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We’ve all seen movies depicting employees whipping out the corporate credit card to pay for extravagant meals and entertainment. Business owners shudder at these scenes, and they should. The Association of Certified Fraud Examiners tells us that 15 percent of all employee expenses can be categorized as fraud. In another study, 66 percent of employees admit to abusing the company card with:
Another portion admit to inflating transportation expenses, getting a cash refund from an expensed item and even creating a fake expense. These last three are full-on fraud. Still, with every opportunity, some people will take advantage. The credit card with a limit of thousands of dollars just trips some kind of spending wire in some employees. When a card’s limit set at $5,000, a $75 dinner for one seems reasonable.
Business owners can reduce their exposure to “expense padding” and fraud when they give their employees secure prepaid debit cards as opposed to credit cards. Like a teen with a set spending amount, employees must budget within a the debit card’s finite amount.
When presented positively, the prepaid debit card can be just as appreciated by employees as the credit card. Simply explain that the debit card works best for your taxes and/or accounting structure. Make this expense tool a decision based on business goals, not something to keep employee spending in line. Avoid mentioning potential expense abuse or fraud all together.
Other benefits of the prepaid debit card for business includes:
Prepaid Debit Cards Control Employee Spending So You Don’t Have to!
Some businesses choose company credit cards rather than debit cards because of the potential for rewards and the lower fees. Debit cards can also come with more fees than credit cards. Still, when compared to the financial losses due to abuse, these fees are negligible.
When a small business becomes a mid-sized business, expenses accounts follow quickly, especially for sales professionals. Then, additional office locations can mean travel expenses. Debit and credit cards empower employees to make their own decisions while keeping spend under control.
The bill for the holiday fun comes due in January when the credit card statements arrive. You may even have used a quick cash advance to get all your gifts purchased during November and December. Prepare now to tackle those bills AND improve your credit score throughout the new year.
The first of the year inspires all kinds of resolutions. If you want this new year to be when you get your financial house in order, it’s time now to tackle that daunting document: your credit report.
You’re entitled to a free credit report every 12 months. Annualcreditreport.com is the only free site authorized by the U.S. government’s Federal Trade Commission. Don’t be intimidated. Just fill out a few fields, check some boxes and it comes right to you.
Statement in front of you? Good. We’ll take it step by step.
The first element of your credit card examine is your credit utilization–basically, how much credit you have used compared to the total that banks are willing to lend you. Those using 50% of their available credit on any one account or 50% of credit offered across ALL accounts have lower scores than card holders using less than that halfway point. If you’ve spent $10,000 of a $15,000 limit, you’re using 67% of your available credit. Your annoying brother-in-law using only $5,000 of a $15,000 limit has a 33% credit utilization rate.
Credit utilization accounts for a whopping 30% of your score. It’s also rather simple to improve. How? Apply for new credit cards and ask for the highest limits. Then, assuming you start with the $15,000 credit limit we discussed above, an additional $10,000 in new credit available to you gets you to a new limit of $25,000. $10,000 out of an available $25,000 credit line creates a 40% credit utilization, far lower than 67%. Keep working on it and you’ll be below 30% in no time.
Credit card limits are tricky. Even if a credit card issuer approves you for $10,000 or $20,000, it doesn’t mean they think you have the income to spend all of that. Approved for $20,000? Best to keep your debt to $10,000 and under.
Your new January approach will be to work your credit card balances down below 50% of your limits or the amount your bank permits you to borrow. Whether that’s through paying down balances or opening new credit lines depends on your financial situation.
Where credit utilization accounts for 30% of your credit score, late payments impact it even more. Even one payment that’s late 30 days starts shaving points, but 60 and 90 day late payments wreck real havoc. At 120 days, most card issuers hand the account over to a collections agency. Now you’re talking about having your credit score drop into the 500s.
If you see that you have late payments, don’t despair. These three options may get them removed:
After you’ve addressed your credit utilization and payment history data, you can go forward knowing exactly how to put your best foot forward in rebuilding your credit.
With a firm understanding of how credit scores are calculated and how your behavior contributes to them, you can be confident about finding credit cards that will stabilize your finances.
Keep that positive in mind when you find out that you most like will need to start out by using “secured” credit cards that have fees, low limits and may even require a deposit. Banks and the U.S. government want you spending, so the secured credit card is the way they make it happen.
These credit cards work just like a regular credit card, except you deposit often the same amount of cash collateral that they permit you to spend. What’s the benefit, then? These secured credit cards report to the three credit bureaus ( Experian, TransUnion and Equifax ) that you’ve shown responsible use of your secured credit card. Every on-time payment gets documented.
Eventually, the secured credit card company should approach you about using an unsecured credit card, where you don’t have to put up the cash. If they don’t after six to nine months, by all means apply for a different unsecured credit card or approach your current company for the same opportunity. The credit card company will consider how you’ve managed –not only your secured card– but all of your credit cards and loans.
Once you get the unsecured card, your collateral from the secured card comes back to you, given you’ve paid all charges.
Holidays are not ALL about the gifts, but they sure make these few days out of the year more fun. And the fun is not just in receiving, but giving. In fact, studies have shown that those who spend money on others feel happier and have more of a sense of purpose than those who don’t. Gift exchange has promoted connection and well-being since prehistoric times. If your generosity is crushing your credit score, rest assured you can work your way out slowly but surely.
Most people have some debt, but if your situation has gotten out of hand, now is the time to figure out how you can pay it off before it gets even worse. By figuring out how much you owe, picking a strategy to pay it off, and making a couple sacrifices along the way, you could be debt free by Christmas.
Here’s how to get started:
The first step to paying off the debt you owe is to figure out exactly how much debt you’re in. You may have avoided doing this because you’re scared of the number, but it essential as it will help you keep perspective and figure out a plan to pay it off. Gather all debts you owe, from credit cards to student loans to medical expenses, and calculate how much it all adds up to.
The next step is to develop a strategy to pay off the debt. This is important. Picking and being able to stick to a strategy will help you pay down the debt faster, while also knowing that the sacrifices you’re making to do so have a set end date, giving you some peace of mind. There are two main strategies to pay off debt: Debt avalanche and debt snowball. The first one is the fastest, and has you pay off the debts with the highest interest rates first. This can save you a lot of money over the long term, but you won’t feel much progress is being made at first.
If you feel as if you need to see yourself making progress to stick to a strategy, debt snowball is likely for you. This strategy takes the opposite approach. Arrange your debts from smallest to biggest (ignore the interest rate) and begin paying off the smallest ones first. This will help you see that you are making progress, but will likely cost you money over the long term due to interest.
Another excellent way to help you pay down your debt steadily is to set aside a set amount of money every month and put it towards the debt. Start out by calculating how much you need to spend per month on necessities (include building up an emergency fund) and then subtract that from your total monthly income to get an idea about how much you can put towards the debt every month. The higher the debt, the more of that money you will want to dedicate towards it.
Even with these strategies, paying off these debts is no easy task. It takes persistence and sacrifice for possibly years. One way to help you but a bigger dent in the amount you owe is to get a side job. Even if it’s just on the weekends doing something simple, you could easily find yourself with a couple extra hundred dollars at the end of every month to put towards the debt. It may not sound like a lot, but it could save you hundreds if not thousands over the long run, and you’ll have that debt paid down much quicker.
When calculating your total monthly expenses, chances are the rent towards your apartment is what is eating up most of your budget. You could downsize to a smaller apartment, but this would involve lots of paperwork and being stuck there for a few years. An alternative solution is to rent out a room in someone’s house or apartment. There is little to no hassle, and with the money saved, you could put even more towards the debt or perhaps avoid getting that side job. Either way, if you owe a lot of money, this is certainly an option to look into.
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