Fuck Bank of America

[LK]

Can someone explain to me the differences between a personal line of credit and a business line of credit? Since my bank didn't...

I run a business on the side, personally owned, where I tried to open a Merchant Account two years ago in order to process credit card transactions. I had the business account opened but was turned down for the Merchant Account I needed (I use a third party for this). Instead, Bank of America offered me a $7000 limit credit card, to which I was like "Hell yes!" I've kept a low balance on the card for most of these last two years (<$1000), but since May the balance has gone up to $6000 due to using the card for large scale purchases. I've always been on time with my payments and typically pay more than is requested.

I noticed today that my line of credit was reduced from $7k to $5.6k. Confused as to not having received a notification as to why, I called my bank to ask about it. Their first response after being redirected two times was to start collecting financial information on my business and ask about my records. I have a hard time reading people but I knew exactly where their concerns had shifted: I became a distrusted risk in the blink of an eye. So while my question was eventually answered ("Lack of personal credit, insufficient age of personal credit", which is horse shit to me since they qualified me for a $7k credit card with non-existent personal credit), the person I was talking to was hostile the entire time and went into Collections mode, despite my account being in good standing and not exceeding my credit limit.

Also, apparently a business line of credit can't be used for non-business reasons? Damn, that would have been a nice note when getting the card. Lemme guess though, it was in the fine print or some other shit.

I'm going to pay down the credit card, close my accounts, and change banks.

[Ingmar]

Even a lot of people with years of good credit are getting their limits lowered over the last year or so - 2 years ago things were a bit different in the credit world.

[Signe]

I shut down BOA and a couple of others who tried shenanigans with me with no regard whatsoever for my credit rating.  I was pissed off with the Evil Banks and didn't care.  It didn't seem to do much damage but I've heard of people's credit ratings being damaged pretty bad by simply closing accounts.  A lot of people advise just to let the card sit and not to actually close it, but I was too frustrated with them. 

[LK]

I'll have to close the business side, but I may be locked on the personal; a lot of stuff, including my primary employment's direct deposit, is tied to the personal account.

At least my business doesn't need credit to run. I've found good people who can handle all the proper paperwork and I just focus on the content creation and marketing, and collect checks.

[Salamok]

Is your business a legal entity (like an LLC), or is it just an alias for you?  

If it is just you DBA whatever your business name is I don't think there would be any difference between a personal line of credit and a business line of credit.  

If your business is actually a registered entity then it can have credit established on it's own merits.  In this case a business line of credit may not even be personally guaranteed and is directly tied to the business.  If you haven't PG'd anything you could in theory just walk away from the business with no negative impact on your personal credit score.

[LK]

What's PG?

It's registered as a sole proprietorship in the state of California. I only registered for tax reasons and to get a merchant account. I'll be paying taxes on it so it's "successful" by the IRS standards, but otherwise, meh.

[Salamok]

What's PG?

It's registered as a sole proprietorship in the state of California. I only registered for tax reasons and to get a merchant account. I'll be paying taxes on it so it's "successful" by the IRS standards, but otherwise, meh.

IIRC Sole Prop is the same as a fictitious business/DBA, you should have filed for an LLC then after 3 years in business as an LLC banks start extending credit directly to the business.  In addition to that perk it greatly limits your clients ability to sue you, they can still sue the company and if the damages are high you can fold it w/o risking your personal assets.  It costs a little extra to set up and maintain (a few hundred $$) but well worth it if you are doing any significant amount of business.

If you have a decent CPA doing your taxes and want to spend a few hundred more you could file for a c-corp/s-corp (I forget which) and get some additional tax benefits (like paying yourself a low salary then shelfing the rest of the business income till year end and paying yourself a dividend).

Another possible HUGE perk is as an LLC (or any other non-sole prop business entity) you can have multiple owners, If you are a white male and have a female you fully trust (like a family member) you can assign 51% of the ownership to that person and bid on government contract jobs as a HUB (Historically Underutilized Business).

PG = Personal Guarantee, this just means that you are personally cosigning something for your company.

[01101010]

Welcome to the new horizon, where small business is no longer the american way, but the american liability. Banks a few years ago were always willing to go with the big risks of small business, but with the upheaval in the markets, particularly banking industry, banks are fleeing the scene. You and your small business is no longer a viable resource to make money and thus, BOA gave you the finger as it took the pictures off your walls and rolled up your rug. It sucks all over, but small business owners are getting the shaft.

[Salamok]

Welcome to the new horizon, where small business is no longer the american way, but the american liability. Banks a few years ago were always willing to go with the big risks of small business, but with the upheaval in the markets, particularly banking industry, banks are fleeing the scene. You and your small business is no longer a viable resource to make money and thus, BOA gave you the finger as it took the pictures off your walls and rolled up your rug. It sucks all over, but small business owners are getting the shaft.

This may change this summer, once personal credit cards get their interest rates limited banks will probably be looking for a way to get back into the 20%+ interest rate game and after starving all the small businesses out there leasing/business credit may be the demographic that will pay it.

[Viin]

Btw, you *can* change who your direct deposit goes to. Try a credit union. F*ck the big banks.

[Soln]

"a business line of credit can't be used for non-business reasons"  nope, it's a GAAP accounting issue.  You can use it, but you have to claim the funds as "owner's drawings" if you use that credit as revenue.  You can still hate BoA for other reasons :)

[JWIV]

Btw, you *can* change who your direct deposit goes to. Try a credit union. F*ck the big banks.

In the middle of doing that myself right now.    My bank is raising their fees yet again (suntrust) and I have no god damn idea what supposed service they are providing me other than the privilege of paying them.

[Signe]

Yes, I use a credit union myself.  I was mostly referring to credit cards (especially BoA and Wells Fargo) in my previous post.  I totally endorse credit unions - at least for now.  They could get "iffy", too - who knows?

[Morat20]

Yes, I use a credit union myself.  I was mostly referring to credit cards (especially BoA and Wells Fargo) in my previous post.  I totally endorse credit unions - at least for now.  They could get "iffy", too - who knows?

My wife has a credit card whose issuer is playing fun games like "Hey, they pay off the total balance monthly, but she spends up to the cap. Let's keep raising it until it carries a balance" and "Hey, let's start moving the fucking due date around so they miss payments and we can charge fees" and my personal favorite "Let's pick arbitrary days (and refuse to disclose them) in the billing cycle in which we will NOT count a large sum as 'the due payment' but an extra payment for the month prior, so we can hopefully get them to miss a payment so we can charge fees".

We're switching that to a card issued through my credit union.

[Lantyssa]

BoA is a joke.  Dump them.  Open up an account somewhere else and switch your direct deposit and other things to it.  Preferably a credit union.

They (and other banks) have done a lot to change their rules in the last few years.  One friend even had her account locked for depositing money because of their silly algorithms.

[Merusk]

Btw, you *can* change who your direct deposit goes to. Try a credit union. F*ck the big banks.

In the middle of doing that myself right now.    My bank is raising their fees yet again (suntrust) and I have no god damn idea what supposed service they are providing me other than the privilege of paying them.

You're going to see more of this, and possibly the death of free checking accounts as banks scramble to make up the ~$28 BILLION in fees they'll be losing this summer.

[Selby]

All I have to say is that Discover pissed me off in the same way.  I had a card through them for $2500.  I get my statement with my once a year purchase on it, and notice they lowered me to a $500 limit.  No warnings, no notifications, nothing.  I have no idea when this happened either.  I mean, a $500 limit is like "we don't even want to trust you with a credit card but we figure why not?" territory.  I haven't even bothered to activate the new card because of this.  I tried calling and did nothing but get the runaround and "don't you REALLY want to buy our personal account guarantee protection service for $10/mo?" line.  So fuck them.

[Johny Cee]

Can someone explain to me the differences between a personal line of credit and a business line of credit? Since my bank didn't...

I run a business on the side, personally owned, where I tried to open a Merchant Account two years ago in order to process credit card transactions. I had the business account opened but was turned down for the Merchant Account I needed (I use a third party for this). Instead, Bank of America offered me a $7000 limit credit card, to which I was like "Hell yes!" I've kept a low balance on the card for most of these last two years (<$1000), but since May the balance has gone up to $6000 due to using the card for large scale purchases. I've always been on time with my payments and typically pay more than is requested.

I noticed today that my line of credit was reduced from $7k to $5.6k. Confused as to not having received a notification as to why, I called my bank to ask about it. Their first response after being redirected two times was to start collecting financial information on my business and ask about my records. I have a hard time reading people but I knew exactly where their concerns had shifted: I became a distrusted risk in the blink of an eye. So while my question was eventually answered ("Lack of personal credit, insufficient age of personal credit", which is horse shit to me since they qualified me for a $7k credit card with non-existent personal credit), the person I was talking to was hostile the entire time and went into Collections mode, despite my account being in good standing and not exceeding my credit limit.

Also, apparently a business line of credit can't be used for non-business reasons? Damn, that would have been a nice note when getting the card. Lemme guess though, it was in the fine print or some other shit.

I'm going to pay down the credit card, close my accounts, and change banks.

Umm.  You never had a business line of credit, you had a credit card.  And paying more than the minimum amount isn't being in good standing.  Paying off the balance regularly is in good standing.  Paying less than that is keeping it out of "sent to collections".

Using a credit card to fund your business is usually a good sign of "this business is in trouble."


A business line of credit will have set terms.  Usually an interest rate at between -1.0% below  to 2 or 3% above prime, will have a max, will be personally guaranteed by the owner, and will have the provision that it will be paid down to a zero balance at some point during a year.  It will generally also be calleable to be paid off within 30 days.

Typically, the rate and max will depend on the business finances/personal finances and on how the line is guaranteed.  I've seen lines with prime -X% interest rates only in situations where the business owner has put up significant amounts of marketable collateral.  For instance, a client had a $1 million business LOC secured by a couple million of publicly traded stock.

It doesn't really matter that much for a non-incorporated sole proprietorship, but taking out distributions/draws in excess of equity is a "debt financed distribution".  For LLCs, partnerships, and S-corps this is a taxable event.  


You basically had two big red flags here:
1.  You're using a credit card for business financing and maintaining large balances on that card.  This is often seen with small business that are having significant troubles.
2.  You're using credit to take out personal distributions.  Again, this is most often seen with people having significant personal financial troubles and are raiding their business assets for personal funds.

[LK]

Umm.  You never had a business line of credit, you had a credit card.  And paying more than the minimum amount isn't being in good standing.  Paying off the balance regularly is in good standing.  Paying less than that is keeping it out of "sent to collections".

That goes against twenty years of advice I've gotten on how to build good credit. Fuck me...

[Johny Cee]

Umm.  You never had a business line of credit, you had a credit card.  And paying more than the minimum amount isn't being in good standing.  Paying off the balance regularly is in good standing.  Paying less than that is keeping it out of "sent to collections".

That goes against twenty years of advice I've gotten on how to build good credit. Fuck me...

It's personal credit versus business credit.  If your business can't get a regular line, or can't purchase from suppliers on account, and you have to float an amount on a credit card just to conduct business?  That doesn't look good.

For small businesses, from the Small Business Administration website:
- 2/3 are still in business after 2 years
- 1/2 are still in business after 4 years

That's why you aren't going to get business credit without it being secured and personally guaranteed.  Especially if your business is operating under limited liability protection.

As I said, I've had clients with net worth between 5 and 10 million that still have to put up personally owned securities as collateral against the business line that is a minor amount of their personal worth, in addition to a personal guarantee.

[Johny Cee]

BoA is a joke.  Dump them.  Open up an account somewhere else and switch your direct deposit and other things to it.  Preferably a credit union.

They (and other banks) have done a lot to change their rules in the last few years.  One friend even had her account locked for depositing money because of their silly algorithms.

I've been remiss with my fraud CPE, but small and unusual deposits are usually the trial balloon for someone checking their stolen/fraudalently gained bank information before cleaning out the account.

It used to be the MO for many of the email scams...  Get someone's bank info, make a couple of small deposits to gain trust and make sure that the account is active, then start sucking out the cash.

[Johny Cee]

Btw, you *can* change who your direct deposit goes to. Try a credit union. F*ck the big banks.

In the middle of doing that myself right now.    My bank is raising their fees yet again (suntrust) and I have no god damn idea what supposed service they are providing me other than the privilege of paying them.

Um? 

Clearing and validating checks has a cost.  Storing and keeping the bank's audit trail for cash deposits and withdrawals has a cost.  Maintaining atms, store frontage, and tellers has a cost.  It's a small cost when spread over all of the bank's customers, but it is still a cost.

Automating tasks and moving to things like electronically generated and emailed statements has helped, but there is still a measurable cost to the bank to administer.  From clerks and postage/courier costs to costs for secure financial servers and IT.

[Johny Cee]

What's PG?

It's registered as a sole proprietorship in the state of California. I only registered for tax reasons and to get a merchant account. I'll be paying taxes on it so it's "successful" by the IRS standards, but otherwise, meh.

IIRC Sole Prop is the same as a fictitious business/DBA, you should have filed for an LLC then after 3 years in business as an LLC banks start extending credit directly to the business.  In addition to that perk it greatly limits your clients ability to sue you, they can still sue the company and if the damages are high you can fold it w/o risking your personal assets.  It costs a little extra to set up and maintain (a few hundred $$) but well worth it if you are doing any significant amount of business.

If you have a decent CPA doing your taxes and want to spend a few hundred more you could file for a c-corp/s-corp (I forget which) and get some additional tax benefits (like paying yourself a low salary then shelfing the rest of the business income till year end and paying yourself a dividend).

Another possible HUGE perk is as an LLC (or any other non-sole prop business entity) you can have multiple owners, If you are a white male and have a female you fully trust (like a family member) you can assign 51% of the ownership to that person and bid on government contract jobs as a HUB (Historically Underutilized Business).

PG = Personal Guarantee, this just means that you are personally cosigning something for your company.

For a side business that you are doing very small volume with, it's rarely cost effective to set up a limited liability entity.  States are very keen on raising money through minimum taxes, not to mention various registration and licensing fees to keep your LLC/Corporation in existence with the Secretary of State.

Especially since your liability for a side business would be mostly covered by a decent insurance policy.

Obviously fees and paperwork requirements vary state to state.

For instance:
- NY has moved to a minimum tax based on gross receipts for all LLCs, Corps, unincorporated partnerships over 1 million in revenues, and S-corps.  Sole member LLCs were exempt last year, but I haven't done a sole member LLC return this year so I don't know if there is a change.
- NJ has a $100 annual registration fee for LLCs.  (Which I had a NJ lawyer bungle for my biggest client, getting their LLC revoked for a number of years.......)
- California has an $800 minimum tax on corps.

That's not to mention that most limited liability forms require a separate tax return as opposed to just filing a Schedule C with your personal return, which you WILL have to pay someone to prepare.

[Abagadro]

I thought you could use "check the box" filing to treat LLC income like partnership income and pass it all through onto your personal return.

[Johny Cee]

I thought you could use "check the box" filing to treat LLC income like partnership income and pass it all through onto your personal return.

Unless you elect to be treated as an association (i.e. a C-corporation) it is a flow through.  LLCs with more than one member will still need to prepare a partnership tax return to generate the K-1 for the income pass-through. 

Single member LLCs file a schedule C with your personal 1040 to report business activity.

The problem is that states have revenue issues.  One of the favorite methods of increasing revenues without the negative popular reaction to tax increases is to increase fees.  The last couple of years, in NYS, we've seen successive increases and changes to the fee structure for LLCs.  You also have registration fees to keep your business entity in existence with the appropriate Secretary of State.


In the last four years in New York, the required fees and forms to be filed for sole member LLCs has changed two or three times.  I can't complain, because it's basically money in my pocket as people have to pay me at my hourly rate to sort out what's going on, but...  Mostly I'm just glad that the bulk of my work is with C-corps and not-for-profits.

Because the LLC form is still so new (historically), there are still huge differences state to state on minimum fees, reporting requirements, and the like.

[Abagadro]

Heh, my dissertation is about the use of fees over tax increases to increase revenue (well really the citizen knowledge/opinion of this, but I look at how governments do it). They are indeed sneaky bastages.

EDIT: The goofy thing is that people generally support fees over taxes.

[Johny Cee]

Heh, my dissertation is about the use of fees over tax increases to increase revenue (well really the citizen knowledge/opinion of this, but I look at how governments do it). They are indeed sneaky bastages.

EDIT: The goofy thing is that people generally support fees over taxes.

In the best case scenario, fees are voluntary.   

In the worst case scenario, it's the old Illusion of Choice strategy that parents and teachers have been using for generations.

[MahrinSkel]

They're all doing this kind of stunt.  Capital One is my favorite, they charge you a fee for paying by phone, online, or walking into a branch and paying in person.  If you pay by mailing a check with their payment coupon, they route it through so many middlemen that unless you FedEx Overnight it the day it arrives (not the next day), it won't be credited in time and you'll be charged a late fee.

Seriously, switch to a Credit Union.  Can't explain why in detail without derailing this thread into Politics, it comes down to the fact that Credit Unions don't have the same financial incentives to screw their depositors (mostly because they're also the owners).  For retail and small-scale commercial banking, they can do anything a bank can.

--Dave

[Hoax]

If you are west coast you owe it to Wells Fargo of all the giant banks to bank with them.  They are consistently the least shady of the big banks, they are like the Ford of American banking only better.

BofA is and always has been shit, they have dicked people over at various points Looooong before the current crises hit.

[Oban]

If you are west coast you owe it to Wells Fargo of all the giant banks to bank with them.  They are consistently the least shady of the big banks, they are like the Ford of American banking only better.

Wells Fargo might be great for personal accounts, but for business accounts they are the most inept bank in California.  They have lost documents, held wire transfers, credited accounts incorrectly, failed to transfer payments to corporate credit cards and their customer service is just abysmal.  Heck, even when we closed all of our accounts with them, they sent my company a statement a year later showing they had somehow failed to transfer sixty thousand dollars to our new bank.  Just a bunch of fucking clowns.

[Signe]

Nothing but complaints about Wells Fargo here.  They attempted to raise interest on a credit card we had closed almost a year earlier and then opened a credit card in our name without permission.  It wasn't even a credit card although they called it that, it was some financing for furniture on a timed no interest deal. They were the first bank I ever closed an account with due to dodgy practices.  The people they hire all seem completely incompetent, too.  They still call us, more than two years later, and try to sell us their useless products even though the account has been closed.  Now they use a third party firm to call us to hawk stuff we have no use for.  We don't bother picking up calls from unknown numbers, but sometimes we look them up. 

[ghost]

You will always be better off going with local banks or credit unions that have strong histories.  Clearly the big bank era has hurt the USA in a lot of ways, and you'll never get customer service like you can at a local or regionally run bank. 

[Teleku]

Meh, I use Bank of America.  All I need is a place that I can drop money into, and then go take the money back out of again.  I don't do anything else, and never have to worry about fee's or anything.  Plus they have ATM's absolutely everywhere, which cuts down on fee costs of withdrawing from different banks ATM's.

[MrHat]

On a lighter note: I read the title as The American Fuck Bank.

[Signe]

You should have your occipital lobe checked out!