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So, my husband and I own a business and recently we’ve had some issues with payment from our largest client. It has, unfortunately, put us in a small amount (around $4,000) of credit card debt from using credit to take care of everyday expenses (NOT from overspending), and not having the cash flow to comfortably pay if off in full. I’d rather not get into the details around this, but we may not be getting all the money owed to us for a long time—if ever. Without getting any of the money owed, we should have our credit cards back down to $0 in about 6 months.
Anyhow, since we’ve always paid the cards off in complete every month until now… we’ve previously used our credit card for basically every expense and reaped awesome cash back benefits from it. However, since we can’t pay it off fully at this point, I don’t feel comfortable using the cards at the moment for anything.
Until we get our credit cards down to $0, I want to pay for everything directly from my bank account. With that being said, I’ve always been super nervous about using my debit card for everyday purchases. In the instance that someone gets a hold of my number and uses it fraudulently (which I’ve had happen several times with my credit cards) I don’t like having my funds open. Of course things get corrected quickly—but I hate that my “real” money would be open for attack—rather than it just being my line of credit. On the other hand, I hate carrying cash around…makes me super nervous and I have a weird paranoia regarding ATMs. I don’t wish to use checks due to the hassle and because that leaves my signature, bank account number and routing number wide open to potential fraud.
So my solution is that I’m thinking of opening up another bank account with a credit union for “just” our everyday expenses (not rent or critical utilities). Basically I’d just keep the account filled with things I’d use my debit card for (groceries, gas, pharmacy, etc). I’ve wanted to open a credit union account anyhow, since at the moment we have all our money with a large national bank. My thought is that if someone was to steal my number for this, it really wouldn’t be that big of a deal as it wouldn’t prevent us from paying for our “big” expenses like rent.
Anyhow…is this a good idea? Is there any harm in having multiple accounts like this? Will a hard pull be done on my credit to open the account?
PS—I know a lot of you here follow the Dave Ramsey ideals and think credit cards are evil. I don’t necessarily agree—and honestly in this situation credit cards saved our butts from being in an even worse situation. If used properly, credit cards are really quite useful.
Last edited by thepinksquid; 08-22-2010 at 03:48 AM..
I don't see any reason not to unless you are paying extra in bank fees. I have a credit card that I use just for online purchases just in case. You may also want to consider opening a business line of credit at the bank/credit union to deal with situations like this in the future since you can then write off the interest and fees paid with that as a business expense.
I have bank accounts in banks in four different states, plus two more in foreign countries. None have ever come back to bite me in any way.
Of all the things that are going on in this country, the fearsome and undiluted power of the credit reporting agencies, with their huge incentive to misrepresent and manipulate data, and their immunity against oversight and redress, is one of the scariest. They are, potentially, the real terrorists.
It is critically important for every citizen to place himself in a financial position where the credit reporting industry cannot harm him.
If they can think of a way to increase their profits by punishing people for having two bank accounts, they will. But as far as I know, they haven't yet.
I have a Small Business and have had as many as 3 at one time.
Everybody has their own ideas as to how to handle there monies.
There is no absolutely correct way.
I like to keep things Simple.
Times have definately changed since I started in Business so I had to change too.
Here are the Tools I use.
Personal:
Personal Checking acct. extablished in 1968. Use a Gel Pen to write all checks. Balance statement monthly without fail.
Keep balance near a minimum for your needs.
Choose a Bank with reasonable fees.
Be careful of the charges for replacement Checks.
But replacement Checks at Costco if your Bank charges too much.
Consider a Credit Union as well.
Cash Back Credit Card. Costco American Express. Buy all gasoline at Costco and get nice cash back reward as well as other rewards. Open this as a Personal acct.
Cash Back Credit Card, Visa/Master Card. "Only" used as Back up for Businesses that will not take American Express.
Business:
Keep all Business Monies Separate for Tax and other purposes.
Same Credit Cards as Personal except open them as Business accts. Especially at Costco.
Always check off your Credit Card monthly statements each and every Month for activity and accuracy.
The Main Problem with this system is,
You have to Get Totally Disiplined to pay off your cards in full at the end of every month. In your case I would Strive to get Clear of all Credit Card Debt before Starting.
Absolutely no Debit Cards. They are a No No to me.
No additional Credit cards.....Period
Hope this Helps.....
P.S. Because of so many Failing Banks you might want to know the Rating of your choice or choices of Banks to do business with.
If you like, you can send me a personal message with the names and city of each potential Bank and I will send you back the current Rating. Many more to Fail going forward.
SF
Last edited by silverfox; 08-22-2010 at 11:17 AM..
Not to intersect with Pinksquids reply but from my standpoint ... Cash No
1. Not safe nor convienient to pak that much Cash around.
Remembering a cash receipt is a Pain in the ---
2. For the Business side, Not as easy to keep a Verifyable Paper trail for the IRS.
A Credit card gives you a Receipt and a Monthly Statement for proof of purchase and credit.
3. If you have a dispute with a Purchase/Credit form a Merchant you have the Credit Card Co. to back you up.
4. Some credit card issuers offer a free extended warranty on purchases. A Bonus...
5. Having a Credit Card as a back up can save your b-t as pinksquid has already found out.
6. Why not use their money for 30days for free.
Last edited by silverfox; 08-22-2010 at 01:39 PM..
To be honest, I just don't feel comfortable carrying cash around. There's not a whole lot of logic behind my thoughts, honestly....just that if I lose cash/get my wallet stolen, I lose the money and it cannot be recovered. I don't need that extra anxiety. I like having a card to back up my purchases too in case of returns.
Anyhow, thanks so much everyone for the input.
Oh, and silverfox... the banks I'm thinking of are either California Coast Federal Credit Union or Mission Federal Credit Union.
To be honest, I just don't feel comfortable carrying cash around. There's not a whole lot of logic behind my thoughts, honestly....just that if I lose cash/get my wallet stolen, I lose the money and it cannot be recovered. I don't need that extra anxiety. I like having a card to back up my purchases too in case of returns.
Anyhow, thanks so much everyone for the input.
Oh, and silverfox... the banks I'm thinking of are either California Coast Federal Credit Union or Mission Federal Credit Union.
Sorry but my Rating info does not include Credit Unions. I wish it did as I would like to check a few of my available ones out.
I would ask the Credit Union you use to furnish the info for you. Talk to the Manager.
Normally I would not be this skidish but in Todays world, it's Trust but Verify.
Sorry but my Rating info does not include Credit Unions. I wish it did as I would like to check a few of my available ones out.
I would ask the Credit Union you use to furnish the info for you. Talk to the Manager.
Normally I would not be this skidish but in Todays world, it's Trust but Verify.
No problem. It was very nice of you to offer anyhow.
I'm right there with you about being overly cautious with banks during this time.
I have a checking acccount with California Coast Credit Union, and I really like them. I also have a checking account with US Bank, only because it's directly across the street from where I live for the convenience. They also have a branch in the Vons store in the College area is open on Sundays. But I hate that account! When I get a permanent job, I'm going to close it. They put holds on my checks, and there's always a line. There's never a line at California Coast, and if one starts forming, they open more windows.
I vote for California Coast, but I've heard good things about Mission Federal, too.
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