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Business credit cards

If you are a small-business owner and cash is not flowing and bills are piling up, the most important thing to do is contact your card issuer.

Some banks are also providing assistance in case you can’t pay your business credit card bill.

Another coronavirus complication: Scams

As consumers wrestle with the impact of the coronavirus, scammers are trying to take advantage of the situation.

In a June 2020 public service announcement, the FBI warned that the increasing use of banking apps could open doors to exploitation.

“With city, state and local governments urging or mandating social distancing, Americans have become more willing to use mobile banking as an alternative to physically visiting branch locations. The FBI expects cyber actors to attempt to exploit new mobile banking customers using a variety of techniques, including app-based banking trojans and fake banking apps,” the PSA warns.

Scammers might also be capitalizing on health and economic uncertainties during this time. In one such scam, cybercriminals are sending emails claiming to contain updates about the coronavirus. But if a consumer clicks on the links, they are redirected to a website that steals their personal information, according to the Identity Theft Resource Center (ITRC).

Identity theft in 2020: What you need to know about common techniques

Bottom line

The outbreak of a disease can upset daily life in many ways, and the ripple effects go beyond our physical health. Thankfully, many card issuers are offering relief. If you’re feeling financially vulnerable, contact your credit card issuer and find out what assistance is available. And while data security may seem like a secondary consideration, it’s still important to be vigilant when conducting business or seeking information about the coronavirus online.

Source: creditcards.com

Can you send money with a credit card?

Sending cash to friends and family? Before you reach for that credit card, grab a calculator. It’s time to do a little math.

With most everything you purchase online or through apps, credit cards have the edge. With plastic, you have chargeback rights. If you’re overcharged or receive the wrong item, broken merchandise or nothing at all, your card issuer will make it right. And if you use a rewards card, you collect points or miles, too. Win-win.

But it’s different story when you’re sending money through peer-to-peer platforms. Many of them (like Google Pay, Popmoney and Zelle), don’t allow consumers to use a credit card to send cash.

Others (like Cash App, PayPal and Venmo), allow credit cards but also charge a fee for the privilege – often about 3%.

See related: How to choose a P2P payment service

The hidden costs of using credit cards to send money

Choose a credit card to send money and you might also end up paying additional fees to your card issuer. That’s because the combination of some peer-to-peer apps with certain cards are coded as cash advances, rather than purchases.

For many cards, that cash advance code triggers a higher interest rate that kicks in the moment you make the transaction, as well as a separate cash advance fee that’s often $10 or 5% of the transaction – whichever is higher. (Currently, the average interest rate for cash advances is 24.8%, while the average APR for purchases is 16.05%.)

So the combination of peer-to-peer service fees, credit card cash advance fees and that higher interest rate (with no grace period) could make sending a few hundred dollars a bit more costly than you’d planned.

No chargeback rights with credit cards

The real kicker: Unlike other venues, you don’t have chargeback rights when you use credit cards to make peer-to-peer money transfers.

When you present your credit card in an online or brick-and-mortar store, there’s a merchant involved – and the law provides chargeback rights for your protection in case you don’t get what you were promised in the deal. But in a peer-to-peer money transfer, there’s no merchant, so currently the laws don’t give consumers any chargeback rights, says Christina Tetreault, manager of financial policy for Consumer Reports.

“The chargeback right requires a merchant,” says Tetreault. “One of the hoops a consumer has to jump through is to try and work it out with the merchant.”

If you use a peer-to-peer service and send the wrong amount or send the money to the wrong person, most platforms advise that the only way to get it back is to contact the recipient and ask them to return it. And that’s often the same whether you use a credit card, debit card, bank account or funded account on the platform.

“Be doubly sure when you’re sending the money that you’re putting in the correct information,” says John Breyault, vice president of public policy, telecommunications and fraud for the National Consumers League. “It’s still a buyer beware world when it comes to peer-to-peer.”

The solution

If you’re sending money and want to use a credit card, it pays to do a little sleuthing first. Check out the peer-to-peer site. Does it allow users to send money with a credit card? If so what, if any, fees does it charge?

On some platforms (PayPal is one), you could see similar fees for using a debit card – while sending from a bank account or funded account on the platform is free.

The good news is that many peer-to-peer platforms clearly disclose it when there’s an extra charge to use a credit card, says Tetreault. With Venmo, for example, you’ll get a pop-up message.

Harder to decipher: Will credit card transactions on the platform be treated as a cash advance? If your preferred platform doesn’t post this information, you might need to contact customer service. (And how quickly and easily you get an answer can tell you a lot, too.)

Ask your card issuer the same question: Are peer-to-peer money transfers on the platform you’ve chosen treated as a cash advance? If they are, what’s the interest rate, and what’s the cash advance fee?

“What I would suggest is to ask that question, via email, of your financial institution,” says Tetreault. “It may be in their FAQs. And you want to save that email. If you have it in writing, if there’s an issue later, you’re better positioned to contest that fee.”

But “the hard truth is you may not be able to find out ahead of time,” she says.

Another solution: Opt to use a credit card issued by a credit union.

“With credit unions, the APR is usually the same” for purchases and cash advances, says John Bratsakis, president and CEO of the Maryland and District of Columbia Credit Union Association.

Likewise, with American Express cards you pay your regular interest rate and no cash advance fees on peer-to-peer transfers, says Elizabeth Crosta, vice president of public affairs for American Express.

And credit cards from U.S. Bank register peer-to-peer money transfers as regular purchases – with no cash advance fees or cash advance APRs, says Rick Rothacker, spokesperson for the bank.

See related: How do credit card APRs work?

What’s your reason for using a credit card?

Take a good look at the reason you’re using a credit card, too. If you want chargeback rights, that’s not an option. If you’re doing it for the rewards, will the value of those points or miles be eaten up by extra fees or a higher interest rate you have to pay to use the card?

And if you’re using a card because you don’t have the cash, that might be a good reason to rethink the idea of sending money in the first place.

That’s a huge red flag, says Bruce McClary, vice president of public relations at the National Foundation for Credit Counseling.

“The need to convert credit into cash is what really gets my attention – because that hints at a lack of savings,” he said. “It’s a reality a lot of people are facing, especially now.”

Cash advances aren’t as expensive or risky as payday loans and car title loans, but they should be among your last resorts. If you’re looking for short-term relief, you could ask your credit card issuer for help, or find out if you qualify for a personal loan. You could also borrow from a family member or trusted friend, but be wary of the potential relationship toll if you can’t pay them back.

Getting cash from credit cards

Fifty-two percent of Americans report that the pandemic has damaged their finances, according to a recent survey by the NFCC. More than a fifth of those had to tap savings for everyday expenses, while 16% increased their credit card spending.

And that’s a sign of financial stress, says McClary. “It means that, in some situations, they have run out of savings.”

There are ways you can use your card to get cash, though.

Cashing in rewards

Some rewards cards from issuers such as Chase, Bank of America and US Bank let you deposit cash-back rewards directly to your bank account.

And Wells Fargo also will let you deposit its Go Far Rewards directly into another Wells Fargo customer’s account, says Sarah DuBois, spokesperson for the bank.

Gift cards

Many credit cards let you convert rewards into retail gift cards. So a pile of points can help a friend or family member buy much-needed groceries or a few holiday presents.

Or simply “buy a gift card for someone,” says Bratsakis.

Retailer-specific gift cards and gift cards issued through local and regional retail associations and malls often come with no fees – meaning every dollar you spend goes toward your gift.

Convenience checks

While you can get a cash advance or use convenience checks from your card issuer, both those options often come with fees and higher interest rates. Not a smart money move, especially in the current economy.

While some lenders may offer convenience checks with deferred interest, that’s not the same as “no interest,” says Bratsakis. Also, if you don’t pay the loan in full, will you owe the full interest retroactively?

“That’s where consumers have to be careful,” he says. With a convenience check or even a cash advance, “that’s usually where consumers can get themselves into trouble if they can’t pay it off and get hit with deferred interest.”

See related: What is deferred interest?

Bottom line

When it comes to peer-to-peer payments, cash really is king. You can then put it into a funded account with the money transfer platform or your bank account. And most peer-to-peer platforms let you do this for free.

“The safest way to use these services is to send money person-to-person and be diligent about getting all the details correct so it doesn’t go to the wrong person,” says Tetreault.

Only send to people you trust and know in real life, she says. “And before sending money make sure you understand what, if any, fees you might incur.”

Source: creditcards.com

How to add an authorized user to a Wells Fargo card

January 19, 2021

You already know that your on-time Wells Fargo credit card payments boost your credit score. But did you know that your payments could also help increase the credit score of a family member or friend with a lower score? Or that your payments could help your children build their own credit scores?

It’s true. This can all happen if you add friends or family members– or anyone else – as authorized users to your Wells Fargo credit card account.

Just be careful: While adding authorized users can help others build or repair credit, it could leave you with some financial pain if your authorized users don’t follow your spending rules.

What is an authorized user?

An authorized user is someone who has access to your credit card account. When you add an authorized user to your account, that person receives a credit card in the mail with its own unique number. But when they make purchases with this card, the charges go onto your account.

You’d add an authorized user to your Wells Fargo credit card to help that user build or repair credit. Every time you make an on-time payment on your card, it’s reported to the three national credit bureaus of Experian, Equifax and TransUnion.

These on-time payments steadily improve the credit score of both you and your authorized users. This is why parents might add their children to help them build a score or a friend or family member with a low score that needs a boost.

There is a risk here for you: Authorized users aren’t responsible for paying off any of the charges they make. When they make a purchase, the primary account holder is responsible for paying it off. If you don’t, that charge will carry over past your credit card’s due date, triggering your card’s interest rate. If your authorized users make a lot of charges and don’t pay them off in full? You could face unexpectedly higher credit card bills each month.

That’s why it’s so important to come to an agreement with your authorized users, spelling out exactly how much they can charge each month and when they must pay you for their purchases. If they don’t follow this agreement? You can remove them from your account.

It’s not all risk when you add an authorized user, though. If you have a Wells Fargo-branded rewards card – such as the Wells Fargo Propel American Express® card or the Wells Fargo Cash Wise Visa® card – your authorized users will rack up rewards points and cash back bonuses when they use your card to make purchases, helping you earn rewards and cash back at a faster pace.

Authorized user eligibility requirements

You can add anyone as an authorized user to your Wells Fargo credit card account. This includes family members, of course, but can also include friends, employees or anyone else you’d like to add.

To add authorized users, you must provide their name, address, date of birth and Social Security number.

How to add an authorized user to your Wells Fargo account

You can easily add an authorized user to your account by first logging onto Wells Fargo Online Banking. After logging in, click on the “Account Services” tab and then click “Credit Card Service Center.” Next, click on the “Request credit card features” heading. You can then click the “Additional cardholders for your account” link, which will allow you to add authorized users.

 

Fee for adding an authorized user

There are no fees for adding an authorized user to your Wells Fargo credit card.

Managing authorized user access

You can’t set limits on how much your authorized users spend each month. That’s why it’s important to only add authorized users whom you trust to follow whatever spending rules you set up with them.

Fortunately, it’s easy to remove authorized users from your Wells Fargo account if they are not following your limits.

Again, log into your Wells Fargo account. Click on “Account Services” and then on “Credit Card Service Center.” Next, choose the “Request credit card features” heading. You can then click “Additional cardholders for your account” to remove any of the authorized users on your account. You can also call the 800-number on the back of your Wells Fargo credit card to remove users.

Pros and cons of adding an authorized user

There are both risks and rewards for adding an authorized user to your Wells Fargo card.

Pros

Cons

Should you add an authorized user to your Wells Fargo card?

Adding an authorized user to your Wells Fargo credit card could improve the credit of your spouse, children or friends. But don’t ignore the risks. If authorized users run up charges on your account, you’re the one responsible for paying them off.

The key? Only add authorized users whom you trust. And be sure to reach an agreement on how much these authorized users can charge and when they must pay you back for their charges.

Source: creditcards.com

Two? Seven? Twenty? How many credit cards should I have?

January 13, 2021

It would be easy to fill up a wallet with just credit cards. A card to maximize airline miles. A card targeted at your favorite hotel chain. A card that gives you cash back on groceries. Even a card that earns you points when you spend at NFL games. So, where to begin? And where to end?

How many credit cards should I have?

The short answer: you should have at least two – ideally each from a different network (Visa, Mastercard, American Express, Discover, etc.) and each offering you different kind of rewards (cash back, miles, rewards points, etc.). How many credit cards is too many? That depends on the individual – you should never have more than you can handle.

Experts say the number of cards one should have varies according to individual and circumstance. “Generally speaking, there is no one perfect number,” said Ethan Dornhelm, a vice president at FICO.

While the number varies by generation, credit score and other factors, the average American has three credit cards and 2.4 retail store cards, according to a 2020 survey by the credit reporting agency Experian.

To ensure a mix of credit cards and keep your credit score climbing, credit expert John Ulzheimer suggests asking yourself two questions about the cards in your wallet:

  1. Do you have cards across more than one network? If you have three cards, but all of them are Mastercards, this could be a problem if you run into a merchant who only takes Visa. An example? Costco only accepts Visa now, though you can use your Mastercard on the wholesaler’s website.
  2. Do you have a low credit card utilization ratio? Your average balances across all your cards for the past 24 months “should represent no more than 10% of your overall credit limit,” Ulzheimer says.

Credit utilization – how much credit you’re using each month, on average, of all the credit available to you from all your cards combined – accounts for 30% of your credit score under FICO’s traditional model.

If you can add another credit card while keeping your overall spending the same, you’ll lower this ratio – and boost your score.

See related: What is a good credit utilization ratio?

Two? Twenty? The answer is personal

That former number sounds about right to John Corcoran, a hotel industry executive in Aspen, Colorado.

He’s got two for personal use – both airline mileage cards – and a third for work. He added the second mileage card solely for the points bonus, and is thinking about dropping it before the $90 annual fee comes due. “I don’t like credit cards,” he said. “I don’t like debt.”

On the other end of the spectrum is Naomi Sachs, an international business executive in San Rafael, California. Sachs estimates she has 20 or 30 cards “sitting in a sock drawer, unused” – generally retail cards she signed up for to lower the cost of a purchase at that store or credit cards she acquired for the points boost.

Sachs is carrying around in her wallet about 10 more cards, of which she uses two or three with regularity. As for cash? Maybe there’s a $20 bill in there somewhere. Debit? “I don’t put anything on debit, ever, ever,” she said.

Instead, she charges strategically, and checks her card balances a few times a week to stay on top of her finances. “I aggressively try to maximize my spend, for almost every single dollar, every single time,” she said.

Credit expert John Ulzheimer suggests two things that can help you determine the number of cards that is right for you. Always keep your overall credit card utilization low, and secure access to more than one credit card network.

While merchants in the U.S. accept the big four card networks – especially Mastercard and Visa, and, to a lesser extent, American Express and Discover – you can still find places where some of them are not accepted. Costco is one example. The warehouse club switched in 2016 from American Express as its card partner to Citi, so now the only card Costco accepts in-store is Visa.

And if you travel abroad, you should pack credit cards from a variety of card networks. While Visa and Mastercard are most universally accepted, and American Express signs are increasingly common in store windows across the globe, you will inevitably wind up in a place that doesn’t accept the type of credit card you have with you.

Beyond those two key elements, Ulzheimer explains, many approaches are valid, so long as they work for you.

See related: How to use your credit card wisely

How many cards should you have if…

Want to get more specific? Here’s a list of some particular situations you may find yourself in, and some experts’ thoughts on how that might affect what kinds of cards, and how many, you may want to carry in your wallet:

You’re new to credit cards, or just recovering from a bankruptcy or other bad credit incident

Start with one card, a secured card if necessary, then add a second card when you can prove to yourself that you are making your payments on time and paying your bill off in full each month, says Netiva Heard, a credit counselor in Chicago.

“It’s a learning period,” she said. “That’s why you start with just one card first, to get adjusted to those good habits.”

You want to take advantage of rewards programs

Cards that don’t offer rewards “are a complete waste of your time,” Heard says. She recommends thinking about what rewards would benefit you the most, and whether you want to pay an annual fee to get them.

Cards that don’t charge an annual fee generally come with lower introductory bonuses than cards that do and may not be as generous with rewards points on day-to-day spending. But be careful that you don’t sign up for more rewards cards than you can manage to juggle.

Heard advises most people to keep no more than three to five credit cards total in their wallets. Ulzheimer said two rewards cards seems like more than enough – one for airline points and one for cash back.

You plan to buy a new house or car soon

You should stick to the number of cards you already have, at least temporarily. Don’t open even one new credit card within at least six months of applying for a so-called installment loan. Opening a new card will lower your score by a few points due to the hard inquiry on your credit, “and you want it to be in the best shape possible when you go out to get that expensive loan,” Ulzheimer said.

That said, he added, installment lenders will pay the most attention to whether you’ve had a mortgage or auto loan before, if you paid it off on time and whether you tend to pay off your bills in general on time.

You want to improve your credit score

This is not a reason to get a new credit card, Ulzheimer said. “Opening a new card can actually backfire,” he said, because it will, at least initially, lower your score.

When you apply for a credit card, the issuer pulls your credit report, which triggers a hard inquiry. A hard inquiry can lower your score by five points, but it only affects your credit score for one year. After two years, the inquiry falls off your credit report. Note that applying for multiple credit cards at once can exacerbate the negative credit score impact of inquiries, at least in the short term.

A new credit card can also reduce your length of credit history, a key credit scoring factor that considers the average age of all your credit accounts. While length of credit history only counts for 15% of your FICO score, the effect can be significant if you only have one or two existing credit accounts.

On the other hand, if your new credit card has a high credit limit and you keep your balance low, the card can eventually boost your credit score by increasing your overall available credit.

debit card, or cash, Ulzheimer said.

If you need to close your credit cards to avoid using them, then do it, but know that every time you close a credit card, it can lower your score, he said – because it may reduce your available credit, thus increasing your aforementioned credit utilization ratio.

Divorce hits women harder financially: Here’s how to survive it

Bottom line

So, whether you have two or 20 cards doesn’t really matter. What’s important is that your cards give you access to more than one network and offer you the rewards that best meet your needs (which can change over your lifetime).

And, of course, you need to be sure you’re not juggling so many cards that you can’t keep track of all the payment due dates The whole point of having two to 20 or more credit cards is earning points or cash back on your everyday spending that you pay off every month. All the while, keep your credit utilization low so that your credit score climbs.

Source: creditcards.com