# Alternatives to cash & credit cards



## Everydaymatters (Aug 4, 2009)

I'm retired, but still do some accounting for a couple of small businesses. One of them is a newly widowed lady who has to travel in order to keep the business she and her husband started 10 years ago. She ran into a huge problem with credit cards being in her husbands name and now that he's deceased, the credit card companies won't allow her to use them.

She has had to get a new credit card in her name only, but because she doesn't have a lot of credit history herself, she's being charged collossal amounts of interest from the day of the purchase. She would really rather not use them.

Paying for her travels with cash is not an option since some of the hotel bills alone add up to $3,000. Most places no longer accept travelers checks because of counterfeits. From what I have read, debit cards are well known for being targets of identity theft.

What's left?

She's asking me for advice and I just don't know what to tell her. I'm asking this question for her, but I'd like to know for myself as well.

The only possibility I can think of is really quite remote: Do any hotels allow a small business to charge hotel bills and then send the bill to their customer for payment? What about gas for the car? Restaurant chains? Do any of these have corporate accounts?


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## Green Maned Lion (Aug 4, 2009)

I've got a credit card from Capital One. I have no idea why in lords name they would give me a credit card, since officially I haven't made more then $5000 in my life- and I now have a card with a limit for more money then I have ever filed for, period. I don't get any interest charges until after the 30-day grace period.

That being said, I'd try a money belt of the kind you wear under your clothes and isn't too conspicuous. Its impossible to pickpocket it, since its fastened to you. You can't snatch it off someone. Keep enough money in your wallet, you can even get mugged with one and make out ok. It would work as an answer to your question, anyway.

But I'd say tell her to keep shopping around for cards. There are a lot of companies out there willing to give credit cards to a bum like me, surely there are ones willing to give her a card without charging arms and legs.


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## Ryan (Aug 4, 2009)

Everydaymatters said:


> She has had to get a new credit card in her name only, but because she doesn't have a lot of credit history herself, she's being charged collossal amounts of interest from the day of the purchase.


This sounds completely and utterly ridiculous. If college kids with no income can get credit cards, she should be able to get a credit card that doesn't do this to her.


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## jackal (Aug 4, 2009)

A poster case for the need for a business to establish its own business credit and have business credit cards and the ability to take out loans on behalf of the business. But you can't change the past.

Her husband never added her on as an authorized user to any of his cards? Or she was an authorized user but now they won't let her use it because he (the account holder) has passed? Interesting.

Anyway, she may only be able to qualify for a limited number of cards now (low-limit, high-interest), but if she pays everything off on-time and uses the cards responsibly, she'll be able to qualify for bigger and better and lower-interest cards within a matter of months. I went from one secured credit card with a $500 limit to over a half-dozen top-end (Visa Signature/MasterCard World/American Express Platinum) cards with the collective ability to charge probably $35,000 in less than two years.

A lot of companies that will establish centralized direct billing accounts require a minimum annual revenue commitment of several thousand dollars per year. A sole proprietor small business isn't likely to meet those. And they're generally only available on big-ticket companies (hotels, rental cars, etc.--not really restaurants or gas stations).

She could ask the client to pay her for her travel expenses up front. Not sure if that would harm her business.

For gas, can she open up a fuel station card (i.e. a Chevron card)?

The other forum many of us here participate on, flyertalk.com, has a very active userbase of business travelers. It might not hurt to post this question there, and you'll probably get a LOT more useful responses. I'd start the question in TravelBuzz, and a moderator will move it if they feel it would be better somewhere else.


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## AlanB (Aug 5, 2009)

One needs to be careful with debit cards, but in this case if she's smart and careful she can still make use of a debit card. I would suggest however that she set up a special checking account that is not tied into the other business accounts or her own personal account. It would still be helpful however if that special account was at the same bank as either her business or personal accounts, such that she could easily transfer money into the special account as needed.

But with a seperate debit card for that one account, she can put enough money for her anticipated expenses, along with some extra, into the account before leaving on a trip. Then she can draw off that account using the card as needed during her travels with only that money at risk should the card and/or its number be stolen. She'll most likely get back any stolen monies, but the point here being that she's not risking the bulk of the businesses money or her own personal money, she's only risking the amount put into the special account.

She should also keep the current credit card and use it for at least one small charge each month to build up credit, even while she continues to carefully shop around for better credit. And I urge carefully, as too many credit inquiries for possible new accounts will hurt her credit score.


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## the_traveler (Aug 5, 2009)

I also don't understand why she can't get a credit card in her name? After all, if they offer credit cards to 3 year old kids and cats and dogs, I doubt they have better credit histories than she has (or maybe doesn't have).

And as far as interest, if the full balance is paid off before the grace period ends (usually 20-30 days from the statement closing date), the interest rate is -0-%! I have had credit cards since 1992, and except for maybe 2 or 3 times, I've always paid the full balance. So I don't really care if the interest rate is 2%, 12%, 22% or 142% - my usual interest rate has been -0-% for the past 17 years!


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## Everydaymatters (Aug 5, 2009)

She was an authorized user on her husband's cards, but when he died she was no longer allowed to use her card. Another interesting thing is that he had about $1700 in points that the credit card company said were withdrawn (Edited here- not withdrawn, but forfeited) when he died. She couldn't even use them to pay toward the balance.

She was able to get credit cards in her name, but only with very high interest rates. Things have changed and now credit card companies are charging interest from the date of the purchase. They no longer wait until they send you a bill and you pay within their grace period.

As far as using a money belt, well, she trains and shows horses for her clients. It's really not very practical to ride a horse with a money belt with several thousand dollars.

I think Alan's solution is probably the most practical, even though the possibility of theft is worrisome.

Thanks, for the ideas, everyone. I'll pass them on to her.


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## MrFSS (Aug 5, 2009)

Everydaymatters said:


> She was able to get credit cards in her name, but only with very high interest rates. Things have changed and now credit card companies are charging interest from the date of the purchase. They no longer wait until they send you a bill and you pay within their grace period.


I don't think that is right, Betty.

I pay off a credit card each month that I use during the month and I never have any interest added to the balance. She needs to check into that if it is really happening.


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## jackal (Aug 5, 2009)

MrFSS said:


> Everydaymatters said:
> 
> 
> > She was able to get credit cards in her name, but only with very high interest rates. Things have changed and now credit card companies are charging interest from the date of the purchase. They no longer wait until they send you a bill and you pay within their grace period.
> ...


Actually, I'm thinking I've heard something about that in either the news or on FlyerTalk--it's happened as part of the whole credit crunch that started the economy on the downward spiral. Lenders are being FAR less generous than they have been in the past--interest rates are being jacked up, credit limits are being tightened down, and grace periods _are_ being eliminated (at least for those who don't have absolutely stellar credit scores).

The folks over at FlyerTalk are also experts on credit cards. If you really want some knowledgeable people to help you (instead of us train nerds--or what is it we were recently called?  --just guessing), I can't recommend highly enough posing your question there. There's also a whole section of the board devoted to credit card talk, so you might put your question there, although I think it'd be better to start it in the more heavily trafficked TravelBuzz forum I mentioned above and let the mods move it where it should go (if anywhere). If anyone asks, say jackal sent ya.


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## Everydaymatters (Aug 5, 2009)

MrFSS said:


> Everydaymatters said:
> 
> 
> > She was able to get credit cards in her name, but only with very high interest rates. Things have changed and now credit card companies are charging interest from the date of the purchase. They no longer wait until they send you a bill and you pay within their grace period.
> ...


I'm not being charged from the date of purchase either, Tom, but that's the new way many credit card companies are giving out credit cards. Even people with existing credit cards are having rates increased, limits lowered, points eliminated, regardless of how well they pay. JC Penney just increased my interest rate a small amount. I use my Penney's card maybe 3 times a year and pay it off when I get the bill.

Oh, and another thing I've read is that they're increasing the interest rate on existing balances. So people who had a major purchase on their card 10 or 12 months ago and are paying it off monthly, now have a higher interest rate on their purchase from back then.

From what I've read, there's a grand rush by the credit card companies to get all the terms in that they can because the government is clamping down on them with laws that will become effective next year.


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## Everydaymatters (Aug 5, 2009)

jackal said:


> MrFSS said:
> 
> 
> > Everydaymatters said:
> ...


I have to run out for a couple of hours, but I've bookmarked your link and I'll take a look at it when I have more time. Thanks. Oh- we're Amtrak Forum Nuts, which I suppose translates to train nerds.


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## p&sr (Aug 5, 2009)

Everydaymatters said:


> She was able to get credit cards in her name, but only with very high interest rates.


If she is using the Credit Cards for convenience and practicality, instead of for "credit"... ie pays everything down to Zero as soon as the statement arrives... then why not just Pre-Pay on the Card? If she's ready to leave on a trip and expects to run up a few thousand dollars on the Card, just send them the money in advance! It shows as a Credit Balance on your account, and I would expect them to sit on it responsibly. Then when the Charges come in from the trip, they just Reduce the Credit Balance! Since there is still NO actual Balance Due, they surely cannot charge any interest!


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## Bob Dylan (Aug 5, 2009)

A couple of ideas: she can sit down with her local/business banker and discuss a line of credit with the bank/

she can apply for the AGR MC,I just received and am using mine and I just retired and my income is much

less than it used to be!(I have quit using the other cards I had/why not build up points as the traveler would

say!)Excellent point about the clip em while you can banks/annual fees are also another way they are

dipping into our pockets but since its for business use Id expect all this might be partially or wholy deductable?

Perhaps a sit down with her attorney might also be prudent advice?


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## Neil_M (Aug 5, 2009)

I know there appears to be some form of worry about debit cards in the US, quite why that is more so than a credit card is a bit bewildering, but over here in the UK there are a number of prepaid debit cards which allow you to top up with funds and then use them as a normal card, something that is sold as ideal for travellers.

I don't know if they exist in the US yet, but it might be a solution to your problem.


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## the_traveler (Aug 5, 2009)

As far as I know, if the previous balance is paid in full by the due date, there is no interest charged on any purchases. However if the preevious balance is not paid in full (even if you pay $597 on a $598 statement), then interest is charged on the unpaid balance *AND* on new purchases *FROM DAY ONE*! :angry: (This is how all my credit cards work!)


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## the_traveler (Aug 5, 2009)

Neil_M said:


> I know there appears to be some form of worry about debit cards in the US, quite why that is more so than a credit card is a bit bewildering, but over here in the UK there are a number of prepaid debit cards which allow you to top up with funds and then use them as a normal card, something that is sold as ideal for travellers.I don't know if they exist in the US yet, but it might be a solution to your problem.


Neil has a good point. I know American Express and Visa have rechargeable prepaid cards that are accepted anywhere the "regular" cards are (meaning most stores, restaurants, hotels, car rentals, etc...) - I'm not sure but MasterCard must also have that. She may want to look into that also.


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## Everydaymatters (Aug 5, 2009)

Yes, she does use the credit cards for convenience and practicality. There are a lot of expenses when she is at horse shows. They have a hospitality suite, rent the furniture for it, rent a golf cart, stall rental, stable help, tack, feed, flowers, decorations for the stall, hotel bills, overnight horse boarding enroute, gas, entry fees, etc.

She really needs some kind of a card. It's not practical to be writing checks, and a lot of places, such as gas stations and restaurants, won't take them anyhow.

As far as a line of credit, generally when you release money from your line it is put in your checking account. So, we're back to checks.

I had never heard of American Express and Visa allowing you to prepay on a debit card, but I have heard where credit card companies are no longer allowing people to pay in advance.

Maybe the prepaid debit cards would work, where it's not tied into a bank account. But if the debit card is stolen, can she get the card cancelled right away like you can with a credit card? Would she be able to call a number to see how much is left on it and make sure there are no charges that weren't hers?


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## AlanB (Aug 6, 2009)

Everydaymatters said:


> I had never heard of American Express and Visa allowing you to prepay on a debit card, but I have heard where credit card companies are no longer allowing people to pay in advance.


You can even buy those cards in many supermarkets these days. The problem is that they tend to charge a fee up front, quite possibly a hefty fee that could turn out to be more than the interest she's currently paying. I'm not sure of that, but it does need to be looked at.

The other issue that I see though is that it sounds like you're talking about big bucks here. Not sure what the upper limit on such a card might be, but I've only seen $500 cards in the stores. It may be possible to load them up with more money via an online webpage, I'm just not sure. You may find more info on American Express' gift cards here.



Everydaymatters said:


> Maybe the prepaid debit cards would work, where it's not tied into a bank account. But if the debit card is stolen, can she get the card cancelled right away like you can with a credit card? Would she be able to call a number to see how much is left on it and make sure there are no charges that weren't hers?


Yes, and yes. Just make sure that she either writes down the card number and the phone number to call and brings that with her seperately or leaves it with someone trustworthy back home.


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## Bob Dylan (Aug 6, 2009)

Everydaymatters said:


> Yes, she does use the credit cards for convenience and practicality. There are a lot of expenses when she is at horse shows. They have a hospitality suite, rent the furniture for it, rent a golf cart, stall rental, stable help, tack, feed, flowers, decorations for the stall, hotel bills, overnight horse boarding enroute, gas, entry fees, etc.
> She really needs some kind of a card. It's not practical to be writing checks, and a lot of places, such as gas stations and restaurants, won't take them anyhow.
> 
> As far as a line of credit, generally when you release money from your line it is put in your checking account. So, we're back to checks.
> ...


I am surprised that such large amounts of $$$ are involved apparently and Ill repeat that she needs to talk with her attorney or a good

lawyer if she doesnt have one,also no offense but perhaps she also needs a good CPA or business advisor that would be able to advise

her on all the ends and outs of business travel and expense!There are lots of people able and anxious to give her advice and help her out,

not one of those internet or credit card scams that are offered to those with little or no credit,also after reading f urhter it sounds like

she may need a new bank/banker that would be thrilled tohave her business!Plenty of those too!


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## Alice (Aug 6, 2009)

The business about widows having to start out fresh regarding credit isn't new, and is the reason financial planners recommend that spouses develop credit in their own name during the marriage. I ran into a similar thing getting divorced. Want to add my new spouse to my credit card and change my last name? No problem. Want to remove him from cards that predated the marriage and change my last name back? Apply again.

As to what to do now, she can pay the bill ahead of time so she runs a credit balance. If she plans on spending $2,000 at a horse show for instance, send the credit card company $2,000 before leaving home. The loss of a month of interest income is pretty trivial at current rates, especially when compared to what the credit card company will charge.


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## jackal (Aug 6, 2009)

Everydaymatters said:


> Yes, she does use the credit cards for convenience and practicality. There are a lot of expenses when she is at horse shows. They have a hospitality suite, rent the furniture for it, rent a golf cart, stall rental, stable help, tack, feed, flowers, decorations for the stall, hotel bills, overnight horse boarding enroute, gas, entry fees, etc.
> She really needs some kind of a card. It's not practical to be writing checks, and a lot of places, such as gas stations and restaurants, won't take them anyhow.
> 
> As far as a line of credit, generally when you release money from your line it is put in your checking account. So, we're back to checks.
> ...


I would also suggest going down to a local bank or credit union (preferably the small-town kind, especially if she's had an existing relationship with them) and seeing what they can do. They may be able to issue a credit card or to tie a business line of credit in with a debit card. Local banks and CUs are MUCH more likely to be willing to work with you, especially if you have a solid business plan and can show that you have positive cash flow and a good business strategy and all of that.

I would be VERY hesitant to use those prepaid cards--both for the reasons that Alan stated (the fees can be somewhat high) and also for the reasons that people do occasionally lose their money when they lose their card and can't find a record of their account number. There's a third reason, though--most car rental agencies and hotels will not even accept those kinds of prepaid cards as qualification for renting or staying, so it's good to have a credit card.

Also, I would recommend trying to (wisely) use credit cards as much as possible in order to build up her credit history.

I was under the impression that she didn't have the money up front, which is why she was looking for a credit card (so she could pay it off later, after the shows and the clients had paid her). If she DOES have enough money up front to handle the expenses, then I'd either look at sending the credit card company money ahead of time (though results can be unpredictable) OR possibly opening a secured credit card (preferably with a local bank). If she can afford to put a few thousand dollars in a secured card savings account, the bank will hold that as collateral against the credit card and issue her a card with a limit of the amount of her collateral (or slightly less, depending on their policies). These cards can usually be converted to standard cards within a few months (a year at most), once the bank is satisfied you'll handle your credit responsibly. The money will also earn interest, although if she doesn't pay off her credit card balances, the 1-2% interest on the secured savings account will be eaten up by the 10-20% interest on the credit card. But if cash flow isn't a problem, this would be the fastest way to build up good credit.

And if she can just get a regular card from a local bank or credit union, such cards tend to have lower interest rates, fees, and more generous policies towards things like grace periods, etc.

Just some options to consider!


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## Green Maned Lion (Aug 6, 2009)

Just thought of something. Does your friend own her home? My dad applied for, and got, long ago a RLOC card on the house. I think the limit on it is $150k or something like that- we don't owe much on the house. It has basically the same rules as a Visa card- no interest charged before grace period, and in anycase I believe the interest rate is only like 12%. He never uses it- its just there in the event that something catastrophic happens, we have the ability to quickly access cash like that, and he doesn't pay a dime on it so long as there is nothing currently outstanding.

Basically, the difference between it and a credit card is that it is secured by your house. Since our equity in the house is worth several times what the cards limit is, they don't care what our credit history is. They have more than enough collateral. Perhaps she might look into that.


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## p&sr (Aug 6, 2009)

Green Maned Lion said:


> Basically, the difference between it and a credit card is that it is secured by your house. Since our equity in the house is worth several times what the cards limit is, they don't care what our credit history is.


The only difference is: if you default on an Unsecured card, the Lender is left scrambling to find a way to recover his losses... but with the Home-Secured Card, you just lose your home and are left scrambling to find a new place to live... with no cash and (now) no credit either. Good Luck!


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## Green Maned Lion (Aug 6, 2009)

p&sr said:


> Green Maned Lion said:
> 
> 
> > Basically, the difference between it and a credit card is that it is secured by your house. Since our equity in the house is worth several times what the cards limit is, they don't care what our credit history is.
> ...


Honestly, if you ever charge more than you can afford to pay off except in a very desperate situation, well, your own mistake. I have no sympathy for such people. None at all. I took the liberty of assuming that Betty's friend is smart enough not to be party to such idiocy.


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## p&sr (Aug 6, 2009)

Green Maned Lion said:


> I have no sympathy for such people. None at all. I took the liberty of assuming that Betty's friend is smart enough not to be party to such idiocy.


Idiocy indeed. Anybody's "house of cards" can come tumbling down unexpected at any time. Everyone is free to construct their own situation as they please. When they DO fail, some arrangements just cause more widespread devastation than others. That was my only point.


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## Green Maned Lion (Aug 6, 2009)

p&sr said:


> Green Maned Lion said:
> 
> 
> > I have no sympathy for such people. None at all. I took the liberty of assuming that Betty's friend is smart enough not to be party to such idiocy.
> ...


Most of my money is kept either in my checking account or a safe in my office in the form of cash or gold (I used to, and occasionally still do, trade work with jewelers). I would never, ever, charge more than I could pay out of the two liquid items and, perhaps, my lowest possible estimate of the value of the gold.


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