Fall In U.S. Credit Rating: What It Means For Small Businesses

Standard and Poor's recent downgrade of U.S. government debt may seem too remote from small businesses to have any impact. But what really are the factors that the downgrade raises, and how can small businesses adapt to the change?

If your small business depends on federal funding, Standard and Poor's recent downgrade of U.S. government debt may affect you directly.

The U.S. government has sought to boost the economy out of recession by borrowing on the international wholesale markets and spending on a range of job creation, welfare change, and capital spending projects. A cut in the credit rating from AAA rating to AA+ by Standard and Poor's raises the potential risk of a default on debt payments, and lenders to the U.S. government will seek an additional few basis points of interest to compensate for the risk.

How Credit Grades Change Fiscal Dynamics
Now a few basis points may not seem much compared with the rates a small business borrows at, but imagine the impact of any increase, no matter how small, on the $14 trillion dollar debt burden and you can see that less money will be available to prime the U.S. economy. Apart from the prestige of having the best credit rating, there is a real knock-on cost on the existing as well as new debt.

It may well be the case that some international lenders will not buy U.S. bonds due to the downgrade. That means borrowing may become more difficult in the near future, and the government may be required to consider even further cutbacks in spending.

What Can Small Businesses Do?
Secure any existing funding lines now before the effect ripples through the market. Do a thorough financial review and develop a detailed cashflow plan. Talk to investors and bankers about getting the business funded in the most appropriate way.

If your business depends on federal funding, then start to look hard at how to streamline your business even further to save on costs. You may come under pressure to retender for contracts as projects get closely evaluated for cost effectiveness in these tight fiscal times.

Know How Much It Costs to Borrow
If your business has any borrowings at all, then make sure you know the interest rate charged and the way the charges are actually worked out. Use a loans calculator to see how small changes in interest rate can affect what you may have to pay and see how changing the term can reduce monthly cashflow needs.

Armed with this information, go and talk to your lenders or investors and negotiate a secure fixed-rate core lending line with a flexible working capital facility big enough to cover the greatest periods of need.

More about → Fall In U.S. Credit Rating: What It Means For Small Businesses

Reasons To Use A Business Credit Card

There is no doubt that credit cards are rapidly becoming a business requirement. They are flexible, convenient and easy to use and offer users the facility to make purchases right away, all around the world.


There are numerous reasons of using a business credit card and following are some of the top reasons of using a business credit card:


1. Using credit cards to buy the business makes it easier to track expenses. Most providers offer integrated credit card expense reports, which can save you countless administrative expenses and a lot of hassle.


2. Cash in hand before the most popular payment method for small, incidental purchases, but the days of small tin of money well and truly over. Nowadays it's more common for companies to make purchases online or by phone. Providing key employees with a credit card that is attached to the business account means that you can make instant purchases and reconcile expenses quickly and easily.


3. One of the most important reasons for applying for the business credit card is to build your business credit. This is useful if you need to take a business loan in the future. Responsible use and consistent payment history will be a great asset credit rating.


4. Most business credit card programs offer rewards and incentives for users. Organizations can save money on various goods and services from gasoline to air travel, insurance and other professional services.


5. If you're a small business owner, you'll know how important it is to separate business and personal finance. The presence of a business card credit helps with this division and will come in especially handy around tax time. Do not forget to keep your accounts separate and do not be tempted to make personal purchases on your business credit card.


6. There may come a time when you need to buy products that make a single payment or pay a big bill. Corporate cards can help you make these one-time payments quickly and more convenient than the use for a business loan.


7. Cash flow is a major issue for all businesses, and especially if you have employees or creditors, who rely on their payments. Business cards credit can help you cover normal times and the seasonal lull.


With money in place or holding it around with you it's not a good idea. Business credit cards reduce the need for cash to make the business less a target for theft or loss.

More about → Reasons To Use A Business Credit Card

The Best Way To Ensure You Gets The Credit You Deserve

Always getting a loan at the prime rate of today is the most impossible thing in this world today. If you do wish to get an interest rate that is more or less like the prime rate of today’s world, you should always consider getting the free credit report gov just so that you can understand where do you stay in this issue. Always getting a free credit report is the best thing that one should do so that they can have knowledge about what you should do and what should you get in order for you to get a loan in the current market. This can lead to your getting the knowledge in the amount of loans that can be incurred in this loan. The original prime rate is actually the rate of interest for customers by the bank who favor them in case of their high fiscal credibility and their good loan rate.

You can always get a free annual credit report that can be got from the bank. They should and always provide this report at you at no cost of yours. They should let you do that at the prime rate that is prevalent in the market as well. Once you have all the necessary information at hand, they should then be available for you to take a guesstimate in the regard of getting loans. If you do not have the necessary skills to decipher the annual report, you should then get the help of an expert and they should be able to get the full details for you and make sure that they get the whole amount of money that you can get in terms of loans is very helpful and essential in terms of money. If the figure is not at all enlighten then you cannot do anything as you would have to live with this only.

You could also get an amazon credit card for your benefit. This credit card can also be very good for your loans and they can help a lot in getting the necessary loans and also be of a huge benefit to you as you would not have to resort to getting the help of banks worldwide just so that you could get the loan amount in a jiffy. They help in you getting some extra cash in hand whenever you need it and easy repayment options are available in this credit card.

More about → The Best Way To Ensure You Gets The Credit You Deserve

Finding The Best Rewards Credit Cards

Great deals on credit cards are now on sale at your nearest dealer credit cards or in your mailbox. Because of competition, the company's credit card has now decided to give something in exchange for your payments - on credit card rewards and incentives can be very attractive. Just about anything goes - from cash back, air miles, or office equipment for your business. Let's take a quick look to see what some of the features and some tips on how to choose the best rewards credit card for you.


Rewards credit cards offer virtually all the credit card company now - simply because they see that it really draws people to their transactions. Benefits now, the day when gas prices really feel the pump, may be especially attractive. Awards are generally based on two things: when you make your first purchase, and depending on the volume of purchases made within a certain period of time.


Rewards credit cards offer benefits based on how much you spend over a certain period of time. In general, you can earn points on your rewards with every purchase, while the number of points per dollar value and the points vary from card to card. The points can then be used to obtain rewards such as gas rebates, airline miles, cash back, and gift cards to stores or goods at a discount, depending on the program.


Cash Back is widely regarded as one of the best rewards credit cards on the market. If you choose this type of card you get from 1% to 20% cash discount on virtually all accredited purchases made by credit card. This is the most popular type of stimulus, provided that, however the cardholder must admit that not every purchase they make will comply.


To find the best rewards credit cards to meet your current needs, be sure to focus on what each credit card can do for you personally. If you want to get more bonus points, designed for travel, look at the map of bonus miles. Persons who wish to cash back rewards should focus on credit cards that offer cash or money can be gift cards for qualified expenses. No matter what you need, you'll find a bonus card rewards are for you. When choosing the best card credit reward, make sure you compare the benefits of one other similar card. There are lots of chances that one may be far ahead of others, which could mean a lot more benefit to you.

More about → Finding The Best Rewards Credit Cards

Planning To Reduce Debt

Stuck in debt. Want to reduce the amount of money you owe. Here is a practical guide on budgeting and making best use of your monthly income.

If you are determined to reduce your debt and are serious about this, it pays to get practical. Look at your budget and figure out exactly how you can make the best use of your monthly income.

Here are some practical ways of cutting down debt

Shun Credit Cards
Say you have got four credit card debts. How do you get that down to three, to two, to one, to zero? Start by taking a look at the interest rates. Find the one that's costing you the most per dollar and focus on getting rid of that one.

If you're not sure how it all works, get some debt advice. It will set you on the right path, so you can make sure you're targeting your efforts as effectively as possible.

The trick is to put all available money towards that debt. Just pay the minimum towards your other debts, and overpay that credit card by as much as you can afford.

Determine Amount to Pay off Debt
It's up to you how much of your 'spare' cash you want to put towards this. Some people prefer to cut their spending to an absolute minimum so they can put as much as possible towards that debt.

Others prefer to sacrifice 50 percent or less of their spare cash, which means that it'll take them longer to clear that debt, but also that they'll still have some money for spending on non-essentials also known as luxuries.

Again, if you are not sure about what's essential, what isn't, and where you could cut back on your spending so you can repay your debts faster, get some debt advice.

It's up to you exactly how you overpay. Just ask yourself
- how much do I want to get out of debt
- how many sacrifices am I prepared to make

Would I rather:  
- cut back on everything for a relatively short time, or
- cut back less - but for longer

Focus on Interest Rate
The simplest and cheapest way of looking at overpaying your debts is to focus on the actual cost, the interest you're charged.

Simply overpay the debt with the highest interest rate, and once that debt is gone, start overpaying the next-highest.

However, not everyone works that way. Say the debt on one of your cards is significantly lower than on the others.

Even if it's not the cheapest, you might still decide to focus on that one first. It might not be the cheapest way remember the interest factor, but the psychological impact of clearing a debt altogether can really give you the kind of morale boost you need when you're working on a demanding but worthwhile project like this.

Whichever way you do it, here's something encouraging to keep in mind. Once you've gotten rid of a debt altogether, that's one less debt to worry about. In other words, your actual required payments will go down, which means you'll have that bit more to use to overpay your remaining debts.

And finally, if you're really determined to reduce your debts, don't underestimate how much the right debt advice can help you, and make sure you don't take on more debt while you're working on your repaying your current debts.

More about → Planning To Reduce Debt

Top 5 Credit Card Myths

Credit card myths can cost you money and affect your credit rating. Here are the five biggest myths.

Credit card issuers generally do not disclose much information about their product. There are many myths about credit cards in the market, and believing in one can cost you dearly. The best thing to do Know these myths and get wiser.

Here are top five credit card myths you should be aware of

Myth No. 1


Some credit cards have no credit limit.
You must be aware of the popular tagline advertised by American Express. No present spending limit. However, all credit cards come with a credit limit.

This tagline is more of a marketing gimmick. It does not mean that anybody who owns an AmEx card can shop for a sports car worth $250,000. This tagline comes with an asterisk sign which further reads does not mean unlimited spending. Your purchases are approved based on a variety of factors, including current spending patterns, your payment history, credit record and financial resources known to us.

The credit limit on AmEx cards is dynamic. It means that if your credit history reveals that you make purchases of small amount on your card and one fine day you make a purchase for a large amount, your card can be declined by the issuer. Therefore, it is always wiser to make a call before making any such transaction.

Myth No. 2:


A credit card company cannot change the interest rate until you get a bad credit rating.
You have been paying credit card bills on time or your usage is much below the credit limit. However, the interest rate doubles in your next credit bill and you are surprised about what went wrong. The fact is that credit card companies can change the rates at 15 days of notice.

This privilege enjoyed by the credit card companies will be ending in July 2010 though as the federal regulations will ban hike in interest rate, with certain exceptions, on the existing balances.

Myth No. 3:


It is necessary for merchants to ask for your Identification card when you pay through a credit card. You made a purchase of $3000 at a local store and the merchant charges your credit card without checking whether you are the same person who owns the card. However, the fact is that the Merchant’s agreement with the credit card companies forbids them from asking any kind of identification.

Even organizations like American Express and Discover discourages this practice. So don’t be surprised at the merchant’s behavior as your signature is enough for him.

Myth No.4:


Merchants can set a minimum amount for a transaction on your credit card purchase.
All the credit card companies charge the merchant a minimum amount of 2 percent of the sale in addition to the transaction fee. So if you buy a soap for $3 and decide to pay using your credit card the merchant might not earn much in the transaction.

Therefore, most of the times you will see the merchant displaying a board. Minimum credit card purchase $10. The fact is that in order to save money the merchant is discouraging small sales, which is against the agreement with the credit card companies.

You have the right to charge your card even for a penny. You can inform the credit card company regarding the practice and they will certainly do something about it.

Myth No.5:


You can improve your credit rating by paying more than you owe.
The total amount due in your credit account is $200 and you make a payment of $500. This practice will temporarily raise the credit limit in your account. It is, however, recommended to keep a certain amount due in your account for better credit rating. The fact is having below zero balance in your credit account will still reflect a zero balance for the rating purpose.

These are not the only credit card myths. There are a lot more. It is a good idea to let some of your friends and family know these myths now and ask some credit card revelations from them, if they have any. Shared knowledge can get you far.

More about → Top 5 Credit Card Myths

5 Tips For Credit Card Management

With their tremendous financial benefits, credit cards have revolutionized the American way of life. Their universal application has done away with the need to carry cash or sign check books for every single purchase. But their successful application calls for certain precautions.

1. Analyze your Needs
Always opt for a card that will be used over the years. Avoid store cards. Majority of them have introductory offers to dazzle you, but eventually it turns out that these cards offer low credit limit at high interest as compared to ordinary cards.

Experts say that it is beneficial to have two cards. One can handle the day to day purchases and other for big ticket purchases. This will help you keep track of your expenses.

2. Awareness about Card Company Policies
Read the terms and condition while applying for a card. This will give you the idea about the customer policies with regard to late payments etc. Do inquire as to when the interest rate is replaced by default rate and ensure that the default rate is universal.

3. Pay on Time
Pay the entire amount due, on time. This aspect is not much publicized by the credit companies that make money on the interest you pay. If you pay late, the credit score falls down. Credit score represents your credit worthiness.

To improve the score, keep your balance below 30 percent of your credit limit. Ensure this by avoiding the items that you cannot afford emergency being an exception.

4. Track your Spendings
Maintain a check register, or log into your account frequently, at the issuer's Web site. Check your balance by using software like Microsoft Money or Quicken. These personal finance software download all transactions automatically.

Ensure that all, on - time payments are reported. This improves your credit card score.

5. Avoid Many Cards
Though having many cards with no balances help improve your credit score, it could prove counter-productive. There may be instances where you are tempted to use them unnecessarily or at times they can become unmanageable. In such a scenario, it is always beneficial to close accounts, otherwise they will go out of hand. If debt was a problem in the past, and may become one in the future, keep open the accounts with which you have a decent track record meaning no, or at least few, bloopers, like late payments or overages and a long-standing relationship. If the low-interest offers dry up, your room for negotiating a better deal is best with a lender that has fond long-term memories of your time together.

More about → 5 Tips For Credit Card Management