded and quite often the criteria lenders use to assess whether you are a good or bad risk will count these things against you.

Squeaky clean

Strangely enough even if you have lived a squeaky clean financial existence and never had a credit card or defaulted on any payments or perhaps you haven’t had a large repayment to make before, this can all sometimes add up to an equally bad risk in the lenders assessment. This is because they have no data on which to assess you; there will be no record of how you may respond to the credit you are now applying for. So they refuse you credit altogether.

A quarter of adults

It’s reckoned that one in four adults have had some form of bad credit rating at some point in their lives. The good news is it can be changed. One way of changing your credit rating for the better is with a bad credit-credit card.

How much!

The problem with bad credit-credit cards is they tend to be expensive. The APR you will normally find on these cards can be up around 30percent.

But as you are determined to improve your credit rating and this is why you have taken out one of these cards it doesn’t really matter because you will be paying off the full balance each month and thereby avoid actually paying the high interest rate…won’t you?

Shop around

It is always worth shopping around for the lowest rate you can get, just in case there is a month or two where you simply can’t pay everything off. And above all, don’t overstretch yourself! Just because you have credit doesn’t mean you have to use it!

Keeping it real and avoiding the debt trap

Once you have your card it is really important to make sure you use it properly. If necessary you should set up direct debits from your bank account well before the payment due date so you always pay off at least the minimum payment each month.

The secret to improving your credit rating is to make regular payments and thereby demonstrate your reliability. But remember, paying off the minimum each month will incur compound interest, (interest on interest) at very high rates too. The last thing you want is to fall into the debt trap.

A capital card

The Capital One Classic Credit Card is currently available to people who have a bad credit rating. As you might expect, it has a limited credit ceiling of between £200 and £2,500, but with time it is likely to increase as you demonstrate good management of your debts. The APR is a whacking 29.9% so you really want to avoid paying interest if you possibly can.

Hopefully a card like this would help you walk away from being amongst this country’s one in four with a poor credit rating.

 More Information:

• Credit card articles - some great articles from the Card Guide
• Applying For Credit Cards When You Have Bad Credit
• Using Your Credit Card To Build Credit History
• CCCS - Free non profit association advice
• APACS information page

Credit Card Charges

A return to form

Some years ago annual fees on credit cards were common. Today as the credit card companies compete amongst themselves for consumer business with zero percent enticements most annual fees have disappeared. Now, as a result of what the industry regards as lost income through consumer fickleness the threat of annual fees is back.

We’ve looked at a group of cards provided by American Express, some of which incorporate a fee into their benefits package and ask, are the annual fees worth it? And do all lending companies re-coup their “losses” by penalising users who step out of line?

An Alliance

In the Summer of 2005 American Express and British Airways announced they were going to continue the British Airways American Express credit card scheme. They now offer three cards under this heading: the basic card, the British Airways American Express Premium card and the Express Premium Plus card. The Premium Plus card has an annual fee of £120.

This is admittedly very high compared to most annual fees of “lesser” cards. Even others in the Amex group where an annual fee is charged it is either £30 or £60. So, why the difference?

The intention is clear

The picture becomes clear when you look at the figures for total charge for credit and interest on each of their cards.

This figure is arrived at by adding together the interest charged and an annual fee. It’s based on borrowing a sum of £1,500 which is repaid in equal monthly instalments over the period of one year, but does not take into account any separate promotional incentives that may be run on any particular card.

The three basic cards in the American Express range have charges totalling between £123.72 and £152.81. The Premium cards vary from £123.72 to £140.79.

All very similar, when you consider that the cards annual fee varies from £30 to £120! So basically you either pay more in annual fees or you pay more in interest. Either way the company, makes sure on this sum that a user of any of the six cards is going to get charged between £120 - £150 for the pleasure of using the card.

But I hear you say, what about the other benefits to the user? Yes, these cards award 1.5 BA miles in return for every £1 spent on the card. Good value? …. Possibly, If you compare it to the Air Miles credit card which gives only 1 Air Miles point for every £20 spent on that card.

Is it worth It?

The bottom line is that any card such as this one from the American Express and British Airways alliance will be of benefit to the user and worthwhile if the user already purchases what the credit card company is offering. In the case of these cards, the premium cards are aimed at small business use, so a fee of £120 isn’t going to break the bank and small companies whose employees do a lot of air travel are likely to jump at these cards.

What they do illustrate however, is that the credit card companies have carefully calculated the expected returns from each of their products. After all these are financial institutions, unlike most of their consumers they understand how to make money! They are not charities and they have reams of data telling them how much money they can expect to make from each of their products.

Punish the offender

The variable for all credit card companies is the way each user actually uses their card and do they love it when somebody steps out of line and doesn’t pay on time, or goes over their credit limit!

In early 2003, The Office of Fair Trading launched an investigation into the penalty charges levied by credit card companies to establish whether they were in fact “excessive”. Despite findings that indicated the fees of £20 and £25 charged to the consumer were greater than the costs to the lender of such defaults, it appears many credit card companies continue to charge what they like, as quite a few still charge these high rates.

Unenforceable?

Speaking in 2005, barrister Richard Colbey from Lamb Chambers declared that “Credit card penalty charges are legally unenforceable because they seek to punish the borrower rather than compensate the bank for any losses that they have suffered as a result of the unauthorised borrowing”

Perhaps this explains why if you have omitted to pay on time or accidentally exceed your limit the credit card companies are usually willing to repay part of the penalty incurred. But they will never waive them completely.

Available Types Of Credit Cards

Credit, credit, everywhere …

Everywhere you look these days companies are offering you credit. There are hundreds of different brands of credit card available and there are dozens of different types of credit card too. We take a brief walk through some of them.

Reward cards

Reward cards offer points to be redeemed against specific purchases such as Nectar points, Air Miles or cash equivalent points to be used at specified retail outlets. Many global retail outlets like Virgin and Sony do their own cards to encourage brand loyalty. The Sony scheme, for example, is called Pulse Beats and points can be collected and used as discount against a whole range of Sony goods. The interesting twist here is that you get triple pulse beats if you use your Sony credit card in a Sony outlet.

Cashback

Cashback cards give you money back on your card every time you use it. Typically cashback is about 2% of expenditure and will be awarded annually although you’ll be able to see how much you are owed on your monthly statements.

Charity Cards

Charities have never been backward in utilising every possible way to raise money, so the introduction of charity credit cards was a predictable step. Usually the charity receives a donation from the lending company for every application for the card they receive and a small percentage every time you make a purchase. This kind of affinity can be very helpful for the charity, as an example, since its launch in 1996 the MBNA Childline charity card has raised over £100,000.

Balance Transfer cards

Many cards offer zero percent incentives on balances transferred from other cards. These are to encourage people to change and many do, often! These 0% balance transfer cards were supposedly to encourage people to be loyal to the particular card they swapped to. But as it’s so easy to change, many people become what are called “rate tarts”. Most of these credit cards offer substantial zero percent periods such as 9 to 12 months as the big lenders battle it out between each other, but watch out for the APR when the holiday is over!

Store cards

Store cards are still credit cards, but many people think of them as being different. All you are doing is getting credit from a particular retail outlet to buy their goods. Infamously the interest rate on these cards is very high, so many people end up paying well over the odds for items they buy using these cards and leave a balance on them for any length of time.

Pre-paid cards

These were designed for people who have poor credit ratingsand are an alternative to ‘Bad credit-credit cards’. Pre-paid cards require the owner to pay a sum up front when they apply for the card, so there is no credit as such as you are then spending your money. Hence there is usually no interest fee. There are of course all the usual requirements and penalties to ensure the user stays within their spend limits.

Gold and Platinum cards

In the nineteen eighties, once the initial wow factor of credit cards started to subside, elite cards were introduced. Like so many things in the image conscious eighties these gold and platinum cards supposedly said something about the user. Usually they required a minimum income which was higher than average and so indicated that the user was a financial success. There was an exclusivity about them. These days all that has gone. Most of the gold and platinum cards simply offer slightly different features in a lenders range of credit cards.

The array of credit cards available today is remarkable and given the convenience of the plastic is it any wonder?

Credit Building Tactics

Your Credit Rating and you

There are two main credit rating agencies in the UK: Experian and Equifax.

When credit card companies receive an application for a card they will more than likely run the person’s details past one of these two agencies. It’s the job of these agencies and others like them, to keep on file all applications for credit, whether or not you were successful and details of how you conducted your dealings with debtors when you had that credit.

This information includes your mortgage payments, sometimes it includes utility bills and it can even take into account the area in which you live and whether you are on the electoral roll. The lender will compare the data it receives back from the rating agency with its selection criteria to build up a points profile of you as a potential risk. If you don’t score enough points you are considered to be a bad risk or have a low credit rating.

Don’t Panic

If you are turned down by a lender it’s possible to find out what your credit rating is by writing to the agency enclosing payment for £2.00 and asking to see a copy of your file. Or apply online at one of the numerous websites offering the service.

If you do have a low rating, don’t panic! You can improve it. Here’s how.

Start slowly

By initially getting a credit card designed of people with a poor credit rating you can start to make regular payments into it. These payments should be fairly large and the best thing is to pay them off in full each month.

If you can and you feel like playing the credit ratings agencies at the top of the game, then you can go one stage further. Sometimes loan companies will refuse you credit if it appears from your history that they won’t be able to make money out of you. So for the hell of it you might want to leave a bit in the card for them to nibble at with their interest charges. But whatever you do, don’t leave too much in there as the APR could be soon become crippling.

And remember, you don’t need to do this every month – clear the balance more often than you leave a little for them. What you are doing is demonstrating that you can look after your finances by working the credit card.

Careful does it

The above method should really be called the kamikaze school of credit improvement and it’s not guaranteed to make a difference with all lenders. It requires you to be very self disciplined and if you’re the sort of person that might get carried away with spending or be just too lazy to control your repayments you probably shouldn’t go near this approach.

The building blocks of credit

Instead you could start to build up your credit rating by co-signing with a family member or a good friend on a small loan or credit card. But be aware of

the potential pitfalls of signing up to a joint debt if you fall out with your

co-signee! This is a good building block for young people who are starting out on their journey into credit.

It’s all over

Once it’s all over and your credit rating improves you will quickly get another card. When it arrives, play the game the usual way and give the credit card companies as little as possible!

Whatever you do don’t forget to meet your monthly repayments on any bills you have or your rating will go sliding again. If you do find you’ve forgotten a repayment, contact the company, get them to make a note that you have contacted them and pay it as soon as possible.

If you move house, tell all financial institutions you are involved with and make sure you register on the electoral roll of the new area.

Applications

Every time you make an enquiry about credit it’s recorded on your rating file. So if you are turned down by a company it will be shown. For this reason it is a good idea to avoid making several applications to different companies if you are turned down by one. Given that it only costs around £2 to find out how your rating stands it would be better to get a copy of your rating from the agency before filling in more applications.

Alternatively simply phone the company before applying and ask them if you fit the credit profile they will want; are you the sort of person they will accept? A quick conversation could do you and your credit history a world of good.

Buying time

A little patience is needed before your credit rating gets going, but while you’re waiting for things to start moving you can help them along by getting a few scorecards, but always pay off the balance on a regular basis as these are usually the most expensive type of credit facilities out there. So don’t go grabbing scorecards for things that you don’t already buy, or you’ll end up in a financial nightmare of spiralling debt.

And finally…

Whatever you do, when you get the credit card that you really want, don’t go over your credit limit. You’ll be charged an outrageous sum for the privilege and you guessed it, it will go on your credit rating file.

Be safe, follow good practice and get rid of all those scorecards and close down your original credit account at least until you have got used to handling credit again or if it’s for the first time until you can recognise how you might respond to the temptation of the card!

More Information:

• Credit Card Advice - CreditCards121 advice section
• Credit Reports
  Every time a customer applies for a financial product such as a credit card, the credit company will consult that customer’s credit file. This file records all their financial activity in terms of credit applications and banking activity.
• CCCS - Free non profit association advice
• APACS information page

Cash Back or Rewards - What’s Your Preference?

In their bid to retain customers credit card companies have resorted to many different marketing ploys, or ‘incentives’. Cashback cards have proved popular, as have cards offering rewards points. But which is better?

Interesting

The interest on most cards offering cash back is accrued throughout the year and the totals shown on your monthly statement. The annual cashback is then allocated to your account once the twelve months are up.

One exception to this is the EGG card that gives you instant cash back if you visit different stores online such as Virgin wines and ASOS, the online gift and fashion store.

Inspecting the small print

Typical restrictions applied to the annual cashback cards are that it’s restricted to 2% of spend as an introductory offer. You need to look for what it then reduces to as it will go to a lower rate when the honeymoon is over. For example, 1% with the Morgan Stanley card. The American Express Platinum card goes as low as 0.5% on amounts up to £3,000, but fortunately increases to 1% on spend between £3,000 – £7,500 and 2% on spend in excess of £7,501.

So, that’s one card where the cashback is clearly designed to encourage you to spend, spend, spend!

Robbing Peter to pay Paul - the annual fee

Although there are less of them around these days it’s always worth remembering to check whether you cashback card charges you an annual fee. If it does, get rid of it. There is no point in giving the company money on the one hand only to receive some back on the other. You can do better.

Is it worth it?

An example of the value of a cashback card being reduced is the HSBC Platinum Visa card, which charges a £35 annual fee. The cashback vouchers are worth 44p for every £100 spent, so that means you would have to spend £8,000 to actually earn cashback in real terms.

No small change

Averaged out over the year that HSBC card spend would be only £666.67 each month. But if you put £1,000 on the card and pay it off each month so you don’t get charged interest, that would mean you have the grand sum of very roughly £17.50 cashback for the year’s spend.

You can see why the card companies are keen to use the cashback incentive.

So what about reward schemes?

Reward schemes usually offer points that can then be redeemed against goods, usually only from selected outlets.

The Goldfish card has proved to be one of Britain’s most popular credit cards, helped largely by a well targeted and conceived Television advertising campaign featuring Billy Connolly.

A million people can’t be wrong, can they?

There are over a million customers with Goldfish cards and every pound you spend online or in the high street with your golden friend will earn points that can be redeemed at popular shops such as John Lewis, Marks and Spencer, Asda, Dixons, Boots, and WH Smith and many, many more.

Come fly with me

Air Miles has proved a very popular incentive scheme and is offered by several different card providers, including the illustrious Coutts and Co. Air Miles credit gives one Air Miles point for every £20 spend and as much as one point for every £5 spent at a participating Air Miles Travel Agency. So they can mount up.

I’m Morgan Stanley fly me

Morgan Stanley are an investment Bank, so if you are a high earning individual or couple, then you could benefit from the travel and holiday offers associated with one of their cards. Collect points on your card and if you spend £25,000 you will have earned enough points to fly from London to New York return.

General Motors

The GM card gives users rebate points at 3% of spend towards money off a new Vauxhall or Saab car. They even offer 100 free rebate points for the first time you use your card and that provides you with the instant equivalent of £100 off that shiny new motor!

Which type of card?

As with all these decisions it really comes down to how you use your card and your own particular lifestyle as to which one you should choose. Bear in mind that card reward schemes in general have been heavily criticised by Which? magazine in the past because they don’t offer very good value for money.

The choice is yours

In general cashback schemes offer more flexibility for the consumer to buy what they want, but if you have a particular lifestyle then you may well see a credit card provider with a particular offer to suit that lifestyle, like the GM card or the Suite card which offers points redeemable at over 16,000 hotels around the world.

Ultimately, the choice is yours.

Credit Card Balance Transfer Guide

A frequent mistake by many credit card holders is to run up a balance, which for one reason or another simply can’t be paid back in one go, so it starts incurring interest. And those interest payments can be crippling.

It’s no wonder the British public have been playing ‘hot potato’ with their credit cards; swapping balances here, there and everywhere. But this has its advantages and disadvantages.

Here’s a short guide to balance transfers.

Running up that bill

It’s very easy to run up a balance that sits like a lead weight on the statement every month. As soon as it’s there even the smallest change in interest rate could make quite a difference to your monthly outgoings.

So shop around!

Be brave, be bolshy!

If you have a fairly large balance and you’re feeling brave, it’s worth phoning the credit card company. When you get through, instead of dealing with the person at the call centre, ask to speak to somebody in the department who sets the interest rates.

All these companies are interested in getting your business and somebody, somewhere sets the rates they offer. Play one company off against another. Tell them what other companies have offered you and ask the question: can you go lower?

The chances are they probably will.

Choosing a credit card

Given that you are going to be getting your new credit card account with an opening balance on it you should probably go for the one offering the cheapest APR. That is not necessarily the one offering zero percent incentive for a few months. You need to be aware of what the APR will revert to when the offer period ends. If you decide to change to another credit card company at that time you may get a transfer fee levied at you and it can affect your credit rating if you change credit cards a lot.

It’s certainly not worth going with a credit card that charges you an annual fee - Why pay them twice! There are plenty of cards that don’t charge out there.

New doesn’t always mean better

Remember the golden rule, when you get that new card, don’t use it for anything else.

The chances are that if you do use it then on your next statement you will get two sets of interest and that second interest figure will be at a much higher rate than for the balance transfer. You’ve no excuse for being surprised, as it will all have been itemised in the small print of the terms and conditions…

Money down the drain

So as you pay your monthly fee into the account it will be deducted from the part of the account that is paying the least interest, not from the transaction that was incurred most recently. In which case, all your hard work researching and selecting the card in the first instance would have been wasted by a single slip up.

If you think you might be tempted like this, the answer is to leave your new card in a drawer where it’s out of harms way!

Credit, credit, credit: your rating

Frequently swapping your balance around from one credit card company to another can sometimes adversely affect your credit rating. Your credit rating is the information the lender companies use to decide how much credit they are going to give you.

The one who cannot be named

If every time you change cards you regularly clear the balance within the interest free period then the lending companies will start to see the game you are playing and can refuse to give you credit.

This is then reflected on your credit rating which means that other companies are even less likely to loan you money. From that point on it can be a downward spiral into credit rating hell.

Refuse me?!

In the UK there are two major credit checking companies that lenders use to check your credit worthiness. These are Experian and Equifax. Both these companies hold your credit history and you are entitled to see that information.

Stand and deliver

If you are refused a credit card it will be worth contacting the lender within twenty eight days of being refused to find out which of the two above agencies were used to provide your credit history.

Remember that you will have been refused credit by the company you approached for the credit card, not by Experian or Equifax; however, talking to them will allow you to see what’s on your record and then get an idea of why you were refused credit. In some circumstances you might even be able to reverse the decision.

Get out while you’re ahead

Assuming you did get the credit card you wanted and you have been given a good long introductory offer with low interest on the outstanding balance, how do you make the most of it?

The answer is simply to keep a record somewhere of when the offer expires. If you keep a diary, scribble it in there, or in your palm pilot, or in your desktop organiser – it doesn’t matter where, just keep a note somewhere obvious.

Have we been here before?

With the end of the introductory period written down you can then make an informed choice of whether to transfer to another card or not. With your new-found understanding of the credit rating system you could get hold of your credit rating and base you decision whether to move or not on that.

Whatever your decision your main aim should always be to prevent your credit card bill becoming overwhelming by accruing huge amounts of compound interest each month.

Credit Card Insurance

Fear factor

These days we are inundated with stories about identity theft, muggings, credit card theft and the general dangers of losing our treasured credit cards.

The dangers of modern living with its job insecurity, illness, theft and all those other things we dread are quite enough to make anybody want to turn to insurance for their own peace of mind. But are Credit Card Protection Plans the answer?

A Sign of the Times

When you start to use a credit card you will get an offer from the lending company to provide you with Credit Card Insurance. Primarily this is to safeguard the money that the institution has lent you. If you lose your job and go belly up with thousands owing on your card and no way to pay it back, they will want a way to ensure their money is safe. It’s also a way for them to make some extra money off you!

There are two main dangers for credit card users:

• loss or theft of the cards themselves
• loss of income

Live dangerously

There are those that regard the risks associated with the debts on a credit card as being tolerable. If you are one of those people who always knows where their credit cards are and has never lost anything ever, then you may feel the same way. You may also count yourself lucky!

Too much

Sometimes people feel insurance is an unnecessary cost because the package being promoted by the credit card company isn’t offering what the cardholder actually wants. It may not be the best value for money or it may be that it provides too much cover. If this is the case there are a number of off-the-shelf alternatives.

Safeguard against risks

Usually a Card Protection Plan (CPP) will provide some insurance against fraudulent use of your card or use of your card without authorisation. They will also include a facility for an emergency cash advance for ticket replacement and hotel bills (in case you suffer lose or theft while staying away) and may provide some cover for any cash that was stolen at the same time as your card.

But there are alternatives to CPPs.

And the family came too

Sentinel Card Protection is one of the most well known insurers specialising in credit cards. For a one-off annual fee they will protect all your credit cards with the same cover. That includes notifying all card companies involved in a theft of your cards and arranging for replacements to be issued. They provide up to £75,000 worth of cover against fraudulent use if they are notified within 24 hours of the loss or theft. They also provide an interest free loan for up to £3,000 to get you out of trouble if you are stranded abroad.

The key thing about Sentinel is that it will cover all your cards and all those of other members of the household with the same one off payment. It offers a three year one off payment option which is even better value at just £50.00.

Their service includes handy items such as a luggage tag retrieval service, so no matter where your luggage may end up Sentinel will help you get it back with their security coded unique reference number system.

They do not however, cover redundancy or your inability to make payments due to long term illness. For this type of cover you would need Payment Protection Insurance or PPI.

Holistic care for your Credit cards

This approach is to insure your payments so that you can continue paying if you get sick or suffer an accident which leaves you unable to work. A plan such as Paymentcare would be issued by a Financial Services Company and could be arranged either directly with the insurer through the internet, or through your broker or Financial Advisor.

This type of insurance will specify how high the maximum balance can be to be eligible for cover, and how long the policy will pay the credit card payments or whether it pays off the full sum in one go.

All these details would be raised as you discuss the plan with your broker or fill in the application form. In this way you can be sure to get an insurance policy that exactly suits what you are looking for. The premiums are usually payable as monthly direct debits and the amount would reflect the type of cover you chose.

Better to be safe than sorry

Whether you decide to insure yourself against the risk of being unable to repay the outstanding balance on your credit cards will really come down to your general outlook on life and your whole attitude to risk… and whether you think the world is really as unsafe as we are all led to believe.

Choosing the right card

Choosing a credit card can be a process full of heartache and confusion; there are so many to choose from. But do they really offer different benefits?

Whether you are venturing into the world of credit for the first time or are thinking of changing your card, we examine the process of choosing a card and reach some interesting conclusions.

Loads of money!

It was clear some decades ago that credit cards were here to stay. In the late seventies there were articles on TV and in newspapers that soon we wouldn’t use cash any more – no more paper and no more heavy coins jangling in the pockets.

It hasn’t quite gone that way, but certainly these days it’s a question of which card to choose not “do I want one?”

Everybody’s different

What type of credit card user are you?

There are some very set patterns that go to make up the million or so credit card users in the UK today. There are so many of us that all together we owe in the region of £180 billion. And that’s a lot of interest!

Pay it off

Do you clear your balance every month? If you are one of these tidy users then really the market is completely open to you as you won’t have to concern yourself with how much interest the credit card company charges. It would be worth casting an eye around the market though just to make sure you’re aware of what is on offer.

To pay it off, or not pay it off, that is the question

If you use your card for regular purchases each month and usually pay off those regular sums but occasionally run up larger bills, perhaps at holiday time or Christmas, then you do need to be aware of how much interest you are being charged.

You should also examine how long the interest free period is offered on the card. Most companies will give you between 56 and 59 days interest free credit, but a rare few don’t give any!

The hole in the wall

If you are going to use your credit card to obtain cash then you are going to get stung anyway you look at it. Going to the hole in the wall will incur interest on the cash as soon as it’s in your hand; there are no interest free periods with cash transactions.

Check to see what rate the company charges for cash; it’s bound to be higher than other rates on the card.

A debt is a debt is a debt

If you are somebody who has run up a debt, or is likely to run up a debt, on your credit card and lets it sit there, then you really do need to go for the cheapest option you can get your hands on.

There are two schools of thought for outstanding balances. Some people say chose a credit card that has a low interest rate for the life of the balance and stick with it. Some people say go for the zero rate promotions and switch when they come to an end. We say it’s up to you.

Buyer beware

If you are going to change between zero rated cards and become a bit of a ‘rate tart’ then you will need to keep an eye on how often you do so and whether there are any penalties charged when you transfer to the next zero rated account.

Switching from card to card for the zero rated incentives can affect your credit rating. Credit card companies have now got wise to the fact they are losing something like £1bn a year in potential revenue by people taking advantage of their offers. So watch out for those fees.

Something for nothing

Credit card companies have also now introduced what are known as honesty boxes on their promotions. These show all the interest rates they charge and should be displayed in a clear understandable form, so you can easily compare like for like.

As far as other incentives are concerned there are cards out there that offer reward points or discounts at selected retailers, cashback, zero percent on goods purchased or even, on special charity cards, a small donation to a named charity every time you make a purchase. There will be one for you.

Choose your weapon

The credit card industry spends billions of pounds every year on encouraging users to transfer balances or to take out more credit. The different types of card on offer are staggering and have been developed to compete in the High Street wars of open finance introduced in the eighties. Today, some of the larger organisations like Barclaycard or American Express will offer several different cards each with their own unique benefits. These demonstrate that we all may be unique, but we each share the same type of habits when it comes to dealing with our finances.

Choose carefully, for your credit card can be your friend if used wisely in the fight to survive the daily financial grind or it can very easily become your enemy.

The Pros And Cons Of A Business Credit Card

There are hundreds of business credit cards from banks and other business service providers. In fact, there are so many that it can be difficult to choose the right one.  Here’s a guide to what you should look at when choosing a business credit card and what to avoid to make sure your business stays financially healthy.

Business Card Advantages

One of the main advantages of a business credit card is that it can be used to manage cash flow. Business owners and their employees can use business credit cards to pay for goods or services that require immediate payment. At the same time, they can benefit from an interest holiday of up to 56 days before the money is deducted from their business accounts. Deferring payments in this way can be very useful for business owners.

Another key advantage benefits both employers and employees. When employees travel on business they often have to pay for hotels, car hire, flights, meals and business entertaining. In many cases, this comes out of their pocket and they have to wait to be reimbursed. Using a business credit card means that employees can charge these business expenses straight to the business without waiting for reimbursement. This keeps their personal finances healthy.

Saving Accounting Time

For employers, this practice has another advantage. Hours and hours of accounting time (and business money) can be spent on sorting out employees’ expenses. This workload is much reduced with a business credit card. While businesses may choose to have the backup of having employees submit expense reports, the business credit card statement may be enough. Each month, business owners get a statement that itemises all transactions on the business account, regardless of which employee made them. Some business accounts offer advanced reporting features that will help with VAT calculations.

Business Card Disadvantages

Despite these advantages, there are a couple of major disadvantages to business credit cards. For example, if an employee accidentally or deliberately reveals card details, there could be expensive transactions on the account. Even if the employee has committed a fraud, the business may still be liable. Such situations can also take a long time to sort out.

The other potential issue is the same for business credit card holders as it is for personal credit card holders. Money spent on a credit card is actually debt. With preferential interest rates and long interest free periods, business owners will need to make sure that they don’t get into a cycle of debt. This could seriously damage the long term financial health of their business.

Other Business Finance Options

For this reason, it is also worth considering other financing options for the business. A business debit card, for example, keeps tight control of access to the account. In addition, business owners cannot spend more than they have in the account, unless they have agreed an overdraft facility. A business loan is another option worth serious consideration. Whichever option business owners go for, it is essential to manage finances prudently and avoid getting into long term debt.