June 8, 2022
10 Best Fuel Cards for Small Businesses
Editor’s note: This is a recurring post with regularly updated card detail When choosing the best fuel cards for small businesses, consider the number of fueling sites where you can use the card, rewards, and redemption methods. The best ones let you save money through discounts or rebates at gas stations or via points or cash back rewards on gas purchases. Your options include regular credit cards, charge cards, co-branded gas cards, and fleet cards. The best fuel cards for small businesses are: : Best overall fuel card for small businesses : Best for sole proprietorships and startups : Best for 4% cash back rewards at Costco gas stations : Best for 5% on GM dealership parts and services and 3% on gas and restaurant purchases : Best charge card for use at major gas stations : Best fuel business card with no personal guarantee : Best for fuel rebates at Chevron and Texaco gas stations : Best fleet card for use at ARCO gas stations : Best for small and mid-sized fleets that fuel up at BP and Amoco stations : Best fleet card with no setup and annual fees To see how these cards stack up against others we have reviewed on our site, click Add to Compare on a card below and select up to two additional cards for comparison. General Purpose Cards With Gas Rewards General purpose credit cards with gas rewards are credit cards that offer premium rewards on gas expenses and can be used for any business-related purchase. We’ve included general-purpose business credit cards with no annual fee and low starting annual percentage rate (APR). U.S. Bank Business Triple Cash Rewards World Elite Mastercard®: Best Overall Fuel Card for Small Businesses Why we like it: The is our best overall business fuel card because it offers 3% cash back at any gas station. You’ll also earn 3% cash back on dining, office supplies, and mobile phone services and 1% cash back on all other purchases. There’s no limit to the number of rewards you can earn, making it one of the best cash back business credit cards. It has no annual fee and a low starting APR of 18.24%. Another factor that makes this card the best overall fuel card is that it offers 0% APR for the first 15 billing cycles on purchases and balance transfers—the longest interest-free period among all the cards on this list. It also offers an introductory bonus of $500 cash back if you spend $4,500 within the first 150 days of opening your account. Chase Ink Business Cash®: Best for Startups & Sole Proprietorships Why we like it: The card gives you 2% cash back on the first $25,000 spent at gas stations and restaurants each account anniversary. You’ll also earn 5% on the first $25,000 spent on office supplies, internet, cable, and phone services and 1% on all other business purchases. If you don’t need reporting features or employee purchase controls that come with fuel cards, this is a good choice. You can also take advantage of the 0% introductory APR on purchases for the first 12 months of card ownership. As a new cardholder, you can earn a $900 bonus cash back after you spend $6,000 within the first three months. Redeem rewards 1) for travel, cash back, and gift cards; and 2) at the Apple Ultimate Rewards® store. This card is also one of our top recommended business cards for startups because of its substantial rewards with no annual fee. Costco Anywhere Visa® Business Card by Citi: Best for 4% Cash Back Rewards at Costco Gas Stations Why we like it: If you’re a Costco member who’s already getting a deal by filling up at Costco gas stations, you could get an even better deal when you pay with the . You’ll earn 4% cash back for the first $7,000 each calendar year on gas purchases at eligible gas stations, including Costco, then 1% after that. You also get 3% cash back on restaurants and eligible travel purchases, 2% on nonfuel purchases from Costco and Costco.com, and 1% cash back on all other purchases. Even if this is a cobranded card, you can use this for other business-related purchases anywhere Visa® is accepted. There is no annual fee outside of your Costco membership, and there’s no foreign transaction fee on international purchases. Your rewards will be given as an annual credit card reward certificate for redemption only at a Costco warehouse, not online. Rewards can be redeemed for either cash or Costco merchandise. GM Business CardTM: Best for 5% on GM Dealership Parts and Service & 3% on Gas and Restaurant Purchases Why we like it: If you drive a Chevrolet, GMC, Cadillac, or Buick, you can earn 5% cash back on parts and service from your local GM dealership with the from Marcus by Goldman Sachs. You can also earn 3% cash back on gas, restaurants, and office supply stores and 1% on all other purchases. Spend $4,000 in your first three months of card ownership and receive $500 to redeem at GM toward the purchase or lease of an eligible new GM vehicle. This card also offers an interest-free period on purchases for the first 12 months and comes with no annual fee, balance transfer fee, and cash advance fee. You can set unique spending limits on employee cards and take advantage of simple online tracking of your transactions. Gas Station-specific Fuel Cards Gas station-specific fuel cards include charge cards and credit cards that can be used in specific service locations and gas stations. Usually, these cards are neither Visa nor Mastercard, so you may not be able to use them for purchases at other stores. 76® Universal Card: Best Charge Card for Use at Major Gas Stations Why we like it: The best thing about the is that while it’s a gas station-specific card, it’s accepted at 95% of US gas stations and over 45,000 service locations nationwide. You can save up to 7 cents per gallon if you fill up at 76®, Conoco®, and Phillips 66® locations. Note that it’s a charge card and not a credit card, so you must pay your balance in full each month. One of its best features is its ability to generate automatic fuel accounting and reports. This lets you view all transactions made with your card, so you can manage vehicle-related costs and plan budgets. Qualified businesses will also have access to tax exemption reports, which include exemptions that can be applied to your account. Further, customer service is available 24/7 as is roadside assistance for cardholders. Shell Small Business Card: Best Fuel Business Card With No Personal Guarantee Why we like it: Small businesses that earn at least $1 million in annual revenue can qualify for the . You can earn rebates of up to 6 cents per gallon at Shell Stations and get discounts at participating Jiffy Lube stations for oil changes and preventative maintenance. This is best for business owners who want a dedicated fuel card business card with no personal guarantee. It’s important to note that it isn’t affiliated with either Visa or Mastercard and can only be used at more than 14,000 Shell stations and participating Jiffy Lube locations across the country. It has no setup, monthly, or annual fees, and you can carry a balance each month with interest. It offers access to detailed reports online, including purchase controls and data analytics, and to 24/7 customer service. Chevron Texaco Business Access Card: Best for Fuel Rebates at Chevron & Texaco stations Why we like it: You can save up to 6 cents per gallon starting at five gallons when you gas up at nearly 8,000 Chevron and Texaco stations with the . Unlike the Shell Small Business Card that’s only accepted at Shell stations and select Jiffy Lube locations, this card isn’t exclusive for use at Chevron and Texaco—it’s accepted at most major fuel stations across the US. Similar to the 76® Universal Card, this is a charge card and not a credit card, so there’s no ongoing APR because your balance is due every month. While there’s no annual fee, you’ll be charged a $2 monthly fee and a one-time $40 setup fee. With online account management, you can set spending limits for employees and view reports on purchase activity and financial summaries. Small Business Fleet Cards Small business fleet cards are business credit cards and charge cards designed for business owners who own more than two business vehicles. These cards offer rewards on fuel expenses and automatic reporting and online management tools that let you manage your users efficiently. ARCO® Business Solutions Mastercard®: Best Fleet Card for Use at ARCO Gas Stations Why we like it: The is an excellent choice if you need to fuel up for over 5,000 gallons per month so you can save on the monthly membership fee of $10. You’ll enjoy Top Tier™ gas for less®, plus additional rebates of 1 cent per gallon at all ARCO fueling locations in the US. Since this card is a Mastercard®, you can use it to make purchases from other gas stations. You’ll earn 4 cents per gallon in rebates at all other gas locations in the US that accept Mastercard. ARCO’s tax-exemption reporting service calculates applicable taxes for fuel for a processing fee of 1% of the invoice amount. Another wonderful thing about this card is that even business owners who are deemed high risk―with a credit score below 670―may still qualify. However, as a high-risk cardholder, you may be charged up to 2% of the account’s spend limit per billing cycle. Note that this card is a charge card, not a credit card, so your balance is due in full each billing cycle. BP Business Solutions Fuel Plus: Best for Small to Midsized Fleets That Fuel Up at BP & Amoco Stations Why we like it: If you own small to mid-sized fleets and you exclusively fuel up at BP and Amoco, the card is your best option. You can save up to 6 cents with volume-based rebates on gas purchases made at BP and Amoco locations. This card offers revolving and non-revolving balance options. If you choose to carry a balance, an ongoing APR of WSJ prime rate plus 14.99% to 23.99% will be applied. This card also allows you to take control of your business expenses by setting fuel-only limits on employee cards. It also offers transaction and tax-exempt reporting to make tax season easier. Keep in mind that this card is exclusive for use at BP and Amoco branded locations in the US only. You cannot use this card to gas up at other gas stations or make other purchases. WEX FlexCard: Best Fleet Card With No Setup & Annual Fees Why we like it: The offers 3 cents per gallon rebates. It’s accepted at 95% of fuel stations and around 45,000 service locations in the US, and WEX mobile app can help you find the cheapest nearby fuel station. There’s no annual or setup fee, and you have the flexibility to carry a monthly balance. Cardholders can also take advantage of WEX’s roadside services, including towing, winching, tire change, fluid delivery, jump starts, and lockout services. The WEX FlexCard also offers reporting services, such as purchase activity reports and tax exemption reports. Report data can be exported into major bookkeeping and accounting software and can also be downloaded as PDF files. How We Evaluated the Best Fuel Cards for Small Businesses When evaluating co-branded fuel cards for small business, we considered each card’s fees, repayment terms, network availability, any rebate programs, and reporting tools. For nonbranded business credit cards, we looked primarily at gas discounts or rebates, ease of use, additional rewards, fees, and features. Bottom Line You don’t need to own a large fleet to be eligible for a business fuel card. A fleet can be a single car used by a sole proprietorship or limited liability company (LLC) or thousands of vehicles owned by a large company. If you prefer not to use a card associated with a specific gas company or haven’t found one in this guide, consider one of the best small business credit cards with strong rewards on gas purchases.
May 3, 2022
American Express Business Green Rewards Card Review
The is designed for business owners who travel frequently and can pay their balance in full every month. Unlike typical credit cards, this small business credit card has no preset spending limits and allows you to use the Pay Over Time option on eligible purchases. Who the American Express Business Green Rewards Card Is Best For Business owners who travel frequently: The is best for business owners who travel often and want to earn rewards that they can redeem for travel expenses. It also offers several travel perks and protections. Business owners who need flexible credit limits: This card has no preset spending limit—the amount you can spend adapts based on factors such as your purchase, payment, and credit history. American Express Business Green Rewards Card Fees Introductory APR: None Ongoing APR: If invited to use the Pay Over Time feature, APR ranges from 17.99% (prime rate + 10.99%) to 25.99% (prime rate + 18.99%) variable Penalty APR: 29.99% (prime rate + 25.99%) Paying interest: At least 25 days after the close of each billing period Annual fee: $95—waived for the first year Balance transfer fee: Transfers not allowed Foreign transaction fee: 2.7% of each transaction after conversion to United States dollars Cash advance fee: Cash advances not allowed Late payment fee: $39 or 2.99% of any past due Pay In Full amount, whichever is greater Returned payment fee: $39 The American Express Business Green Rewards Card offers an invitation-only Pay Over Time feature that can help ease the monthly repayment requirement. The Pay Over Time feature allows cardholders to pay charges over time with an interest that ranges from 17.99% to 25.99%. If you’re enrolled, eligible charges will be shown automatically in your Pay Over Time balance on your credit card statement. As for the Penalty APR, this will be applied if you meet at least one condition: Made two or more late payments within the 12-month period Didn’t pay the Minimum Payment by the closing date of the billing period and you still don’t pay it by the Closing Date of the next billing period Made a returned payment American Express Business Green Rewards Card Rewards 15,000 Membership Rewards® points after spending $3,000 in eligible purchases within the first three months of opening an account 2x points for each dollar you spend on eligible purchases at amextravel.com 1x points for each dollar you spend on eligible purchases You can redeem a minimum of 5,000 points to book travel on American Express Travel. You can also transfer points to another frequent flyer program for an additional cost of .25 of a cent per point, with a maximum fee of $99. How To Make Payments on the American Express Business Green Rewards Card Online: You can make a payment through your American Express online account anytime. Simply choose your payment account and select your bank account and payment date. Note that credit cards and debit cards cannot be accepted as a form of payment. Via Amex mobile app: Download the Amex Mobile App and enjoy the convenience of paying your bills on the go, anytime. Via direct bank payment: Direct debits let you pay bills automatically, so you don’t have to worry about missing due dates. Ensure to provide your bank account details to American Express and let them know of the amount you’d like to pay every month. Via autopay: You can enroll in autopay through your American Express online account. Note that your first autopay payment may not be applied to your current billing cycle and would need to make your usual payments until your autopay begins. Via Mail: You can choose to mail your payment either by check or money order made payable to American Express. Finally, ensure to include your account number at the front of your payment. First Class Mail American Express P.O. Box 650448 Dallas, TX 75265-0448 Express Mail American Express Attn: Express Mail Remittance Processing 20500 Belshaw Ave. Carson, CA 90746 American Express Business Green Rewards Card Features The offers varying features that let you maximize your travel, making it best suited for those who frequently travel that may need a flexible credit limit. These features are then divided into the following: cash flow flexibility, expense management, travel, and insurance protection. Cash Flow Flexibility Pay Over Time option: The Pay Over Time option lets you carry a balance with interest on eligible purchases. These purchases can be paid over time, up to the amount of your account’s Pay Over Time limit. You have the option to pay for these purchases over time with interest, or you can pay your full balance each month. All charges not included in a Pay Over Time balance must be paid in full. No preset spending limit: This type of spending limit lets you adapt the amount you can spend based on factors such as your purchase, payment, and credit history. Expense Management Employee cards: There’s a $0 annual fee for every Employee Business Green Rewards Card. In addition, each card can get Membership Rewards® points on purchases your employees make. Using QuickBooks: QuickBooks can help you save time as it has an auto-expense categorization system. Once enrolled, your American Express Business Green Rewards Card transactions are tagged automatically with your QuickBooks categories. Year-end summary: At the end of each year, cardholders can see a complete summary of their spending, which is categorized by month and purchase type. This will help you track your business expenses down to the last detail. Travel Car rental loss and damage insurance: The American Express Business Green Rewards Card provides car rental loss and damage insurance up to $50,000 per car rental agreement. It covers rental cars for the first 30 consecutive days of a rental agreement. Some incidents aren’t covered, such as intentional damage, manufacturing defects, theft of or damage to tires, damage to any other vehicle, and damage to any property other than the rental vehicle. Baggage insurance plan: The American Express Business Green Rewards Card offers a baggage insurance plan for any bags lost in direct transit. It provides coverage up to $1,250 for carry-on bags and up to $500 for checked Baggage, in excess of coverage provided by the Common Carrier. For New York State residents, there’s a $10,000 aggregate maximum limit for all Covered Persons for every Covered Trip. Global Assist® hotline: Cardholders can access a global assistance hotline when traveling farther than 100 miles from home. This hotline provides access to medical, legal, financial, or other emergency services, and is available 24 hours a day. This hotline only connects you to third-party providers but doesn’t pay for their services—the cardholder will be responsible for any fees charged by third-party providers. Insurance Protection Roadside assistance: The American Express Business Green Rewards Card offers a 24-hour dispatch hotline that can help you contact roadside service providers in case of an emergency. The roadside assistance hotline is free. However, you’ll be responsible for the costs of any goods or services provided. You can request services like towing, winching, jump-starts, flat tire change, gas delivery, and lockout services. Purchase protection: The American Express Business Green Rewards Card covers purchased items that were either stolen or damaged within 120 days from the purchase date, 90 days for New York residents. The coverage is limited to $1,000 per occurrence and $50,000 per year. Items that aren’t covered by the protection include tickets, gift cards, preowned goods, motorized vehicles, cash or its equivalent, rented items, permanent fixtures, and items for resale. Extended warranty protection: Extended warranties are offered on purchases with original manufacturer’s warranties of five years or less. American Express will offer two additional years of warranty if the original warranty is anywhere from two to five years and will match the original warranty if it’s less than two years. Some items aren’t covered, including motorized devices, fixtures, real estate, consumable items, animals, and living plants. Travel accident insurance: Travel accident insurance of up to $100,000 is available to cover losses within 100 days of the date of the accident. This insurance covers losses like death or loss of limbs, sight, or hearing. The entire trip fare should have been charged to your American Express credit card to be eligible for this coverage. Pros & Cons of the American Express Business Green Rewards Card American Express Business Green Rewards Card Alternatives Capital One® Spark® Miles for Business The is ideal for those looking for an ideal travel card as it offers 2x miles on every single business purchase. On top of this, if you use this card to book hotels and rental cars with Capital One Travel, you can earn 5x miles per $1 without blackout dates or seat restrictions. Finally, it offers an introductory bonus of 50,000 miles―equivalent to $500 in travel―after spending $4,500 on purchases within the first three months of card ownership. This makes it our top pick for both best business credit cards for travel and best business credit cards for miles. American Express Business Platinum Card® The is best suited for traveling business owners who prefer to travel overseas luxury with non-stop travel perks. Cardholders are eligible for car rental upgrades, gold status at Marriott Bonvoy and Hilton Hotels & Resorts, complimentary access to The Centurion Lounge, and many others. While this card has a steep annual fee of $695, there’s an introductory APR of 0% within the first 12 months of account opening and rewards of 120,000 points after spending $15,000 within the first 3 months of account opening. It’s no surprise that this is our top-recommended business credit card with lounge access and one of our top choices for the leading small business credit cards and best business credit cards for travel. Bank of America® Business Advantage Travel Rewards World Mastercard® The offers usual rewards for both business travelers and business owners wanting zero transaction fees when they purchase products overseas. Cardholders can get 1.5x points for every dollar spent on any business purchase and can also earn 4x points for every dollar spent if you book through the Bank of America® Travel Center. This card also offers a welcome offer of 30,000 points after spending $3,000 within the first 3 months of account opening. These reasons make it our top-ranking business credit card with no foreign transaction fees. Bottom Line The is best for business owners who travel frequently, need a flexible spending limit, and can pay their balance in full every month. If you’ve checked out this American Express Business Green Rewards Card review and decided that this card isn’t what you’re looking for, compare top cards in our Credit Card Marketplace to find one that may be a better fit for your business.
March 9, 2022
Small Business Credit Cards vs Purchasing Cards
The primary difference between a small business credit card and a purchasing card is that a purchasing card is a charge card. A charge card requires payment in full each month while a small business credit card allows you to carry a balance into the next billing cycle. Both are short-term financing options for business-related purchases, but purchasing cards are meant specifically to streamline the business-to-business purchasing process. Small Business Credit Cards vs Purchasing Cards at a Glance When to Use Small Business Credit Cards You should use a small business credit card to: Make every day business-related purchases: Small business credit cards are best used to finance everyday business expenses easily and conveniently, such as office supplies or equipment, internet, phone, or travel. Earn cash back and points rewards: Some of the best small business credit cards offer cash back rewards or points rewards for specific spending categories. This is like getting a discount every time you purchase from those spend categories. Issue employee cards for business expenses: Most small business credit cards allow business owners to issue additional cards to their employees. This is often easier than dealing with purchase orders or reimbursing your employees for business-related purchases. When to Use Purchasing Cards You should use a purchasing card are to: Streamline the business-to-business purchasing process: P-cards allow businesses to streamline the process by making business-to-business purchases with cards instead of other payment methods, such as checks and automated clearing house (ACH) transactions. Control and set employee spending limits: Business owners can issue additional employee cards. You can set daily or monthly spending limits, determine where the card can be used, and lock and unlock the card from your account. Integrate the P-card program with your accounting software: Some P-card programs integrate with accounting software and add your transactions automatically so that your accounts payable (A/P) team won’t have to enter them manually. Potentially earn pay-early discounts from suppliers: Some suppliers and service providers offer incentives if you pay your bill early. When to Use an Alternative to a Small Business Credit Card or P-card One alternative to a small business credit card or purchasing card is a business prepaid card like . It’s similar to a debit card, but you must have enough cash on hand to fund the account. It may be the best choice if: You don’t meet the qualification requirements: Business prepaid cards are typically for business owners who don’t qualify for or don’t want a small business credit card; they have fewer requirements than both small business credit cards and purchasing cards, while also limiting the owner’s risk. You want to manage employee expenses: Like P-cards and business credit cards, business prepaid cards offer employee cards. You can restrict merchant categories and set up flexible spending amounts. You’d rather preload funds than have a credit limit: Business prepaid cards don’t come with credit limits. Instead, business owners preload the amount of funds they want to spend. This gives you the ability to keep your spending under your control. You’re rebuilding your credit: Prepaid cards don’t require a credit check and your prepaid card activity isn’t reported to the major business credit bureaus. How Small Business Credit Cards Work Once your business credit card application is approved, you’ll receive your card in the mail within 10 to 14 days. Some card issuers will give you the card number upon approval so you can start using it immediately. Depending on the card, sometimes you can earn cash back or points rewards on some or all of your purchases. You’ll typically receive a statement at the end of your billing cycle, usually every 30 days. However, only a monthly minimum payment is required. If your business only pays the monthly minimum and carries a balance over to the following month, those unpaid balances will accrue interest. Any unpaid balances will continue to accrue interest until they’re paid off fully. How Purchasing Cards Work Purchasing cards are usually issued to employees to make business-to-business purchases, such as purchasing goods or services. Employees can either make a purchase upfront or submit an invoice to their supplier or service provider. Those suppliers or service providers report the transaction to the P-card provider. Your P-card provider will typically send you your bill every 15 or 30 days, depending on your agreement. You can either pay this balance in full manually or have your bill paid automatically through your connected business checking account. Small Business Credit Cards vs Purchasing Cards Qualifications If you own a new business, a small business credit card may be the best financing method for you because of its relatively simple qualification requirements compared to a P-card. Purchasing cards, on the other hand, have annual spend, level of cash flow, and profitability requirements. Most business credit card issuers require a personal guarantee because there’s no revenue or time in business requirement. This means that the business owner is held liable for any outstanding expenses on the company’s business credit card account. Also, when your business is new, your credit card application will be based on your personal credit. P-card providers often want to see that your business is currently profitable and has been profitable during the last couple of years. This gives them a high-level view of your business’s financial health. Small Business Credit Cards vs Purchasing Cards Costs While the APR may seem high for business credit cards, many of them offer an introductory 0% APR for anywhere from nine to twenty months. Given the cost of an APR plus an annual fee, a purchasing card is generally a more inexpensive option if you can manage its repayment terms. Small Business Credit Cards vs Purchasing Cards Rewards When it comes to cash back or points rewards for what you spend, small business credit cards rank best in that category. Some cards offer rewards for certain spend categories such as office supplies, gas stations, and restaurants. Others offer rewards on all business purchases. Conversely, P-cards generally don’t offer cash back or point rewards. Instead, some suppliers and service providers offer incentives in the form of discounts. Small Business Credit Cards vs Purchasing Card Repayment Terms Remember, small business credit cards give you the ability to float business expenses but purchasing cards don’t. Although it’s recommended that you pay your credit card bill in full every month, it isn’t required. What’s required is the monthly minimum payment. It’s important to use a P-card only if you know you’ll be able to pay off your entire account balance at the end of each month. Often, P-card providers require that you set up auto repayment with them to make sure your payment obligations are met. They may also require that you have an account with the bank that’s issuing the card. This helps when setting up autopay, as you can connect that account to your P-card. Bottom Line A small business credit card is an easy payment method for financing your business that’s accepted by most retailers/suppliers. A purchasing card is a good choice for streamlining a business-to-business (B2B) purchasing process, especially if those purchases are recurring. Consider whether you’d prefer to float your expenses and earn rewards each month or if you have recurring purchases month after month and can pay your bill in full without difficulty. See our article on employee credit cards and best practices for more options and recommendations.
February 18, 2022
How To Build Business Credit in 7 Steps
Business credit helps indicate your business's creditworthiness, which lenders and creditors use to determine your risk as a potential borrower. Scores typically range from 0 to 100 and are measured by the major business credit bureaus—Dun & Bradstreet, Equifax, and Experian. A good score can be the ticket to favorable terms on a business loan, a business credit card, or with a vendor. To build business credit, here are seven steps you should follow: 1. Establish Your Business Formally Formalizing your business is a two-step process. First, establish a corporate structure for your business such as a limited liability company (LLC) or corporation. Second, obtain an employer identification number (EIN) from the IRS. Determine Corporate Structure When you incorporate your business or form an LLC, you separate your business and personal credit profile legally. This provides a level of protection from personal liability for the actions of the corporation. Some other advantages of incorporating your business include: Small business owners are protected from personal liability for company debt obligations Corporations are the best for companies that eventually want to go public Corporations can raise investment capital Transferring ownership is generally easier as a corporation Corporations aren’t dependent on the life of an individual and can continue indefinitely There are more opportunities to create tax benefits Determining the best corporate structure for your business depends on whether you intend to remain small, seek investor capital and grow to scale, or have additional owners in your business and issue stock. Obtain an EIN Just as personal credit bureaus use your Social Security number for personal credit reports, business credit bureaus use an EIN for business credit reports. The EIN is essentially the Social Security number of a business. An EIN is required to apply for business loans, incorporate your business, open a business bank account, use with vendors or suppliers, and file business taxes. You can apply for an EIN online in about 10 minutes. Once you receive your EIN, you can use it immediately for most business purposes. However, you’ll need to wait about two weeks to use your EIN to file taxes electronically. 2. Open a Business Bank Account Every business needs a small business checking account for handling financial transactions. Opening a business bank account under your business’s legal name is required if you want to maintain the liability protections offered by LLCs. If business owners mix their business and personal finances, then a creditor has the right to say that company owners are liable for all company debts or damages. While many checking accounts are similar, some banks don’t charge monthly account fees or make it easy to avoid them if you meet modest minimum balance requirements. These free business checking accounts can help keep traditional bank fees to a minimum, which allows you to keep more money in your business. 3. Obtain a DUNS Number Dun & Bradstreet (D&B) offers a business credit score that’s used by many lenders. D&B collects public business and industry information, payment history, and financial performance information to generate three individual business credit scores. To gain access to these scores, you must first get a data universal numbering system (DUNS) number. The DUNS number is a unique nine-digit identification number that’s used to create your business credit file, similar to how your Social Security number is associated with your personal credit reports. A DUNS number is also necessary if you decide to pursue a contract for work with the federal government. You can apply for a DUNS number for free on D&B’s website or through a credit platform like . DUNS will ask for the following information: Name of the organization Address Name of the owner or CEO Legal structure of the organization Year the organization was established Primary type of business Total number of full and part-time employees Establishing business credit with D&B requires the DUNS number plus at least three trade references. Trade references, similar to employment references when you apply for a job, come from suppliers and creditors that you’ve done business with. You can get trade references by asking vendors you have a positive relationship with to report your payment activity to D&B. It’s also possible that you already have a DUNS number if a vendor or supplier previously reported information to D&B. You can check to see if you already have a DUNS number by visiting the D&B website and searching for your company. Equifax & Experian In addition to D&B, Experian and Equifax monitor business credit. You don’t need to create an account or get trade references with Equifax or Experian. These bureaus look automatically at the secretary of state records for new business filings and other public records. They can score your business solely based on the demographic information in such records. Equifax also offers the ability for business owners to self-report company information, which can help keep your credit information up to date. 4. Obtain a Business Credit Card Getting a small business credit card and paying the balance every month is a good way to build a strong payment history, which is one way to build your business credit. Many credit cards earn cash back and points-based rewards. If you have a good personal credit score―at least 670―then you may qualify for some of the best business credit cards. If you have no business credit history, there are many credit cards that will look strictly at your personal credit or your financials. 5. Establish a Line of Credit With Vendors & Lenders While there’s a handful of information that can show up on your business credit report, trade lines can be some of the more important pieces of your credit history. A business trade line is a line of credit between a business and a vendor, which allows your business to pay its balance at a later date. Traditional and online lenders also offer business lines of credit that can be used for working capital and cash flow. A business owner can follow these steps to help them get a business line of credit. If you want to build your business credit, open a line of credit with vendors and lenders that report to the business credit bureaus. You should have three to five lines of credit that report payment information. If you have a positive payment history, it’s important to ask your current suppliers and creditors if they report to the business credit agencies, as they aren’t required to do so. If they don’t, ask them if they can start reporting. Many vendors will agree because there’s no cost to report to the credit bureaus. 6. Pay Bills on Time To build business credit, it’s crucial to repay all your creditors on time. Your payment history with vendors, lenders, and credit issuers is the most important factor when business credit bureaus calculate your business credit score. As with your personal credit score, late payments have a significant negative impact on your business credit score. And, a low credit score is the leading reason for credit denial. If your credit is damaged, consider opening a secured business credit card to help rebuild your score. 7. Monitor Your Credit Reports Errors on your business credit report, such as misreported payment information, can skew your business credit. It’s a good rule of thumb to reconcile your business bank and credit card accounts with your trade lines, as this is where businesses will usually find errors or fraud on their accounts. Getting a basic business credit report is free. These reports typically show monthly summaries of credit reports. Paid services will offer a more complete picture of your business credit; however, they may not be necessary if you’re merely checking to make sure your credit information is accurate. You can obtain your business credit reports and scores from D&B, Experian, and Equifax for free using . Each business credit reporting agency has its own procedures for errors on a business credit report. You can submit disputes electronically to D&B and Experian. To dispute items on an Equifax report, log into your account and contact customer service. With the right documentation, it usually takes about one month to fix an error on your business credit report. FICO LiquidCredit SBSS The FICO LiquidCredit SBSS is a mix of your personal and business credit score. FICO is unique because it isn’t technically one of the three major credit bureaus, but it still provides its own unique score. FICO provides a business credit score based on information already collected by Dun & Bradstreet, Experian, and Equifax. Therefore, there’s nothing you need to do besides having your credit information looked at by the three main bureaus. All business owners need to focus on this score because it’s most commonly used when approving Small Business Administration (SBA) loans. Bottom Line As your business expands and grows, establishing and maintaining good business credit offers many benefits, such as low-interest business financing and favorable payment terms from suppliers. Using the steps outlined above, you can build a strong business credit score and set yourself up for success.
October 19, 2021
Business Credit Card vs Business Line of Credit: What’s Better?
Both credit cards and lines of credit are short-term, revolving financing options used by small businesses to access working capital. Which option is better? It truly depends on your business needs, how often you plan to make purchases, how much you need to spend and, ultimately, how quickly you can repay those borrowed funds. When to Use a Business Credit Card or Business Line of Credit Both business lines of credit and business credit cards offer the ability to borrow funds to support your business. While both provide needed access to capital, there are best practices for using each: Business credit cards: These are an excellent way to manage employee expenses and smaller operational expenses or to purchase items that require a card number for payment. Also, if your business is a startup that has yet to record significant revenue, a business credit card may be the only way to support it. Business lines of credit: These are a great way to manage seasonal variations in cash flow, order larger amounts of inventory in advance of busier times of the year and purchase larger one-time expenses that can be paid off relatively quickly. Business owners seeking to finance a one-time, large investment should consider applying for a Small Business Administration (SBA) loan or an equipment loan. Interest rates for both types of loans are much lower than credit cards and unsecured lines of credit. Additionally, the repayment period for both types of loans is much longer—up to 25 years for some types of SBA loans. Business Credit Card vs Business Line of Credit at a Glance Business Credit Card vs Business Line of Credit: Qualifications Business credit cards traditionally have a higher minimum credit score threshold than business lines of credit. However, many business credit cards don’t have a revenue requirement and don’t require a business to be in operation for a specific length of time. Business credit card financing is based predominantly on the owner’s credit score, especially in the case of newer businesses or those that have very low annual revenues. A business line of credit will require a UCC filing at the time of approval. This provides the lender with the ability to put a lien on your business assets should you fail to pay back what you borrow. Business Credit Card vs Business Line of Credit: Costs Business lines of credit typically have a higher annual percentage rate (APR) compared to business credit cards. However, individuals with outstanding credit may be able to obtain a lower interest rate line of credit. Fees can vary widely by lender with both business credit cards and lines of credit. While annual fees are typically minimal with lines of credit, there may be origination fees and a draw fee, depending on the lender. Many small business credit cards have no annual fee; however, cards with perks and rewards can carry higher annual fees. The total cost of borrowing should be a primary consideration when shopping around for both the best business credit cards and the best small business lines of credit. Business Credit Card vs Business Line of Credit: Access to Capital Unsecured business lines of credit allow access of up to $250,000, with the largest limits set aside for businesses with higher annual revenues. Most lines of credit will have limits in the $50,000 to $100,000 range. By comparison, credit card limits typically don’t exceed $50,000. Both credit cards and unsecured lines of credit feature fast approvals. Lines of credit fund within three business days, but credit cards take a little longer, as the card needs to be mailed to you. When it comes to accessing funds after initial funding, there are minor differences. When it comes to using a line of credit, you can draw from the line as needed and deposit as cash or transfer directly into your bank account. Credit cards are typically used for individual purchases. However, both offer convenience and flexibility to use as needed. Business Credit Card vs Business Line of Credit: Repayment Terms Business credit cards have monthly repayment terms, with the minimum payment being a small percentage of the owed balance once a minimum threshold is met. This is somewhat different from the repayment terms on a business line of credit, which are either weekly or monthly. Depending on the lender, you may have a fixed amount due based on the owed balance or a percentage of the principal plus interest accrued. The other difference lies in the time you have to repay what you owe. With an unsecured line of credit, you typically have no more than 24 months to repay the advance, with most advances being due within one year. With a credit card, you continue to make payments as long as there’s a balance owed on the card. Business Credit Card vs Line of Credit: How to Apply Applying for a credit card and line of credit is as easy as entering your business and personal information online. Typically, you’ll receive an approval decision within 24 hours. For a line of credit, you’ll receive your funds within one to three days compared to the seven to 10 days it takes to receive a business credit card. If you apply for a business line of credit, the online process will be much easier as you only need to provide personal information, your business’s information, and your bank statements so the lender can evaluate your ability to make loan payments. Applying for a business credit card online works the same way. If you’ve been in business for one year, have a credit score above 600, and generate at least $100,000 in annual revenue, you may qualify for a line of credit from . There’s no cost or obligation to draw funds if you qualify, and you pay only for the funds you actually use. If you’re looking for the right card to apply for, we recommended the card. You can apply online by filling out a basic application containing both business and personal information, and you could be approved the same day you apply. After approval, you’ll receive your card in the mail within seven to 10 days. Benefits of Having Both a Business Credit Card & a Line of Credit Business credit cards and lines of credit both have unique benefits that are helpful to business owners. If your business makes smaller purchases online while managing larger seasonal inventory fluctuations and cash flow variations, having both a line of credit and a credit card makes sense. Some benefits of having both a business credit card as well as a line of credit include: Increased business credit: One factor all credit monitoring agencies review is your business’s credit utilization ratio. Provided you can keep your owed balances in check, having both a business credit card and business line of credit increases your business’s total credit limit and lowers your credit utilization ratio. Both of these factors will positively impact your business credit report and scores. Greater payment flexibility: Many business credit cards offer cash back and rewards for the money you spend on the card. This can work well for day-to-day purchases, orders where a credit card is needed for payment, or smaller operational expenses. A line of credit can be used as cash and to write checks, which you can’t do with a business credit card. This gives you additional flexibility to manage your business cash flow. Pros & Cons of a Business Line of Credit A business line of credit can benefit your business because you can receive high credit limits up to $500,000 in the form of cash while having a credit score as low as 600. However, in contrast to credit cards, business lines of credit carry interest rates up to 50%, require that you have $100,000 in annual revenue, and are repaid like a loan. Pros & Cons of a Business Credit Card Business credit cards give business owners and their employees access to a credit line that can be used as needed. Business credit cards are especially beneficial for small businesses that have low annual revenues and can’t qualify for a line of credit. Expenditures should be paid off monthly, as the outstanding balance is charged interest until repaid. Bottom Line A small business credit card and a business line of credit are both good short-term financing options that should be used for different reasons. If you can obtain both as part of your financing arsenal, you’ll get added flexibility and can improve your business credit, provided you make your payments on time. If you need to choose one option, look at how your business operates, what your specific needs are, and whether a line of credit or credit card is a better fit for your business.
January 6, 2021
5 Best Amazon Business Credit Cards
Editor’s note: This is a recurring post with regularly updated card details. The best Amazon business credit cards offer top rewards on Amazon expenses, making them ideal for owners who spend big on Amazon purchases. While most business credit cards offer 1% cash back on Amazon purchases, these cards earn up to 5% cash back and bonus gift cards worth up to $125. Although some cards require an Amazon Prime membership, none of the cards on our list charge annual fees. The best amazon business credit cards for Amazon purchases are: : (Best overall) Best for 5% back on Amazon purchases : Best for Amazon purchases without a Business Prime membership : Best for 5% cash back on a personal credit card : Best for earning Amazon rewards on a personal card without a Prime membership : Best for fixed-rate cash back and 0% introductory annual percentage rate (APR) For more details on how we evaluate business credit cards for this list, see our methodology. : Overall Best Amazon Credit Card for Business Use Why we like it: The Amazon Business Prime American Express Card is the all-around best business credit card for business owners who make frequent Amazon purchases. This card earns up to 5% back at Amazon.com, Whole Foods, Amazon Business, and Amazon Web Services. If you're a heavy Prime Amazon business user, this card's high rewards. Plus, you'll get your choice of earning rewards or payment terms. Those who opt for payment terms can make Amazon purchases without interest for 90 days. What's more, you can change your benefits selection to rewards on future purchases at any time. You'll also earn this card's second-highest rewards on purchases for restaurant, gas station, and cellphone purchases. Although you'll get all these benefits without an annual card fee, you'll need an Amazon Business Prime membership to qualify. Business Prime accounts cost $179 per year while standard Prime memberships cost $119 per year. : Best for Amazon Purchases Without a Business Prime Membership Why we like it: If a Business Prime membership isn't a priority, the Amazon Business American Express Card is a solid pick. This card earns 3% back on purchases made at Amazon.com, Whole Foods Market, Amazon Business, and Amazon Web Services. If you don't want rewards, you can also choose interest-free payment terms for 60 days. You can update your card benefits between payment terms and rewards at any time. Although the cash back option earns rewards on all purchases, you'll also earn 2% back when you use your card for restaurant, gas, and cellphone service-related purchases. : Best for 5% Cash Back on a Personal Credit Card Why we like it: The Amazon Prime Rewards Visa Signature Card offers 5% cash back on all Amazon.com and Whole Foods purchases, so it's a great personal card for frequent Amazon shoppers. This card also comes with a $70 gift card that can be applied instantly to your Amazon account upon card approval. This card also gives you the option to earn cash back rewards or opt into payment terms, where you'll have no interest for 90 days. If you choose ongoing rewards, you'll earn cash back rewards on more than Amazon and Whole Foods purchases. You'll also earn 2% cash back on restaurant, gas station, and drugstore purchases. You will need a standard Amazon Prime membership to qualify for this card. Amazon memberships start at $119 for personal accounts. However, because this is a personal credit card, you won't be able to use it for building business credit. : Best for Non-Prime Members Who Want a Personal Card Why we like it: The Amazon Rewards Visa Signature Card is a consumer credit card designed to give top rewards on Amazon purchases for non-Prime members. This is also a great option for business owners who can't qualify for a business credit card. Plus, it's cheaper to own than the Amazon Prime Rewards Visa Signature Card, which is available only with a Prime membership. However, it offers slightly lower rewards—3% vs 5%—on Amazon purchases. Just like the Prime version of this card, the Amazon Rewards Visa Signature Card earns 2% cash back at restaurants, gas stations, and drugstores. Additionally, you'll get a $50 gift card upon approval as a welcome bonus that you can use on future purchases. However, because this is a personal credit card, you can't use this card to build business credit. : Best for Fixed-rate Cash Back & 0% Introductory APR Why we like it: The American Express Blue Business Cash™ Card is one of the best business cards for owners looking for steady cash back rewards on Amazon purchases. Although it's not an Amazon-branded card, this card still earns 2% cash back on all eligible purchases on up to $50,000 per calendar year, including Amazon-related purchases. Plus, you'll get a 0% introductory APR period that's longer than any other card on our list. This is a good card for owners who want premium American Express perks like expanded buying power without the costly annual fee. With this card, you can make purchases above your credit limit with no over-limit fees. The expanded buying power feature isn't unlimited and is dependent on your card usage and payment history, among other factors. How We Evaluated the Best Amazon Credit Cards for Business When considering cards for this list, we primarily included cards that offer robust ongoing rewards for Amazon-related purchases. Along with ongoing rewards, we also took into account welcome offers, Amazon-specific introductory financing, and annual card or Prime membership fees. The best Amazon credit cards for business pay up to 5% cash back on purchases while offering welcome bonuses that can be applied directly to your Amazon account. Bottom Line The best Amazon business credit card earns top rewards that you can redeem easily for Amazon purchases. These cards also typically come with introductory offers like free gift cards and statement credits that you can use for future purchases. If you're only an occasional Amazon customer, you'd be better off with a non-Amazon branded card. For rates and fees on the Amazon Business Prime American Express Card, please click . For rates and fees on the Amazon Business American Express Card, please click . For rates and fees on the American Express Blue Business Cash™ Card, please click .
October 26, 2020
The Alarming Increase in Credit Card Debt and Fraud
Credit card debt and card fraud are complex issues that continue to become more common. Whether we evaluate the past five years or even look at projections, we see an alarming increase in debt and fraud both in the United States and worldwide. Because this is a prevalent issue in society, preventive measures are encouraged to safeguard yourself from falling within the statistics in this report. US Credit Card Debt Has Seen a Shocking Increase Credit card debt statistics show that US credit card debt is on the rise, and it has been for the past handful of years. For instance, since 2015, card debt has increased by an average of $48.75 billion each year. This statistic is evidence that US card debt is on an upward trend and doesn’t give too much hope for a drastic decrease in debt anytime soon. The looming credit card debt within the US is usually a result of cardholders who miss payments, can’t repay their balances, or deal with a ton of interest charges that send them spiraling off in a seemingly endless debt trap. Because that’s never a fun place to be in, it’s crucial for cardholders to make timely payments and use their card responsibly to avoid falling into this debt spiral. US Credit Card Debt Through the Years While looking at the average increase in card debt per year gives a good bird's-eye view, it’s eye-opening to understand how the amount of debt has changed during the past five years. For instance, in 2015, card debt was $898.7 billion compared to $1.09 trillion in 2019, which is a 21.28% increase. For a closer look at US credit card debt, here is the amount of debt per year since 2015: From 2015 to 2019, credit card debt increased by an average of 4.95% every year. The largest increase for one year was 6.85%, between 2015 and 2016. The smallest increase was 2.94%, between 2017 and 2018. These statistics and calculations show that credit card debt has historically been increasing. US Credit Card Debt vs Total Consumer Debt Unfortunately, credit card debt isn’t the only debt-related problem in the US. Americans also deal with other debt, including loans and mortgages. The total consumer debt in the US, which includes credit cards, auto and student loans, and mortgages, hit $14.15 trillion in 2019. With revolving debt amounting to $1.09 trillion and nonrevolving debt at $3.09 trillion, that means housing debt makes up $9.97 trillion of consumer debt. Furthermore, here’s a look at how consumer debt has changed during the past five years: 2015: $12.12 trillion 2016: $12.57 trillion 2017: $13.15 trillion 2018: $13.55 trillion 2019: $14.15 trillion These numbers are truly staggering. On average, there was a 3.90% increase in consumer debt every year. That’s less than the 4.95% average increase in card debt we saw between the same time period. Regardless, both card and consumer debt are continually on the rise in the US. Each American Cardholder Saw an Increase in Their Card Debt Not only is overall card debt on the rise in the US, but debt for each cardholder is also on the rise. In 2019, the average card debt for each US cardholder was $6,194. Compare that to 2018, and you’ll see an increase of $154. Although not a massive change, this 2.55% increase in debt per cardholder is another indicator of the growing average credit card debt in the US. US cardholders who want to avoid watching their credit card balances increase year-over-year should focus on paying down their balances monthly, setting up automatic payments, and using a budget. While it may seem like credit cards give you access to free money, that is never the case. If you can’t repay what you owe, you may find yourself drowning in interest charges. Surprising Insights on Credit Card Ownership in the US Ready for some eye-opening card ownership statistics? Here’s what Experian reports: Americans have a total of 484 million credit cards. On average, Americans hold four credit cards with an average account history of seven years and two months. In 2019, Americans opened 20.8 million new accounts. Now, although this isn’t directly related to the alarming increase in US card debt, here’s what it does show: Americans are creating more opportunities for card debt because of the number of cards they own. More credit cards mean more credit available, which means more potential debt. Cardholders and Their Looming Credit Card Debt As mentioned, more credit cards mean more possibilities for unpaid balances. There’s even evidence that shows there are more US cardholders with card debt than there are without. For example, approximately 55% of US cardholders have card debt. This means that for every 20 cardholders, 11 cardholders have unpaid balances. Carrying a credit card balance can easily turn into a massive expense on its own because of high ongoing annual percentage rates (APRs). When cardholders carry a balance, issuers charge interest monthly, which racks up quickly. For example, say you have a balance of $6,194. If your card charges a 17% ongoing APR and you pay the 3% minimum payment each month (approximately $186), it would take you 46 months to pay off your balance, and you’d pay $2,245 in interest. Cardholders’ Quick Guide to Escaping Credit Card Debt Credit card debt happens, even to those who may think they have a good grip on their finances. A few unexpected expenses or missed payments can start you down the path of racking up debt over time. However, while it can happen to anyone, card users can also pay off credit card debt with a few responsible tactics, which are outlined below: Debt snowball method: This method is one of the quickest ways to pay off your debt. You start by paying off the card with the least amount of debt while making the minimum payments on the others. Once you pay off your smallest balance, you move to the next smallest and so on until all your card debt is repaid. Debt avalanche method: With this payoff method, instead of focusing on the smallest balance first, you focus on paying off the card with the highest APR while making the minimum payment on the others. Once the card with the highest APR is repaid, you move onto the card with the next highest. Use a balance transfer card: Some issuers offer balance transfers credit cards, which typically charge no interest on balance transfers for up to 21 months. This means you can transfer all of your balances to one card to help pay down all that you owe while avoiding interest. Business owners can also use business balance transfer credit cards. Cardholders that realize they’re in credit card debt should consider setting their cards off to the side. It’s difficult to pay down your accrued card debt while actively adding to the balance owed. Card Fraud Losses Are on an Upward Trend in the US As much as we wish credit card fraud to disappear entirely, unfortunately, that’s likely never going to happen. When we look at current credit card fraud statistics, we see the following: Global card fraud losses amounted to $27.85 billion in 2018 Card fraud losses worldwide are projected to hit $35.67 billion by 2023. That’s a whopping increase of $7.82 billion since 2018. If you experience credit card fraud, don’t be quick to think you did something wrong or made yourself vulnerable. It’s hard to avoid―even experts like myself who have a suite of credit cards experience card fraud. What matters is how you respond, so be sure to call your issuer immediately to report the fraud and lock your card. Credit Card Fraud Is the Most Common Type of Identity Theft Not only is credit card fraud a rising issue around the world, but so is identity theft. Identity theft is when someone steals your identity and uses it for their own personal gain, such as opening a new account. While there are several types of identity theft, such as card fraud, loan or lease fraud, or bank fraud, credit card fraud is the most common type, with 271,823 reported cases in 2019. Percentage Global Fraud Losses Around the World As mentioned, credit card fraud is not just a problem in the US. Unfortunately, we see it happening all around the world. For example: In 2010, 46.9% of fraud losses were right here in the US, and 53.1% were outside of the US. In 2018, 34% of losses were in the US, and 66% were outside. While this is a 12.9% decrease in losses within the US compared to 2010, it’s also a 12.9% increase in losses outside the US. Fraud losses inside and outside the US tend to fluctuate every year. However, historically, fraud losses within the US have been less than outside. This isn’t necessarily a positive, though, because a lower percentage of losses in one region means a higher percentage in another. A Look Into US Card Fraud Reports Since 2015 Although it’s essential to analyze credit card fraud reports around the globe, it’s helpful to identify fraud statistics specific to the US and how they’ve changed over the course of the years. For instance, there were 74,902 reports of credit card fraud in 2015 compared to 271,823 reports in 2019, which is about a 263% increase. For a more granular perspective, here are the reports for each year. Between 2015 to 2019, on average, there was a 41% increase in fraud reports every year. The largest increase for one year was 72.35%, between 2018 and 2019. This data helps illustrate and prove that credit card fraud is absolutely on the rise. New Account Fraud Is More Common Than Existing Account Fraud There are two types of credit card fraud: new account fraud and existing account fraud. New account fraud, or account opening fraud, is the more common of the two and has seen an 88% increase in 2019 compared to the prior year. When a fraudster steals your identity and opens a new account under your name, their mischievous plan typically lasts up to 90 days, where they max out any credit limits. Existing account fraud, on the other hand, happens when a fraudster takes over an existing account. This type of fraud has seen a 4% decrease in 2019 compared to the previous year, meaning that new account fraud is an easier win for fraudsters. Cardholders who experience either type of fraud should contact their bank or issuer immediately. Most People Are Unaware of New Account Fraud Although new account fraud is common, most people are unaware of it. A report put together by the Identity Theft Resource Center (ITRC) shows that most respondents had never heard of account fraud; however, they were concerned about this type of fraud happening to them. Here’s a snapshot of that survey from the ITRC. The majority of concerned participants were worried this fraud would hurt their credit or take a long time to correct the problem. However, those concerns are not the only repercussions of new account fraud. This type of fraud can also freeze access to your funds, make you susceptible to other fraud, and require you to get new cards with new information. Banks Strive to Safeguard Against New Account Fraud Now you may be wondering, how do people prevent themselves from new account fraud? Well, most of the time, that protection lives in the hands of the banks. When someone opens a new account, it’s the bank's responsibility to verify the identity of the customer and recognize potential fraudsters. The Association of Certified Fraud Examiners (ACFE) outlines 15 red flags banks and issuers should look out for when someone is opening a new account. Some of these warning signs include: Applicant’s name doesn’t match the Social Security number information returned by the credit bureau Primary identification cards issued within the previous 60 days, unless the applicant has recently moved from out of state The address on the ID card is different than the home address provided Applicant is older than 25 but has no prior banking experience Bottom Line Cardholders never want to find themselves dealing with credit card debt or fraud. However, it’s unfortunately on the rise, so there’s a possibility they’ll experience one or the other. If someone experiences debt or fraud, they need to take action immediately, such as paying off their balances as quickly as possible or contacting their issuer to report the fraud.
October 5, 2020
7 Eye-opening Credit Card Fraud Statistics
People might think using a personal or business credit card is safe, but credit card fraud is a major global and national problem. Although some people skate by without ever dealing with fraud, these seven alarming credit card fraud statistics goes to show how prevalent it is in our world. 1. Credit Card Fraud Losses Reached $27.85 Billion Worldwide Credit card fraud spans further than just in the United States. As a matter of fact, in 2018, card fraud losses reached $27.85 billion worldwide. This is an increase of 16.2% from $23.97 billion in 2017. Not only is a 16.2% increase in fraud losses a major jump in a single year, but if we look at projected losses, it gets even worse. The Nilson Report projects that, by 2023, credit card fraud losses will reach $35.67 billion worldwide, which is a 28.08% increase from 2018. 2. The US Accounted for 34% of Global Fraud Losses in 2018 Credit card fraud is not a rare occurrence, but it’s particularly prevalent in the US. Americans were the victims of 34% of the world's credit card fraud in 2018. What’s more, the US accounted for 47.3% of card fraud losses in 2012. Fortunately, that represents the highest percentage between 2000 to 2018, so we can take some comfort that we're seeing a downward trend. 3. Credit Card Fraud Makes Up 42% of Identity Theft In 2019, there were 650,572 reports of identity theft, with 271,823 reports linked to credit card fraud—or about 42%. This makes card fraud the most common type of identity theft in the US. Falling just after card fraud, the Consumer Sentinel Network Data Book reports loan or lease fraud as the second-most common type of identity theft. Phone or utilities fraud is the third-most common. To be clear, credit card fraud happens when someone gains access to your credit card information and makes an unauthorized purchase. Meanwhile, identity theft happens when someone steals your personal information to use your identity for their purposes. In the case of this credit card theft statistic, someone could steal your information to open a new card under your name. 4. New Credit Card Account Fraud Increased by 88% In 2019 Not only is credit card fraud a major global and national issue, but some aspects of it are also continuing to rise. For instance, in 2019, new account fraud increased by 88% when compared to the previous year. Compare that to existing account fraud and, fortunately, you see a 4% decrease from 2018 to 2019. You may also know new account fraud as account opening fraud or account origination fraud. This is when fraudsters use stolen or fake identities to open new credit cards. Their number one goal? Max out the card’s limits as quickly as possible, typically within 90 days. To safeguard you from this happening, the Association of Certified Fraud Examiners (ACFE) disclosed 15 red flags that banks can look out for when a customer is opening a new account. 5. Younger People Report Fraud Losses More Often Some age groups report fraud losses more often than others. For example, in 2019, 33% of people ages 20 to 29 reported a loss due to fraud. That’s 20% more often when compared to people ages 70 to 79. However, just because those age groups reported fraud more often doesn’t necessarily mean they lost the most money. When you look at people aged 70 or older, the median loss was much higher. The Consumer Sentinel Network Data Book reports people ages 70 to 79 had a median loss of $800 in 2019. Furthermore, people aged 80 and older had a median loss of a whopping $1,600, which is a 100% increase when compared to people ages 70 to 79. Take that number and compare it to people ages 20 to 29―their median loss was only $448. 6. California Reported the Most Credit Card Fraud in 2019 While credit card fraud is a national issue, it varies drastically by each state. California’s card fraud, for example, made up 51% of its 101,639 identity theft reports in 2019, making it the state with the most card fraud. That’s 51,836 credit card fraud reports in just one year. Coming in right behind California are Florida with 33,069 fraud reports and Texas with 27,207. However, as I mentioned, card fraud truthfully varies from state to state. For instance, Wyoming is the state with the fewest fraud reports in 2019, with only 108 reports. Right after Wyoming, there’s Vermont with 145 reports and South Dakota with 160. I calculated the fraud per state by multiplying the total fraud reports for each state by the percentage of card fraud that made up the specific state’s identity theft reports. 7. Major Card Companies Have the Most Fraud by Card Type Global card companies, including Visa, Mastercard, American Express, and Discover, experienced the most fraud losses by a longshot. These global brands reported losses of $24.86 billion in 2018. Credit card and debit card transactions at nonglobal networks reported the second most fraud by card type with $1.58 billion in losses—or $23.28 billion less than the global card companies. Domestic and private label cards also report fraud losses. Together, however, they only amount to $1.41 billion in losses. What Is Credit Card Fraud? Credit card fraud happens when a thief or fraudster steals your credit card or your card information to make unauthorized purchases or cash advance. Card fraud is common across the world, so it's crucial to understand how to avoid it and what to do if you’ve been hit by a fraudster. How to Avoid Credit Card Fraud Although fraud is a surging issue, there are a handful of tactics you can use to avoid personal or business credit card fraud. Here are some easy ways to help prevent card fraud in your life: Sign the back of your new credit card immediately: When you sign the back of your card, you make it difficult for someone else to erase your signature or cover your signature. Separate your cards and cash: It’s common to carry your cards and cash together in the same wallet. However, if your wallet is stolen, so are both of those belongings. Keeping your cards in a safe and secure place can help you avoid fraud. Report a lost or stolen card immediately: If your card goes missing, report it to your issuer right away. This will make sure no unauthorized purchases are made. Some issuers even let you lock your card online or through the mobile app. Only use your card on secure and trusted websites: Before using your card online to make a purchase, make sure it's a secure site you trust. Secure site URLs start with “https://” and have a lock symbol in the search bar. Monitor your transactions daily: Make it a habit to check your credit card transactions every day. This will help you catch any suspicious activity. If you see a suspicious transaction, report it immediately. What to Do If You Have Credit Card Fraud You would never wish to experience fraud. However, credit card theft statistics show there’s a chance it may happen to you. If you have credit card fraud, follow these five steps: Call your credit card issuer immediately. Change your passwords to your online banking account. Request a credit freeze from each of the three main credit bureaus. Keep an eye on your statements for a few months after the fraud happened. Request a copy of your credit report and report any fraudulent errors. Bottom Line While these credit card fraud statistics are alarming, it doesn’t mean that fraud is unavoidable. You can escape the global fraud problem by following common preventative tactics, such as reporting suspicious activity or a lost or stolen card immediately. You deserve financial security.