Monday, September 3, 2007

Students Easy Prey For Credit Companies

By this time of year, most college students are settling in. They already know where the good (and cheap) food is around campus. If they're at sleep-away school, they've decided if they love (or don't-love) their roommates.

And right about now they are feeling that particular kind of love coming from a crowd of strangers who ask only their signatures in return.

For inspiration about that last one, let us turn to Elder Marichal Monts, pastor of Hartford's Citadel of Love.

When Monts left his mother's home in Hartford's North End for Wesleyan University, he carried with him a bedrock faith, a heap of musical talent and absolutely no clue what it meant to have a credit card - or, for that matter, what it meant to have stuff.

He was the perfect target.

Everywhere Monts turned on campus, he saw credit-card applications. What would you say to $1,000 free money in exchange for your signature on a form? (Don't be silly. You wouldn't say anything, but you might leap over the table to get to the form.)

Monts maxed out his first card, and then another, and then a third. Still, the offers kept coming. Most times, the card itself came tucked inside a lovely envelope, and thus Monts was able to leapfrog through college living the life to which we'd all like to become accustomed.

Before you condemn, understand this wasn't all about acquiring things for himself; Monts thoughtfully acquired a credit card for a woman's clothing store so that he could get things for his sister, his mother and other women in his life. "Bad credit" means nothing when you have none.

Monts figured he would pay his debts eventually, and with that magic card, Monts could buy things that would make him feel important. He could fit in to the rarefied air of Wesleyan by at least looking the part. For a while, "it was Christmas all year," Monts said.

He was his credit-card companies' prettiest baby. While he was freely spending, the debt was accumulating, and because Monts had no visible means of paying his bills, the interest rates piled up. Credit companies make their money on people like Monts, customers for whom those cards are golden portals to happiness.

And then the balance came due. Unhappy people started calling his house. Collecting the mail became a daily exercise in humility.

College students are prime pickings for a credit-card company. The assumption is that if students get into financial hot water - and they often do - their parents will step in and pay their bills. That, or the students will eventually graduate and get the kind of jobs that will allow them to pay their debt, all while hemorrhaging cash to meet just the minimum payment.

But colleges and universities say they lose more students to credit-card debt than they do to bad grades. The average college freshman has $2,200 in credit-card debt, according to Nellie Mae, a student-loan provider. At graduation, that debt grows to $5,800, and that's doesn't include student loans. Half of first-year college students have credit cards. Almost all seniors do, and a good portion of them - like Monts - use four or more.

Except when Monts graduated, he was dragging 22 credit cards behind him, with a balance that 20 years later he will only say was more than he could afford. Late payments trashed his credit score. And everything he wanted to do afterward - buy his first car, get a mortgage, help finance the church he eventually started in the North End - was affected by his youthful exuberance.

Things got tough, but slowly Monts made good on his debt, and these days he tells his story from the pulpit, and he counsels couples about their finances. He knows what it's like to want, and then to pay. He's still a snappy dresser, but he's also an expert shopper. He talks to his flock about limits. Clothes go out of style, he tells them. So do cars. Invest in something that lasts. Sometimes parents forget to say that, and no way will credit-card companies say it.

Tuesday, August 21, 2007

Using a credit card for your business

Business credit cards offer an efficient alternative to the petty cash and cheque systems traditionally used in businesses. Both self-employed and large business owners alike would find business credit cards an easier option, enabling you to see what is being spent where, and enabling you to reduce both company expenditure and the amount of administration. If you are a small, or even one-person operation, then a business credit card can be very useful in keeping your business and personal transactions separate, avoiding the need to use your personal credit card for business items.

Most business credit card providers enable you to decide how many extra credit cards (with the company name) will be needed for staff to use and allow you to stipulate the credit limit for with each individual card. Business statements can usually be tailored to suit companies’ own finance requirements and give details of overall company expenditure each month and individual breakdowns for each business card relating to the account.

Business credit cards often come with a range of incentives related to business. For instance some offer discounts on business related expenses or the facility to accumulate air miles. These extras often come with insurance features including travel insurance, extended warranties on selected products and purchase and anti-fraud insurance.

Some of the low introductory interest rate offers that you see on individual credit cards are also available on business credit. There can be an annual fee associated with a card, so before applying it is always best to check, as well as looking at the standard interest rate that applies after the initial period. By comparing the interest rates, fees and incentives offered by each provider, you should be able to find a business credit card that best fits the need of your company.

The MBNA Business Self Employed Credit Card charges no fee and keeps your business activities in one place. It is available to businesses which have been up and running for at least two years. There is a low introductory interest rate of 4.9% on balance transfers and credit card cheques for six months from the opening of the account, and an APR of 17.9%. As with most individual credit cards, you can get up to 57 days interest free purchases if you pay your statement in full and on time every month. You can manage your account online, viewing balances, each card’s credit limit and up to 13 months of transaction history.