CFI.co, Author at CFI.co Blog

Are you thinking of getting a credit card?

From mortgages to car loans to renting a house, you’ll need a good credit score to get the best deals. If you’re looking to improve or build your credit score, then a credit card plays a vital part.

But you shouldn’t pick any old card or the first deal you see. Finding the best credit card starts with knowing your options. You must find a card that works for you.

That’s where we come in! Keep reading our guide where we’ll break down the different types of credit cards to choose from.

How to Choose a Credit Card

Different credit card offers cater to different types of users. It focuses on their interests and their financial needs. By doing this, banks hit the sweet spot of profitability and their risk management.

How to choose a credit card starts with knowing what user you are and there are 3 main types. Are you a student, business owner, or ordinary customer?

Business and student credit cards work on different rules. This is because there are different consumer protections. The financial needs of these users are also more unique.

The next considerations are your financial profile. This includes:

Credit history
Credit score
Current debts
Current income

With that features like the fees, rates and rewards will fall into place. You’ll see what credit companies are willing to give you, and on what terms. With how many variables there are to each credit card offer, it’s easy to see why there are so many card types.

The Reward Credit Card

Rewards cards work by giving you something back when you use them, like travel mileage. A cashback credit card gives you cash back when you buy something. Check here for more on travel vs cash back credit card options.

There are also points credit cards that give you points to spend elsewhere. In some cases, the credit company issues its own rewards program. Think of American Express Members Rewards.

Other issuers partner with hotels, airlines, and other retailers. Either way, the more you use the card, the more rewards you build up. In general, though, you’ll want to have a credit score of around 700+ to get the best rates and premium rewards. It’s also best for people who will use it often, and on large purchases.

The Retail Credit Card

Some retailers have their own store credit cards. For example, big names like River Island or New Look. The best cards offer access to promotions, discounts, and rewards for using them.

But, the interest rates on late payments can be high. These late or missed payments get back to the credit bureaus too, affecting your credit score. You want to check the terms and conditions before signing up for any of these.

Cards for Debt Transfer and Large Purchases

In some cases, making savings on interest payments is its own reward. If you often hold a balance on your card or have an existing card debt, you’ll want a low-interest rate. Or, you want to look for a 0% APR introduction offer.

While these cards can save you money, you should make sure you’re not in a debt cycle. Make sure you’re working to pay down your debt and clear off any balances you accrue on your cards.

The Balance Transfer Card

Balance transfer cards let you finance existing card debt for very little or no interest. This is often for a period between 6-18 months. They don’t have any rewards by can be a helping hand for reducing existing credit card debt.

You’ll likely need good credit to qualify though, as issuers still want to make sure of your risk level. If you have a high balance, it should be an early step to take before you get into any trouble.

The 0% Introductory APR Card

The 0% APR card gives you a long period to use your card and avoid interest payments. If you need to make large purchases, these can give more favourable options than taking out a loan. So long as you can pay it off within the interest-free period.

You’ll need a good to excellent credit score to qualify though. And make sure you read the fine print. Know how long you have interest free, and what that interest will be should that period expire.

Credit Cards for Students, Bad Credit or Establishing Credit

For those starting, or having to start over you won’t have a great credit score. You want to find a card designed for new credit users (like students) or those with bad credit looking to improve.

The Student Card

These cards are to help students with limited income and credit histories start out. Benefits and rewards will be modest, but there will be some perks over using cash or debit cards.

They can also help with learning money management skills and help in an emergency. You must learn to manage debt and your money, as well as build up a good score by graduation.

The Secured Credit Card

Secured cards can get people with bad credit or no credit history on track. But you’ll need to pay a security deposit that the issuer keeps if you default.

For example, you could get a card with a limit of £1,000, you might need to put £1,000 upfront in cash. This is to cover the balance if you fail to make your repayments.

You get the deposit back at the close of the account though if it’s in good standing. Or, if you upgrade to an unsecured card as your score improves, you’ll get it back then.

As long as you use them well and keep up with payments, they can be a great way to boost your score. They’ll also build up a credit history for you if yours it’s sparse.

The Business Credit Card

A dedicated business credit card helps keep personal and work finances separate. Most will have tracking and reporting features, as well as rewards for business use. These can include things like advertising and office supplies.

They’re great if you use them to manage large monthly transactions, as you can wrack up the rewards. For many businesses, it also helps make managing cash flow easier.

They work like consumer credit cards and often need personal guarantees. Your credit score and history as a business owner will determine which cards and rates you get. For larger companies and non-profits you could qualify for a corporate card. These don’t need personal guarantees.

Different Types of Credit Cards Explained

So, there you have it! Now you know the different types of credit cards, you’ll be sure to find the right one for you.

Think about your credit and financial needs. Are you looking to build up your score or start it off? Are you a small business looking to manage monthly expenses? Or are you a consumer, looking for the best rewards? This is what determines the type of card you look for.

If you’re looking for more banking and finance tips, check out our blog today. We’ve got tips and tricks from industry experts to help with all your finance needs.

Uncategorised

8 Things You Need to Consider When Switching Banks

ByCFI.co

If you’re tired of your current bank’s level of service, you might be considering switching banks. It’s a big step, and according to statistics, one that many British people have never taken. In fact, about 39% of British consumers have never changed banks in their life.

Clearly, there’s a lot involved in switching banks and it’s a decision that no one takes lightly. Taking a balanced look at what you need to consider before switching banks can help you decide whether it’s time to take the leap.

Read on for 8 things you need to consider when switching banks.

1. Check the Minimum Income Requirements

Most, but not all, UK banks set a minimum amount that must be paid into the account each month. If you’re switching current accounts, for most people this will not be a problem. They often set a minimum monthly income of £500 or £1000, which most people’s salaries will cover.

Be aware that the bank will expect you to continue to pay in this amount in the years to come. Can you anticipate a change in circumstances soon that could affect that? If so, consider choosing a bank with no monthly income requirement.

2. Compare Joining Bonuses and Offers

There are more retail banks eager for your business than ever before.

In the past, the high street was dominated by a few big-name retail banks, and most people stayed with them for life. Now lots of banks offer incentives such as free cash for opening accounts and even cashback on certain bills.

However, it’s also more common now than in the past for banks to charge a monthly fee. This doesn’t just apply to premium accounts that offer additional insurances or services. Even ordinary current accounts may charge a small monthly fee for banking with them.

A joining bonus may be very tempting. But it’s should be just one consideration. Calculate how the cashback, fees, and special offers would work for you before making your choice.

3. Understand Banking Charges and Interest

As well as monthly fees, banks also charge fees such as overdraft interest and usage charges and foreign transactions.

Look honestly at the way that you use your current account. If you move:

Are you likely to face higher overdraft fees and interest payments?
Do you regularly make foreign transactions?
How much would they cost with the new account?

Take a close look at the small print before switching banks. This can help you to avoid any unpleasant surprises down the line.

4. Current Account Switch Service (CASS)

Many banks in the UK have signed up to the Current Account Switch Service (CASS). This free service makes switching current accounts much easier and even allows you to switch if you are using your overdraft.

This means that all your regular payments, such as direct debits and standing orders, will be switched over without a hitch. Your old bank will then take care of closing your old account.

Moving to a bank that has signed up for this service should make your move a lot easier. It should also eliminate the possibility of missed payments. This allows you to take advantage of better deals as they become available.

Moving to a new bank only takes 7 days using the CASS.

5. Check Out Their App

Nowadays, we all expect easy access to our bank account on the go. If you’re less than satisfied with your current bank’s app, this may be a reason you’re considering making the switch.

Just make sure that you don’t go from the frying pan into the fire. Not all online banking apps are very user friendly. Read online reviews to see what customers have to say about the app’s ease of use.

6. Consider Their Customer Service

Excellent customer service leads to happy customers that don’t even think about switching banks.

Recent surveys have shown high levels of customer satisfaction with three banks that have no brick and mortar branches at all. These are First Direct, which is a phone and online-only division of HSBC.

The other two rated highly by customers are Starling Bank and Monzo, both of which are online only. The survey was based on how happy they keep the customers – a key point to consider when making a switch!

7. Consider High Street Presence

Many retail banks have closed branches and reduced their high street presence in recent years. If you’re opening a new bank account and need to pay in cash regularly, this could be a challenge.

Investigate the options open to you for paying in cash and cheques. You may be able to pay in cheques using the bank’s app, but there may be a relatively low threshold for this.

Other banks allow you to pay in using the Post Office, but again the amount you can deposit may be limited.

8. Focus on Overdraft Charges

Many of us need to dip into our overdraft now and then. If that describes you, then it makes sense to choose a bank that allows you to do this as cheaply as possible.

Some provide an interest-free overdraft for a fixed period, which is ideal if you have a plan to pay it off before it ends. Others allow you an interest-free amount that stays in place as long as you have the account.

Make Switching Banks a Rewarding Experience

Opening a new bank account and closing a bank account may be things we don’t do very often. But follow these tips and a bit of homework, and switching banks will be easier than you think. Make a canny choice, and you should find that you’re better of by switching!

At Capital Finance International, we provide you with the latest information on banking worldwide. Our expert journalists analyse markets and interview key figures from the world of finance. Our news coverage alerts you to innovations affecting banking internationally.

Gain a deeper insight into the world of Finance by exploring our blogs and news articles today!

Wealth Management

8 Sure-Fire Stock Investment Strategies

ByCFI.co

The lure of investing in the stock market is interesting and even a little glamorous for most people. The idea that you can put your money someplace and have it grow is intriguing. So, you might be surprised to learn that only 12% of the UK population has invested in the stock market. Are you interested in joining others in investing in stocks? Does the idea of growing your money through the stock market sound alluring to you? While for many people, it sounds like a good idea, most don’t have any idea how to get started. If you’re looking for investment strategies to buy into stock and shares, read on for more information.

1. Informed Decision Making

If you want to make money in the stock market, you need to have some knowledge. Then you need to use the knowledge to make informed decisions.

Many people approach investing using simple name recognition. Oh, I recognize the name of that company, it might be a good idea to buy their stock. Yet, they don’t really know anything about the business model of the company or their track record of making money.

Before investing in the stock of a company, you need detailed information about the history of the company and its projections for making money.

2. Following the Herd

Don’t make stock investment decisions just because someone you know did. Don’t follow the pack when it comes to making stock investments.

If everyone chose to make stock investments based on what others were doing, they all should hope the first person who led the pack knew what they were doing.

It might be easy to make stock purchases because your family member or neighbour made the same purchase. But the truth is, you need your investment choices to be more informed. Refer back to number one on this list and do your homework.

3. Avoid the ‘Time the Market’ Approach

You, nor any other expert, can predict the ebb and flow of the market. Some who try to make a quick stock market buck will want to time the market and get in during a tight window.

This approach over the long term just doesn’t work. You want to be in the market for the long term, it’s ultimately how you’ll make money. You can’t really guess the highs or the lows.

Instead, invest in and be prepared to invest in a way that’s for the long term. Ultimately, most experts agree it’s how you really make money in the market.

4. Understand the Business

Most people will say they are investing in the stock market. This may be true but ultimately as an investor, you want to invest in a business versus a stock.

You should understand the business you invest in. Don’t invest because you know the name, know the business they are in instead.

When you understand the business, you’re likely to understand the factors that might impact the success, or lack of it, of a business. A business’ success can impact its stock prices, after all.

5. Invest With Discipline

The simple fact is that the stock market can be more volatile than other types of investments. What makes it volatile can also be unexpected making it hard to plan for.

If you invest in the stock market, you should approach your investment with great discipline. This means you make fact-based, educated investments and you don’t get skittish during the inevitable highs and lows of the market.

You should invest and be patient for your money to grow over the long term.

6. Avoid Emotional Investing

Most people would agree it can be challenging to not get emotional about their money, good or bad. You should not make emotional investment decisions.

You don’t want to make a decision to buy or sell based on an emotional decision. It’s a quick way to lose money.

Many people have fallen into the panic trap while investing and made bad decisions that have cost them money.

Go back to the idea that your investments should be based on informed and knowledgeable decisions, not emotional ones. Keep your expectations realistic and understand the market can be volatile and you need to be careful to avoid emotional decision making.

7. Think Diversification

While it is important to be knowledgeable and informed in your decision making and you want to invest in companies you know. Another key to successful investing is diversification.

Diversification means you create an investment portfolio that is varied enough to reduce your risk in the market. If one area of stocks struggles, you have enough diversity in your investments to handle the ups and downs that naturally occur with stock investing.

One important consideration when investing is your personal threshold for risk. All investing involves risk. Often the greater the risk, the greater the opportunity for making money, or losing it. You shouldn’t invest with a level of risk that will make an emotional investor.

8. A Financial House In Order

Investing for the future through the stock market, or other means is a great idea. Yet, it doesn’t make sense to begin investing money if you don’t have your own financial house in order.

Let’s say you have significant debt from credit cards. It doesn’t make sense to use your assets to invest only to make a smaller percentage than you are paying in interest. Instead, before you start investing, pay down debt and make sure you have the assets in place to make the investments, especially over the long term.

Investment Strategies for the Stock Market

Use smart and calculated investment strategies to grow your money in the stock market. Don’t make emotional decisions and be prepared to invest over the long term.

For more financial information and help with your wealth management, we can help. Visit our blog for more opportunities to learn and plan your financial future.

Banking

7 Essential Steps to Take If You’re a Victim of Banking Fraud

ByCFI.co

The FTC, also known as the Federal Trade Commission, had more than 2.1 million reports of fraud from consumers in 2020. Banking fraud is one of the most common types of fraud and results in millions of dollars lost each year.

If you are a victim of banking fraud, there are steps that you can take to regain your safety and to prevent future fraud from happening.

Do you want to learn more about what you should do if you are a victim of fraud? Keep reading these 7 steps to take after banking fraud to learn more.

1. Immediately Contact Your Bank

When you have identified fraudulent activity on your bank statements or credit reports, it is vital that you immediately contact your bank. While fraud cases and cybercrime continually increase, only 15% of these crimes are reported.

Reporting fraud to your bank will allow them to take immediate action to protect your account from future transactions. This means that you can be sure that you will not lose any more money.

They can help you cancel your credit cards and give you replacement cards to protect your finances. Your bank will also be able to refund the money that was stolen out of your account.

However, if you wait too long to contact your banking institution, you may not be able to refund the money that was stolen.

2. File Reports & Complaints

Next, it is important that you file reports and complaints.

First, you should report this crime to your local police department. Even if they are not able to help you identify the source of fraud, filing a report is often a necessary step to take if you want to get your money back.

Next, you need to file a report with the Federal Trade Commission. They will get more details about your specific case which may be able to prevent other people from being victims of the same scam.

3. Collect Important Information

If you are the victim of bank fraud, you may need to open a case or file a claim with your insurance agency if you want to get your money back. To make sure you are protected, it is important to collect important information about your case as soon as it happens.

This includes your account number, when you noticed the fraudulent activity on your account, when you reported this activity, and if you filed a report with the FTC or police.

Having this information will make other organizations take your case seriously and may help you get a favourable result.

4. Place a Fraud Alert

Something else that can give you peace of mind after you have been the victim of banking fraud is to place a fraud alert on your accounts. This will not have any impact on your credit score, but it can prevent people from getting credit under your name.

It essentially acts as a red flag for lenders and other creditors and will require extra verification to be sure that it is you that is applying for new credit.

5. Change Your Banking Passwords

Next, you need to change all of your banking passwords. If you have been the victim of a financial scam, you will not know how the criminal got access to your banking information.

For example, they may have stolen the numbers off of your card. Or maybe they hacked into your bank account after you used a public computer to log onto your account.

By getting a new credit card and by changing your passwords for things like your bank account, you can keep people from accessing your account in the future. It is also important to never share your passwords with anyone who should not have permanent access to your bank account.

6. Request a Credit Freeze

Anyone can place a credit freeze on their account, which acts as an extra layer of security. It will prevent people from opening any new credit accounts in your name without authorization.

If you place this alert and someone tries to use your information to open a new account, you will be notified and you may have a better chance of stopping the criminal who has your information.

7. Take Steps to Prevent Future Fraud

Finally, it is vital that you take steps now to prevent credit card fraud from happening in the future. People who are victims of fraud are often targeted more than once, so it is important that you take steps to protect yourself from this.

First, it is important to learn how to practice online banking safety. This includes regularly scanning your bank statements for fraud, avoiding public wifi or computers when using private information, and more.

You also need to understand common types of scams. Recognizing scam techniques can prevent you from being a victim of a banking scam in the future.

Finally, you can use things like anti-virus protection to stay safe from viruses or malware and to keep your private data safe. These types of fraud awareness will keep you safe in the future!

Learn More About Banking Fraud & Protecting Your Finance Today

Banking fraud is a common tactic that results in millions of dollars lost each year.

However, many instances of banking fraud go unreported. If you have been a victim of fraud or identity theft, it is vital that you take these steps to take control of your banking and to prevent fraud from happening again.

By staying up to date on trends in finance and banking, you can be prepared for these situations and can even prevent them from happening.

Do you want to learn more about banking and finance? CFI.co can help! Check out our website for more tips about banking and how you can protect yourself from fraud.

Uncategorised

A Quick Guide on How to Build Wealth at Any Age

ByCFI.co

Ever heard of the wealth mentality and how it can help you build wealth from nothing? Well, if you want to start building wealth, you need to rethink your financial security. Financial decisions that you make in the present will determine how comfortable you’ll live in the future.

Regardless of your age, it’s never too late to start your wealth-building journey. Evaluate your savings, assets, and debt before coming up with a wealth creation plan. Avoid comparing yourself with your peers who have made great financial strides.

Amassing wealth from scratch doesn’t have to be complicated as most people think. Here are proven tips on how to build wealth at any age:

Cut Your Expenses

Start spending less and saving more for you to have enough personal finances to afford the future you want. For instance, you may cook at home instead of going to the restaurant as a way of saving money. With a tight budget, you won’t overstretch your income, and you’ll avoid running into debt.

Track your spending habits and lower your household expenses as part of your money management strategies. You should also cut your insurance premiums and re-evaluate your subscriptions to save cash.

With reduced expenses, you can allocate more money to paying off debts. The extra cash can also help finance a lucrative project or diversify your investment portfolio.

Pay off Your Debts (and Loans) Early

Your debts (and loans) can make it difficult for you to save or invest for the future. Create a debt management plan that allows you to pay off credit card balances and loans early. You should also pay off your mortgage or avoid getting one if it puts pressure on your income.

Pay more than your debt’s minimum repayment amount to settle the balance faster. You can also pay the debt twice or thrice a month to reduce the balance. Start with the most expensive loan if you have multiple loans under your name.

The downside of debts (and loans) is that they accrue interest charges. They may also affect your credit score if the lender submits your loan information to a credit bureau.

Consider Side Hustles

Turn your talent or passion into a side gig that can earn you extra cash if you have spare time. The side gig will complement your main job and improve your total income.

You may consider online side hustles like transcription, web design/coding, and writing/editing. Working online as a virtual assistant, coach, consultant, tutor, or marketer may earn you extra cash.

Offline side gigs to consider include freelance private chef or part-time adjunct professor. You may also work part-time as a yoga instructor, fitness coach, or freelance property manager.

Sign up for short certification courses to diversify your knowledge base. These certifications can help you land part-time hustles to grow your income and build wealth.

Have a Fully-funded Emergency Fund

An emergency fund will shelter you from the financial effects of an unexpected event. The size of this fund may vary with your income, dependents, monthly costs, and lifestyle. Save three to six months’ worth of your expenses in a locked account for emergencies.

While debt can help you cover a financial emergency, it will come with high-interest charges. An emergency fund will sustain you when you lose your job, unlike a debt or a loan.

Part of your emergency fund should help cover health emergencies. Money from your health savings account may help in instances where your medical insurance can’t be applicable.

Rethink Retirement

Start thinking about where you’ll get income during your retirement years. Your retirement plan should allow you to lead a comfortable and active life as a retiree.

Save a portion of your gross income into retirement accounts with good returns. You may put your money in a secure pension plan that guarantees tax relief. Furthermore, you may rely on your workplace pension (paid by your employer) to save for retirement.

The amount of money that can sustain you in your retirement years will depend on the lifestyle you’d like. You can use an online retirement tool to help you calculate how much money is needed in your retirement savings to afford that lifestyle.

Scrutinize Your Insurance Policies

A good insurance cover will prevent you from dealing with massive financial losses in undesirable situations. You should have affordable health insurance to cover unexpected, high healthcare costs. With the coverage, you enjoy free screenings, preventive care, and essential checkups.

Auto insurance will protect you from the legal consequences, medical expenses, and financial liability when you get in an accident. Depending on your lifestyle and income level, you may need life insurance, travel insurance, pet insurance, and home insurance.

Only spend up to ten per cent of your overall income on insurance policies. Discontinue any insurance coverage that drains your income and no longer suits your current lifestyle.

Diversify Your Investments

Spend part of your income on different assets and asset classes as a way of diversifying your investment portfolio. Only invest in opportunities and assets that you are familiar with to avoid running into losses. You should also look out for the latest investment tips to grow your knowledge base.

To grow your portfolio, consider exchange-traded funds (ETFs) such as stock ETFs, bond ETFs, and REIT ETFs. They give great returns without the market timing, fees, and taxes of mutual funds.

With stock ETFs, you’ll buy a company’s shares and earn money every time the company makes profits.

Bond ETFs allow municipal, federal, and corporate to borrow money from you and pay it back with interest. On the other hand, REIT (real estate investment trust) ETFs allow you to buy stocks of profitable real estate ventures. Your money will grow every time the value of the company or real estate rises.

Need More Insights on How to Build Wealth?

With these financial tips, you can build wealth gradually to secure your future years. Wealth building requires a proper strategy and a positive mindset to succeed. Consult as much as you can on how to make the most out of your hard-earned money.

We are an online resource and print journal that reports on finance, economics, and business. Our content comprises commentary, analysis, and news on worldwide markets to help our readers succeed in any line of work they’re pursuing. We’d like to hear your honest view of our content.

Banking

7 Helpful Business Banking Tips

ByCFI.co

Did you know that applying the best banking tips for your business can make it more productive?

In today’s volatile markets, entrepreneurs confront a slew of problems, the major one being business finances.

But having a good understanding of your business account and the services provided by your bank or building society can ensure that you’re getting the most out of your business banking.

A business account will undoubtedly help you manage your money and monitor your income and profit progress. This doesn’t matter whether you are a new venture, solo or start-up trader trying to position yourself.

Getting accustomed to business banking best practices and checking your company account online will assist you in managing your money. This is especially helpful if you are new to accounting and bookkeeping.

Here is a list of 7 business banking tips to assist you in getting the most out of your business account and prevent any mistakes along the way.

1. Select the Best Introductory Offer

There are numerous introductory bonuses to take advantage of when choosing your first business bank account. This will also assist you in comparing accounts and choosing the one that is ideal for you.

They primarily involve providing a term of free business banking. This means you will not be required to pay a monthly service fee. Based on the provider you pick, introductory deals on existing business accounts can last up to 25 months. This allows you to avoid these extra fees as you establish your new firm.

Some initial deals will also waive transaction costs. This makes it totally free to deposit funds through cash, check, or electronic transfer. If you can look around for the greatest introductory offer, you may avoid costly fees and focus on profit in your initial stages of operation.

2. Speak to Your Business Manager

Starting your own business may be stressful enough. That is why you need to seek guidance wherever possible. Your building society or the best bank are among the best options.

You would most certainly be allocated a business manager by any big supplier, whom you may call whenever you need help. You may also use this opportunity to report a problem with your business account if one arises.

Developing a working connection with your company manager will help you obtain timely advice and address any difficulties that may arise.

This support may be quite beneficial for individual entrepreneurs and start-ups who may know their industry or skill but not about business finance.

Even if you’ve chosen an app-based business account with no local branches, you may get online and mobile assistance.

3. Borrow Without Remorse

Many small company entrepreneurs have used personal resources to fund their ventures. This is not suitable as the needs expand. This is because most businesses will need extra cash to support development and expansion.

Any borrowing will come with interest. Hence select your loan product wisely.

4. Don’t Allow Your Cash Flow to Turn Into a Cash Drain

Not every business checking accounts are the same.

The charges you pay for withdrawals and deposits might vary greatly. This is especially important if you run a firm with a considerable volume of transactions. These charges might easily pile up.

Also, not every fee is transactional. There may be extra fees for large amounts of cash, cheques, or coin.

Now, what are you going to do? Inform your banking institutions about your daily usage so that they can assist you in selecting the appropriate account for you.

A financial institution’s cash management services may frequently reduce costs and rates while increasing efficiency. Look for methods to save money by comparing several accounts. Then, select one that will have a minimal strain on your finances.

5. Avoid Overpaying For a Merchant Account When a Simple One Would Suffice

Most retail institutions now provide point of sale payment alternatives. This is because a huge percentage of consumers prefer making purchases using their debit or credit cards rather than cash.

This is useful for both management of cash and record-keeping. But, be certain that the merchant account provider you choose meets your demands in terms of services and charges.

If your transaction volume is not particularly large, a volume-based payment plan may lead to cost savings. In modern days, there are several options available that are tailored to your unique business needs.

Conduct some research and consult with your financial institution about your possibilities.

6. Avoid Combining Personal and Business Expenses

Using a personal credit card to fund your enterprise appears to be a simple solution, and it is a prevalent activity. It is, however, critical to keeping your personal and business spending distinct.

It is for this reason that company credit cards exist. Keeping your company spending separate helps make tax season go more smoothly. It simplifies record keeping and makes your tax accountant happy.

It can help you develop your company’s credit and make it simpler to get other loans in the future. Above all, business credit cards provide excellent incentives explicitly tailored to enterprises.

7. Save Money for Both Your Business and Your Trip Separately

If you are a solo entrepreneur, the boundary between your personal and business money might get blurred.

But, small company owners should keep their personal funds distinct from their business savings. This makes it easy to prepare and budget for expected company needs, such as bulldozers and office supplies.

A long-term savings strategy will enable you to borrow very little and offer a financial cushion for your company. So, put money aside for holidays in one account and businesses in another.

Use the Above Banking Tips to Leverage Your Business Banking Fully

Knowing banking tips and a good connection with your banker may be pretty beneficial for expanding your business.

A competent small business bank will guarantee that qualifying small businesses have enough credit to sustain their operations. Also, they will give solutions to difficulties and go above and beyond to ensure continuous development.

At CFI.co, we offer market news, analysis, and market opinion from around the world. Our specialised editorial staff ensures that readers have a deeper understanding of the factors affecting and transforming the global economy.

Call us today and our team will respond immediately.

Banking

How to Find the Best Bank For Your Needs

ByCFI.co

Do you want to open a bank account but aren’t sure which bank to choose? Selecting a bank is one of the most important financial decisions you will ever make. All the banks aren’t the same. They differ in the financial products and services they offer to individuals, small businesses, and startups. With so many choices and you may not know where to even start. This is why you need to be more strategic and conduct thorough research to find the best bank that fits your needs.

If you’re wondering which bank suits your needs, here are things you should consider when shopping for a bank. It’ll save you a lot of hassle and money.

1. Identify the Type of Account You Want to Open

Comparing all the types of products and services different bank offers can be overwhelming. To make it much easier, you should identify the type of bank account you want to open depending on your financial goals. Knowing whether you want a checking account, savings account, money market account, certificates of deposit (CDs), can help narrow down your search.

While both saving accounts and CDs help you stash money you don’t want to use for a while, one major difference is that CDs store your money for a pre-determined amount of time and lock in your interest rate for the full term. If you’re looking to keep the money you’ll spend regularly, you should opt for a checking account.

Money market accounts are also similar to a savings account, except the bank can send you a debit card or paper checks, making it easy for you to access your savings.

2. Consider Interest Rates

Most checking accounts don’t usually pay interest, and if they do, the rates are very low. If you want more interest, you can try opening a savings account, CD, or money market account. The rates depend on the bank you choose. In case interest rates matter to you, ensure you find a bank with competitive rates.

3. Find a Bank That Charges Low or No Fees

Opening an account with an institution that charges costly fees isn’t beneficial. You end up losing money instead of saving. When it comes to monthly maintenance fees, you need to choose a bank that charges no fees, low fees, or fees you can waive.

You should also watch out for ATM fees, foreign transaction fees, excess transaction fees, and overdraft fees. If you overdraw a checking account, you may have to pay an overdraft fee. While you may opt for an overdraft protection program, you may end up paying more. So when you’re looking for a new bank, you should find one with more lenient overdraft policies.

Paying fewer ATM fees will depend on the bank and the type of account you want to open. If you often travel in foreign countries, check the bank charges for using your debit card abroad. Also, look at how much different banks charge when you go over your withdrawal limit.

And when you find your perfect account, do this:

Link your checking account to another account at your financial institution so that if you run out of money in your checking account, the bank will pull money from the other account to cover the transaction. You may be charged a fee for this, but it’s typically less than an overdraft fee.

Sign up for low-balance alerts through your bank or credit union’s website. These alerts, which you may be able to receive on your phone, will alert you when you are at risk of overdrawing your account.

4. Consider the Convenience of Your Bank

When it comes to banking, accessibility is a vital factor since you want to be able to access your money as soon as you need it. You need to see if the bank offers convenience in terms of branch location, ATM location, and the availability of digital banking.

Also, look into the bank’s customer support. You want to choose a bank with dependable customer services so you can reach them when you have an issue.

5. Find a Bank That Fits Your Lifestyle

When scouring for banking options, you should stick with a bank that meets your needs. For entrepreneurs, you should opt for a bank that can provide support as you grow your business.

If you’re trying to save money, look for a bank that can help you reach your goals. You may find a bank that lets you open and name separate savings accounts. This can help you create savings account for different uses including a travel fund, emergency fund, and more.

What’s more, your spending habits can give you an idea of a bank you want to work with. If you love tracking your expenses, you can choose a bank that has budgeting tools built into its apps or websites.

6. Examine the Bank’s Digital Features

If you value high-tech digital experiences, you should look into a bank’s digital capabilities. While most banks offer basic services like the ability to pay bills, transfer funds, make mobile deposits and check balances, you also need to see if you can access advanced digital services.

Advanced digital capabilities such as the ability to lock your debit card and manage mobile banking alerts can help enhance your banking experience.

Research the banks you’re interested in and read online reviews to see if they have the digital features you’re looking for.

7. Understand the Terms and Conditions

Before you choose a bank, you should read the fine print. It helps you know if a bank is insured. A safe bank to consider should have insurance, ensuring your money is safe in case something goes wrong and the bank shuts down.
You should also read through your banking account disclosures to ensure you’re aware of the regulations and fees required.

Find the Best Bank for Your Financial Needs

To manage your finances, you’re going to need a bank. Always look at what you need and what each bank can offer you before you choose the best bank.

Also, remember, your choice isn’t permanent. You can change if you outgrow the bank you started with. Read more banking blog posts to learn more about banking and finances.

Banking

A Guide to Online Banking Safety

ByCFI.co

71% of bank customers regularly use online and mobile banking options. However, many people do not completely trust online sources and may worry about their information being stolen when choosing an online bank.

Are you looking for ways to protect information and improve your data security? Keep reading these tips for online banking safety to learn more!

Don’t Use Public Wifi or Computers

One of the most important online banking safety tips to keep your information secure is to only sign in on your personal network or device. When you use public wifi that many people have access to, you never know who will be able to see your browser history or password.

This is also true for public computers. If you were to accidentally save your password for your online banking institution, it would be easy for a complete stranger to access your bank from the same computer.

To avoid these potential disasters, it is always best to use your own devices and your own wifi network whenever you have to log into a password-protected website.

Scan Statements for Fraud

While you want to do everything you can to prevent fraud, it is also important that you are able to identify any fraud as soon as possible.

One way that you can do this is by regularly scanning your statements for fraudulent activity. Check your bank statement for any purchases that you do not remember making.

While banks do their part to identify fraud, some purchases may not stand out to them. By looking for fraud in your own account, you may be able to catch suspicious activity.

Use Anti-Virus Protection

Next, it is important that you protect your devices with anti-virus protection. This can keep you from getting attacked by any viruses or malware.

Most computers come equipped with some type of anti-virus software, but you want to be sure that you frequently update it for the best protection for your computer.

Understand Common Scam Techniques

Something else you can do to protect your online banking information is to recognize and understand common bank scam techniques. Scammers will frequently use the same tactics to gain access to your information, so understanding these will prevent them from targeting you.

One common scam technique is sending you links in an email. While the email may look legitimate, you may find that clicking on this link may lead you to a fake website that looks just like your financial app. Digital currency investors are a big target for this type of scam due to the increase in cryptocurrency prices. A famous example of this was when MyEtherWallet users were sent an email asking them to update their login credentials. In doing so, they gave cyber criminals access to their account where they stole all the assets.

To avoid this scam, it is always best to re-type the URL to your banking institution rather than clicking on a link.

Your bank will also never request your private information over the phone or over email. If anyone is asking you for information to gain access to your account, you should hang up and call your bank directly.

Regularly Update Passwords

Many people will re-use the same password for many different websites. However, if someone guesses your password for one website, they may try using the same password on another website.

This is why you should always make your banking password unique from other websites.

The easiest way to combat keep people from guessing your password is to update and change your passwords regularly. Typically, it is best to change your password once every few months.

Then, anyone who had access to your account will be kicked out with the new password.

You should also be thoughtful about the types of passwords you use. If you make them one word or if your password is something easy to guess, like your name, people will easily be able to gain access to your account.

To make your passwords more secure, you should make them a long password with multiple words, numbers, or special characters.

Sign Up For Text Alerts

If you want to make it easier to identify any fraudulent purchases, you can always ask for text alerts from your online bank.

Banks can send you emails or texts whenever there are large transactions made from your account or if your balance drops too much.

If you notice that you didn’t make a purchase or transfer money from your account, you can immediately call your bank to stay protected from fraudulent activities.

Carefully Choose Your Bank

Finally, it is important that you do plenty of research to find the best online bank. If you know that you can trust your bank, you know that they will do anything to protect your assets and information.

Make sure you check online reviews for banks and you understand your banking needs before you make a decision. You should also prioritize finding an institution with high security to prevent data leaks or hackers.

For example, things like multifactor authentication make it much more difficult for people to gain access to your account without your knowledge.

If you want to learn more about choosing a bank, check out this article on factors to consider when choosing a bank.

Improve Your Online Banking Safety Today

You can easily improve your online banking information when you focus on data security. By following each of these banking safety tips, you will not have to worry about fraud, scams, or any other data leaks.

However, the most important thing you can do to improve your online banking safety is to choose a reliable and trustworthy organization to work with.

Make sure you choose the best online bank so you can be confident in your banking!

Do you want to learn more about online banking and other safety tips? CFI.co can help! Check out our articles on finance and banking to learn more helpful tips.

Banking

Commercial Banking vs Retail Banking: What’s the Difference?

ByCFI.co

The global market size for financial services is expected to reach an astounding $22.5 trillion in 2021. That figure will climb to $28.5 trillion by 2025.

Among the biggest players in the financial services industry are retail and commercial banks. Both types of institutions are of critical importance to both the domestic and global economies.

But exactly what is retail banking, and how does it differ from commercial banking? If you’re asking this question, you’ve come to the right place. This post sheds more light on the commercial banking vs retail banking discussion.

What Is Private Banking?

The terms retail banking, private banking, and consumer banking are often used interchangeably. They refer to a division of banking that handles retail customers.

Retail banking focuses on dealing directly with clients located in a close city or town. The retail bank handles much of its activity face to face, in a manner clear and visible to the client.

Given that retail banks serve many clients with a multitude of transactions, it’s referred to as mass-market banking.

Note that retail banking doesn’t solely depend on physical locations. The term simply refers to the business model followed. Simply put, retail banking operates on relatively small or medium-sized transactions.

Thus, many retail banks allow their clients to enjoy the benefits of digital banking by providing online banking services.

The most important source of funds in retail banking is customer deposits. The bank makes a profit through service charges and fees. The institution also earns income from the interest they charge when they lend out money to clients.

What Is Commercial Banking?

Now that we’ve seen the retail banking definition, it’s time to look at another popular type of banking: commercial banking. Also known as corporate banking, commercial banking provides services to businesses and governments.

Generally, these are stocking corporations that make money by acting as financial intermediaries.

Corporate banks tend to have physical locations from which they offer their services. In the recent past, however, these institutions have been increasingly operating online.

Commercial Banking Vs. Retail Banks: The Main Differences

Retail and commercial banking differ in several important ways. Let’s take a closer look at some of these differences.

Services Offered

Both types of banks provide a large variety of services to their respective clients. Retail banking clients can expect these services:

Checking and Savings Accounts

A retail bank allows its customers to open checking and savings accounts. Once you open a checking account, you’ll be required to pay a monthly fee.

With a savings account, you earn a slightly higher interest rate. However, you cannot have checks written on the account.

Mortgages

Retail banks also offer different mortgage loan types to their clients. These loans are meant for buying either residential or investment property. Generally, mortgages earn a substantial chunk of retail banking profits due to their size.

Auto Financing

Clients looking for vehicle financing can also talk to retail banks. The banks also provide refinancing for existing car loans.

Credit Cards

Credit cards are one of the most lucrative sources of interest income for banks. That’s because this service attracts some of the highest interest rates in the industry.

There are, of course, many other services retail banking offers, but these are among the most popular.

Clients looking for commercial banking services can benefit from the following offerings:

Loans and Other Credit Products

Just like retail banks, corporate banks offer different loan facilities. Perhaps the biggest difference here is that the loans involved.

Corporate banking offers more substantial compared to those offered in retail banking.

Treasury and Cash Management Services

Corporate banking clients can also benefit from treasury and cash management services. Such services help clients manage their working capital besides meeting their currency conversion needs.

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Equipment Lending

Clients can benefit from customized loans and leases to acquire a range of equipment. Such equipment may be used in a variety of industries, including manufacturing, IT, and transportation.

Other services offered by corporate banks include:

Trade finance
factoring
letters of credit

These are only some of the services offered by corporate banks. Corporate banking clients can expect to find a range of products they can use to meet their business financial needs.

Target Clients

There’s a huge difference between the clients of these banks.

Generally, retail banking focuses on individuals. Commercial banking is more concerned with corporate clients, from SMEs to large conglomerates.

Volume and Value of Transactions

In retail banking, the volume of transactions is typically high. However, the value of transactions is low, given that the client base consists of individuals and small businesses.

In contrast, the volume of transactions is much lower in commercial banking. The value of these transactions, however, is considerably much higher as the client base is typically made of sizable business enterprises.

Product Customization

Generally, retail banking involves little product and service customisation. Most products are standardised, also referred to as off-the-shelf products.

Things are different with corporate banking, customised where the products and services are highly personalised to meet the client’s specific requirements and preferences.

Commercial Banking Vs Retail Banking: Now You Know The Differences

Hopefully, the commercial banking vs retail banking conversation is clearer to you now. While the two banking approaches provide services essential to the economy, their target clients, volume and value of transactions, and service customisation levels are significantly different.

We hope you enjoyed this article about the differences between commercial and retail banking. Are you looking for more information about finance? Check out our blog section for more content.

Uncategorised

What Is Retail Banking Exactly?

ByCFI.co

Did you know there are over 6000 banks and financial institutions in the US alone? Each of them serves a different purpose concerning customers and the broader local and global economy. But do you know what makes a retail bank different? Knowing how they work can help you make better choices regarding your finances. Read on as we discuss everything you must know about retail banking.

What Is Retail Banking?

The retail banking definition is of a bank that provides financial services to members of the public and individuals instead of businesses. It is also called personal or consumer banking.

They provide a range of services such as loans, personal accounts for checking and saving, credit cards, and mortgages. They allow people to deposit money and gain access to lines of credit. Retail banks may be local community banks or branches of larger banks.

This is in contrast to a business banking service. These are only offered to small and large businesses and offer different services and rates.

How Does a Retail Bank Work?

When a retail bank gets money from a customer deposit, it will use this to earn money. The deposit will be put toward issuing a loan, on which they charge interest.

Different loans have various rates and periods in which they need to be paid back. For example, a mortgage loan will be paid over a long period and have a lower interest rate–as it is a significant amount. On the other hand, credit card debt needs to be paid back quickly and has higher rates.

Banks will offer steady interest rates to tempt customers to keep their money in the bank. They will also get profit from transaction and service fees. For example, they may charge overdraft fees and maintenance costs on specific accounts.

Types of Retail Bank

Retail banks can be broken down into two main types. These are commercial banks and cooperatives with credit unions. Though they offer many similar services, they do bear fundamental differences.

Commercial Banks

Commercial banks offer all the services you would expect from a consumer bank, often providing a wide range of services. Interest rates are charged on loans, and transaction fees are taken to make a profit. They will generally have a broad interest rate spread during good economic times to make more profit.

In downturns, they will lower rates to attract more customers. Using a combination of interest rates and banking fees, they turn a profit. This is given to shareholders, the key factor making it fundamentally different from credit unions and cooperatives.

Credit Unions and Cooperatives

Credit unions and cooperatives offer much the same services as commercial banks. However, they will not have the breadth of choice or range of services. You may also find that they have shorter opening hours and fewer employees.

However, these establishments do not use their profit for shareholder dividends. Instead, the money is relocated to the customers themselves. This means lower interest rates on loans, higher interest on savings, and reduced transaction fees.

Services Offered

Retail banks will offer several services to customers. Depending on the size of the bank, these may have different terms and conditions that help fix one to your needs.

Transaction Accounts

These are the standard accounts that allow people to make deposits and withdrawals when they see fit. It will often be the account people have wages deposited into. In the US and some other countries, they are often known as checking accounts.

Savings Account

A savings account allows depositors to hold money for long periods and gain extra interest on it. They are less liquid than transaction accounts, often having stipulations for the withdrawal of funds. In compensation, interest rates will be better than the transaction account.

Cards

Cards include credit and debit cards. A credit card allows a customer a small line of credit for free use. This often has a higher rate of interest than longer period loans.

Debit cards work similarly. However, they do not offer credit.

When you use the card, money deducts from the funds in your transaction account almost immediately. Therefore you can never spend more than you have.

ATM cards would also come under this category. They allow people to take money from an ATM in a particular geographical location or district.

Loans

Banks make money from the interest charged on loans, and they are a vital part of their operation. You will find a vast range of loans available from a bank. They could be long-term home improvement loans or short-term personal loans.

Online Services

There are few banks these days without online services. This will let you do e-banking, checking your statements and making transactions online. This frees up labour at the bank itself and gives you 24-hour access to services.

Functions of a Retail Bank

Retail banks do not just serve consumers. They are part of the larger economy and provide an essential role within it. All banks are overseen by the central bank of the country they are situated in and must abide by the fiscal policy.

For example, they can control the supply of money in the economy. By adjusting the interest rates and adjusting requirements for credit, they can decide how much money is available.

They can also stimulate the economy by lowering the costs of borrowing. When the economy needs help, they lower interest rates to increase consumer spending. In times of prosperity, this can rise, resulting in more profit.

Learn More About Retail Banking

When choosing retail banking, make sure you shop around. Different banks will have a range of services, some of which may be better for your needs. Get recommendations online or ask friends, family, and colleagues who they use.

If you need assistance making the right financial decisions, then CFI.co should be your first stop. From savings to shares, we are the online resource for everything you need to know about the world economy.

Click here to see all our articles on retail banking.