First, find a lender that you respect that is willing to extend you a credit card merchant account online. This may be the bank where your business interests and accounts currently reside. Or you may choose to shop for another lender with better rates or services. Don’t rush into this decision, however. Plan some time in your schedule to carefully browse the many services offered through a host of financial institutions today. You can browse the Internet by typing in search phrases like “merchant account” or “merchant services” and seeing what Google or your favorite search engine can bring up. Then it becomes a matter of checking out each lender to find the one that will best fit with your business budget or growth objectives. Some companies may seem a little too shady, while others may not have been in business long enough to enjoy a solid reputation. Others may charge a frightful amount for the services you want. Ask around your local business community to see which merchant account providers others are using, and then compare those costs and services with those you find online. You can probably reduce your list to a few of the better underwriters in short order. Then you will need to make the final selection by comparing monthly and annual fees.

Applying for a credit card merchant account online is fast and easy. Just click on the lender’s home page link to “application” (or some variation thereof) and follow the links to the application page. Then type the requested information in each blank. Contact the customer service representative if you do not understand a question or if you are unsure how to answer it. Remember to print a copy of the application if you are able to do so, or keep a copy of the confirmation number if one is provided. Often a company will email a verification of your application’s receipt and tell you when to expect a reply. At least print this page, if nothing else, for your records.

After applying for a credit card merchant account online, sit back and wait to hear about the decision. Often this arrives within a few days or even hours by email, although some are mailed out by post. When you receive approval and open your merchant account, you can begin to accept credit card payments right away. You will be delighted to see how quickly your profits increase as customers begin taking advantage of this valuable service. Don’t wait—consider applying today for your credit card merchant account online.

The same way, if your credit card company charges higher interest rate than your bank, you should hire money from the bank instead. It’s the principle of appeasing the lesser evil. The thing is why would any bank want to lend you money at low interest?

Now, we need to resort to psychology here. Say someone comes to you and says, “Lend me money I have a huge business that can have 100% yield”. Say another person comes and says, “Lend me money, I got a standard real estate business that yields 20% per year”. Which person would you give your money to? The one giving 100% yield?

Obviously it’s not obvious. Why? Because you don’t give a shit on the sort of yield he’ll get.

All you care about is how much from that 100% yield will he share you?

If both say that they will share you 10%, which one will you choose? The safer investments. Usually higher yield investments are riskier. So, when both say the will share you 10%, you will choose the business yielding 20% per year. That’s why Banks love lending money to low yield real estate rather than highly profitable silicon valley business start up. There is another even more important reason, which I’ll explain later.

You don’t care how much yield a businessman will make. You care what your share is. That and the probability that they won’t pay your loan.

The same way, Banks lend money to businessmen at pretty much constant interest rate. If the businessmen make a lot of money, the Bank makes 10% interest, if the business makes less money, the bank also makes 10%. So banks don’t care how much money businessmen make.

Banks only bite the bullet when businessmen go bankrupt. The same way, when a bank considers a loan to you, they don’t care how brilliant you are. They’re only interested whether you will pay the loan or not. If they feel secure you’ll pay, they lend the money. Simple?

Now, how do we make bank feel safe that you’ll pay? Collateral. You see, secured debt are debts where banks can seize something if you don’t pay. You’ll usually get lower interest rates this way. Collateral makes banks feel safe in lending money for you. This is the second reason why banks love real estate. Real estate loans always come with collateral that will minimize banks’ problem when the debtor ditches.

Trivia: Why Credit Card Interest Rate is Higher Than Mortgage?

Answer: When you lend money on interest rate basis, all you seek is security. To make a profit, your interest rate should be higher than the interest rate your lender gives. However, that’s not the only factor. You need to compensate for the probability of default. Your interest rate should be high enough so that even if say, 10% of your debtors are defaulting, you still earn a profit.

Different Point Of View: Credit Cards, unlike Mortgages, are unsecured by collateral. So banks are not motivated to lend money through unsecured loan to unsecured debt. So how do we motivate them to lend money? By agreeing to pay higher interest rate.

Morale: As with anything, after a bunch of regulation, the market will sort of take care of it. More pain for a bank usually leads to bigger share for it in another form.

As usual, I put a few simulations for this advance strategy. I also put an in-depth analysis to explain why this advance strategy is possible. You should compare the simulations of this strategy with the simulations of the basic strategy

Conclusions

Is it for you? Well, I won’t jump to conclusions. If you’re determined to pay, go ahead.

However, if you’re not, this can make you loose your house. You see, that’s the downside of collateral. It’s a secure debt so you cannot hide behind bankruptcy laws to prevent banks from taking it.

I’ll explain more about bankruptcy later.

However, if your debt is not neck deep and you obviously can pay, this is obviously the way to go. The worst is you live on welfare, right? Doing this right can help shorten your loan payment period or cheapen your payment.

Loan interests go high because banks are taking risks that some people won’t pay their loan. Hence, by paying high interest loan, you are paying the loan of those who don’t feel like paying loan.
Maybe you think it’s unfair that some people don’t pay their loan expecting you to pay for it. However, for all the bank knows, you are potentially one of those people.

Unless you can convince your bank that you’re not likely to default on your loan, the bank will think that you’re a potential defaulter.

You see, unless you have a credibility or collateral, the bank will automatically think that you are partially a defaulter. If the default rate in your country is 20%, for example, then the bank will look at you as if you’ve decided to default (on average at least) 20% of your loan already.

Here, the bank will give you an interest rate where on average, the bank still gains its usual low interest rate plus some amount to compensate for the extra risk.

By signaling to the bank that you’re not one of them through collateral, you only pay interest for what you owe rather than paying for those who don’t pay their loan. Hence, you get cheaper interest rate.

Here are some questions consumers have asked the FTC about consumer reports and consumer reporting companies, and the answers.

Q. Do I have a right to know what’s in my report?
A. You have the right to know what’s in your report, but you have to ask for the information. The consumer reporting company must tell you everything in your report, and give you a list of everyone who has requested your report within the past year – or the past two years if the requests were related to employment.

Q. What type of information do consumer reporting companies collect and sell?
A. Consumer reporting companies collect and sell four basic types of information:

* Identification and employment information: Your name, birth date, Social Security number, employer, and spouse’s name are noted routinely. The consumer reporting company also may provide information about your employment history, home ownership, income, and previous address, if a creditor asks.
* Payment history: Your accounts with different creditors are listed, showing how much credit has been extended and whether you’ve paid on time. Related events, such as the referral of an overdue account to a collection agency, also may be noted.
* Inquiries: Consumer reporting companies must maintain a record of all creditors who have asked for your credit history within the past year, and a record of individuals or businesses that have asked for your credit history for employment purposes for the past two years.
* Public record information: Events that are a matter of public record, such as bankruptcies, foreclosures, or tax liens, may appear in your report.

Q. Is there a charge for my report?
A. Under the Free File Disclosure Rule of the Fair and Accurate Credit Transactions Act (FACT Act), each of the nationwide consumer reporting companies — Equifax, Experian, and TransUnion — is required to provide you with a free copy of your credit report once every 12 months, if you ask for it.

Q: How do I order my free report?
A: The three nationwide consumer reporting companies are using one website, one toll-free telephone number, and one mailing address for consumers to order their free annual report. To order, call 1-877-322-8228, or complete the Annual Credit Report Request Form and mail it to: Annual Credit Report Request Service, P.O. Box 105281, Atlanta, GA 30348-5281. Do not contact the three nationwide consumer reporting companies individually. You may order your free annual reports from each of the consumer reporting companies at the same time, or you can order from only one or two. The law allows you to order one free copy from each of the nationwide consumer reporting companies every 12 months.

Q: What information do I have to provide to get my free report?
A: You need to provide your name, address, Social Security number, and date of birth. If you have moved in the last two years, you may have to provide your previous address. To maintain the security of your file, each nationwide consumer reporting company may ask you for some information that only you would know, like the amount of your monthly mortgage payment. Each company may ask you for different information because the information each has in your file may come from different sources.

Q: Are there other situations where I might be eligible for a free report?
A: Under federal law, you’re entitled to a free report if a company takes adverse action against you, such as denying your application for credit, insurance, or employment, and you ask for your report within 60 days of receiving notice of the action. The notice will give you the name, address, and phone number of the consumer reporting company. You’re also entitled to one free report a year if you’re unemployed and plan to look for a job within 60 days; if you’re on welfare; or if your report is inaccurate because of fraud, including identity theft. Otherwise, any of the three consumer reporting companies may charge you up to $9.50 for another copy of your report within a 12-month period.