CREDIT CARD LIQUIDATION STRATEGIES

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1 Page 1 CREDIT CARD LIQUIDATION STRATEGIES Important Disclosure: Before you begin, please note that the techniques and ideas suggested here might not be applicable for every situation. Additionally, it is important that you realize that every Lender, Merchant Service Provider, and Credit Card Issuer has different terms and condition. By sending you this document, JDB Financial LLC is NOT suggesting that you violate any such terms and conditions. By reading this document, you agree to hold JDB Financial l, its associates, affiliates, directors, officers, employees, representatives and agents, harmless from any claim or loss resulting from your use or implementation of these liquidation strategies. There are many ways to get your approved business credit lines into your bank account. The important thing is that you do it correctly to minimize interest rate and transfer fees. Although each Lender has different terms on their introductory rate, the concepts are very similar. IT IS IMPORTANT THAT YOU CALL THE LENDERS YOURSELF TO MAKE SURE THE TERMS YOU HAVE ARE CURRENT. Either the Lender offers a 0% introductory rate on purchases, balance transfers, or both. The efficient use of a particular strategy may sometime rest on the terms. 1. The Common Balance Transfer: (BT) This is probably the simplest way to move a balance and take advantage of your new credit lines with a low intro rate on BALANCE TRANSFERS. DO NOT use this method for cards that offer an intro rate only on purchases. You simply use the new card, which often comes with a lower intro rate, to pay down or pay off the balance on an old credit card. It s pretty simple and basic. Don t forget the interest rate after the intro offer expires, the fee, and the length of the intro rate on the balance transfer. The best offers are available for 6-12 months with little or no fees...however, there are other variables to consider that make some shorter term offers just as good or a close second to the longer term offers. Do not make the mistake of thinking that all intro offers are created equal...and not even all 0% offers are created equal either. Here are the steps you need to take: Call the customer service department of the new credit card that is offering you the introductory rate. The phone number can be found on the back of the card. Let the representative know you would like to initiate a balance transfer. You will need to provide the representative with the following information: 1. Name of the bank you are trying to pay. 2. Mailing address of the bank you are trying to pay. 3. Account number of the bank you are trying to pay 4. The amount you would like to pay.

2 Page 2 2. Request Balance Transfer checks: (BT) This is probably the cleanest and easiest way to turn a BT into cash because you just write yourself a check and cash it. You may have to call the Lender to request these checks. Not all lenders offer this option. Some Lenders will only offer this option to accounts that have seasoned for 3-6 months. Just make sure that the checks you use are considered BT checks and not just cash advance checks so that you know what fees and rates are attached. Many people do this and think they are getting 0% BT s when, in fact, they are really being charged a much higher fee and percentage because the transaction is actually a cash advance. Important Note: If you intend to do a traditional BT to pay off more than one credit card, we still recommend this method so that you can get access to all the cash in one transaction and you only pay the BT fees once rather than multiple times. Also, always remember to leave yourself a small $ cushion (including any BT fees) between the amount of the BT and the available credit limit. We recommend you leave a $500 cushion so there will be no problems and the transaction will not get denied. Here s how to request balance transfer checks: Call the customer service department of the new credit. Ask the representative to send out balance transfer checks. (demand, don t ask) 3. Citi Savings Account Strategy: This is quickly becoming one of the most commonly used techniques for turning your 0% offers effectively into cash and it works great for BOTH 0% BT offers AND 0% purchase offers so pay close attention to this strategy! You simply open an online Citi Bank savings account. The Ultimate Savings Account is the best one to use for this. Use this link: t_list=savings_plus&package=citibank_account Then you will need to fund your new account. The great thing is that they will let you fund your new account with a credit card. As a quick FYI, when you do get to the section of the online application where you are to fund the account they have some different screen shots but some of them make it very difficult to find the option of funding the account with a credit card. As long as you are OPENING a new account and setting up a new user name and password it will be there. On one of the funding screens you ll have to scroll down to the bottom and middle portion of the website in order to find the link for funding the account with a credit card. Another detail to note is that you can only fund these accounts with Visa s and Mastercards (not Amex or Discover) and that you ll probably have to fax in a signed credit card authorization form that gives them your written permission to process your credit card. Important Note 1: The only 2 Lenders we ve seen challenges with on this strategy are Chase & FIA Card Services (FIA is the servicer for Bank of America and Regions Bank) they will sometimes look to process your transaction as a cash advance rather than as a purchase transaction so beware of that.

3 Page 3 Important Note 2: For residents of some states, there is a $25, minimum to open an Ultimate Savings Account. So if you have a new business card with a 0% intro offer on purchases then you give them the account info and you re done. So what if the 0% offer is on BT s only and not on purchases? In that case, you can fund your account with a personal credit card and then call up your 0% BT offer and do a BT to pay off the new balance that you have on the personal card you funded the account with. The end result is you have access to the cash and the balance rests on the 0% business card with the low rate and, more importantly, it s NOT on your personal credit report. It s important to note that Citi will only let you do this ONCE on each account so you can easily set up 2 or 3 accounts if you want to take advantage of more than one 0% offer. If you do set up multiple accounts please choose a different user name and password for each account. When we say open up multiple accounts, we don t mean 10 accounts in 30 days! Please be conservative in your strategy. You won t have to worry about anything if you open up multiple accounts (multiple meaning 10 or more accounts within a 90 day period). Make sure that you do not have a fraud alert on your credit profiles when you apply for this account. They will check your credit and they will not open your account if you have fraud alerts on your file when you apply. Also, since they will do a credit check please be sure to only apply for this AFTER we have finished submitting your file to the various banks and lending institutions for funding and all inquiries have posted to your credit file. It s a good idea to us and check your status before you open this account. This will make certain that opening the account will not interfere with the funding application process. 4. Cash Advance to BT Strategy: (Balance Transfer) This is a good one and it is very effective but make sure you execute it correctly. Start by using a credit card with a low balance (preferably a zero balance) and take a cash advance on that card that is equal to the amount of cash you wish to access. Then, simply transfer that balance to your new card with the lower introductory BT offer. Example: I want to access a 0% offer on a new credit card with a $20,000 credit limit. Card #1 has a zero balance and I use this card to do a $19,000 cash advance and I put the cash in my bank account (preferably my high yield savings account)...but what if the rate is really high??? That s ok; we don t really care because it won t be there long. Card #2 This is the new card with the 0% introductory offer. Now that you owe $19,000 to card #1 it s time to pay them off with the 0% balance transfer offered by card #2 so do the BT to pay off that high interest card #1 with the $19,000 balance. End Result: Your $19,000 is cash in hand (or in the high yield savings account where it can make a little interest income for you) and that balance is on the card with the 0% offer while card #1 is back to a zero balance. You only paid the high interest rate on card #1 for a few days or maybe 1-2 weeks at most. In fact, if the rate is high, you re going to likely pay only $5-10 per day in interest while waiting for the BT to post. Important Note: A couple important notes here...

4 Page 4 Remember that the interest rate on the cash advance card is almost irrelevant because the balance is only on that card for a very short time. You should be more concerned with the cash advance fees that are charged to you at the time of the cash advance...try to use the card with the lowest fee possible in most cases (not all) you will pay a fee for the cash advance and the BT...but don t get too worried...if you pay a 3% fee for the cash advance AND a 3% fee for the BT and get 0% on the balance for 12 months this is really a 6% annual cost to borrow in year one. In most cases, you will do better than this on one or both ends of the transaction. Is 6% a year a good interest rate? Try convincing a private lender, angel investor, venture capitalist or hard money lender to let you pay them a 6% annual ROI inclusive of their fees. Here s how to execute this strategy: Go to the bank that holds your business checking account. Ask the teller to do a cash advance from card #1 from the example above. You will need to bring card #1 with you to the bank. Call the issuer of card #2 and request a balance transfer to card #1. 5. BT to Line of Credit or HELOC account: This one works like a charm. If you have another account with a bank or lender that is 16 digits long then you can simply have your BT done directly into the other account. We love this method because it is quick and easy. Some Lenders require that this 16 digit account number needs to begin with a 3, 4, 5, or 6 just like all Amex, Visa, MC, and Discover accounts do. This can often times be done to a line of credit or HELOC account that does not have a 16 digit account number. It will vary from Lender to Lender. Here s how to use this strategy: If you have a line of credit or HELOC then just take the assumptive approach and TELL the customer service rep that you want to take advantage of the 0% intro offer and do a BT to pay down your line of credit. It s best to TELL them that you want to do the balance transfer rather than to ask them if you can do it. If for some reason it s not allowed then they can come back to you after trying unsuccessfully and tell you that it didn t work. You would be surprised how many customer service reps don t really know what can and can t be done...they are trained to feed their data into the computer and let the computer decide what can and can t be done. If you have a line of credit or HELOC with Wells Fargo or PNC Bank they often issue 16 digit account numbers so if you have one of these Wells Fargo or PNC accounts then this is your best strategy. Don t forget that in business it helps to be creative...so if your friend or fellow business owner has a Wells Fargo or PNC line or HELOC then see if you can send your BT or BT s to their line and have them write you a check off their line after they receive your BT. Don t forget to have your HELOC loan number, payment address, and name of financial institution with you before you call. 6. Overpay another credit card: (BT & refund) This is a good strategy but you must use it with caution. Basically if you have a credit card account with either a low balance or a zero balance there s nothing to stop you from doing a BT

5 Page 5 to that card and creating a credit balance. In other words if you send $8000 to a card with a zero balance then the card with zero balance actually owes YOU the $8000! But here s where it gets sticky. It may raise a red flag and put the account under review. If you re thinking about using this strategy please don t use it with your oldest and most valuable account with the highest credit limit and don t use it on a card that rarely has any activity on it. They may give you a hard time and then may make you wait up to 30 days to get your money back but they re not going to keep your money. Lastly, when you use this strategy you better play dumb and tell them you paid the wrong account accidentally and request them to refund you the credit balance as a check...not a great idea to tell them you re trying to get the best of them to take advantage of a great balance transfer offer. This works really well with Chase. Bank of America and Discover will sometimes directly deposit your credit refund directly into your checking account. Remember, the banks can t really trace where your payment came from other than that it was paid from some other bank or lender...they will not know usually if it s a credit card or just one of your accounts at that bank that issued the payment. 7. Paypal: If you re familiar with Paypal then you probably need no explanation but this works great. If you aren t a paypal member then go to paypal.com and set up an account. You can send a payment to your spouse, mom, dad, friend, etc. We suggest that you re careful about large amounts so it s a good idea to talk to someone who has done a lot of Paypal transactions if you consider this strategy. We have had a lot of Clients who have used this strategy successfully and it s quite easy. Here s how to get started: Visit: Click on Sign up

6 Page 6 Choose one of the three accounts that best fits your needs: Fill out the form and create your account!

7 Page 7 CAUTION: DURING THE FIRST COUPLE MONTHS, KEEP YOUR DAILY PROCESSING AMOUNT UNDER $1000 PER DAY! IF YOU EXCEED YOUR DAILY AMOUNT, PAYPAL CAN FREEZE THE FUNDS AND ASK YOU FOR BUSINESS VERIFICATION DOCUMENTS. IF YOU DO NOT HAVE THESE DOCUMENTS READILY AVAILABLE IT COULD TAKE YOU WEEKS TO OBTAIN DUPLICATES AND FURTHERMORE, IT COULD TAKE PAYPAL A LONG TIME TO REVIEW THEM. We suggest you don t fall into this trap to begin with. 8. Intuit Merchant Account: If you have Quickbooks, you can sign up for a merchant account through Quickbooks. Intuit is known to be easier to deal with than Paypal, however, a Paypal account is quicker and easier to set up. Here s how to set up this account: Start your Quickbooks software Make sure you re connected to the internet Click on Accept credit cards and echecks

8 Page 8 You will receive a pop-up. In this window, click on Activate This Service

9 Page 9 Fill in the form and click I m ready to accept credit cards CAUTION: DURING THE FIRST COUPLE MONTHS, KEEP YOUR DAILY PROCESSING AMOUNT UNDER $1000 PER DAY! IF YOU EXCEED YOUR DAILY AMOUNT, INTUIT CAN FREEZE THE FUNDS AND ASK YOU FOR BUSINESS VERIFICATION DOCUMENTS. IF YOU DO NOT HAVE THESE DOCUMENTS READILY AVAILABLE IT COULD TAKE YOU WEEKS TO OBTAIN DUPLICATES AND FURTHERMORE, IT

10 10 Page COULD TAKE INTUIT A LONG TIME TO REVIEW THEM. We suggest you don t fall into this trap to begin with. 9. Squareup.com: Square is similar to Paypal and Intuit merchant account. The only difference is that it s a mobile only solution. You will need iphone, ipad, or Android phone. Here s how to set up Square: Visit Type in your name and address on the home screen Fill out the registration form on the next screen Once you log into your account, you can order a free card reader. You can download an app to manage the funds and transfer them into a desired checking account. This is a good technique for cards that offer 0% intro rate on purchases only. CAUTION: DURING THE FIRST COUPLE MONTHS, KEEP YOUR DAILY PROCESSING AMOUNT UNDER $1000 PER DAY! IF YOU EXCEED YOUR DAILY AMOUNT, SQUARE CAN FREEZE THE FUNDS AND ASK YOU FOR BUSINESS VERIFICATION DOCUMENTS. IF YOU DO NOT HAVE THESE DOCUMENTS READILY AVAILABLE IT COULD TAKE YOU WEEKS TO OBTAIN DUPLICATES AND FURTHERMORE, IT COULD TAKE SQUARE A LONG TIME TO REVIEW THEM. We suggest you don t fall into this trap to begin with. 10. Existing Merchant Account This is by far the most favorite liquidation strategy of JDB Financial. If you already have a merchant account and you can accept credit cards then this is obviously very quick and easy. If your merchant account is set has a low high ticket limit, you will need to call the processor and let them know you want your high ticket increased because you are adding a new dimension to your business. You can then process your transactions intermitly. If you are unsure about how to handle this please call us first and we will help you. Also, it may be a good time to consider getting a merchant account if you don t already have one. JDB FINANCIAL IS IN THE BUSINESS OF SETTING UP ALL TYPES OF MERCHANT ACCOUNTS (normal and high risk). WE CAN HAVE AN ACCOUNT SET UP FOR YOU IN AS SHORT AS 24 TO 48 HOURS. You simply process your charge and let the funds get deposited into your account. If your 0% offer is on a business card that is only 0% on balance transfers, then keep in mind that you may want to process the charge with a personal card and then pay it off right away with your 0% balance transfer offer. If you are for some reason unable to get a merchant account then find a friend or colleague with a merchant account and have them process your payments into cash. This can be done multiple times.

11 11 Page 11. Personal open checkbook style credit line: This is one of our favorites also! You may apply for a personal line of credit through one of the financial institutions below. You will most likely have to visit a physical branch location to apply. Some of them may require a personal checking account to be open with them. Depending on your existing relationship with the particular bank, they may or may not request last two years of personal tax returns. We recommend you choose a lender that you have an existing relationship with in order to make the process quick and seamless. Keep in mind the line of credit is based on your PERSONAL credit and has nothing to do with your business. Once you apply for this at your local branch at one of these banks, we ll show you how to use this credit line to transfer balances from your new business credit accounts: nes+of+credit/personal+lines+of+credit onal/loans/personal+loans+and+lines+of+credit/personal+loans+and+lines+of+credit Once your personal credit line is open, you can transfer the funds into a checking account with the same bank without paying any fees. It s as easy as transferring funds from your savings account to your checking account. Go ahead and transfer the full amount from the credit line to your checking account and then initiate a balance transfer from your business credit card to pay the personal credit line in full. You can repeat this process as many times as you want. Make sure you budget the time that it takes between the balance transfer request date and the time that it posts to your personal line of credit. We highly recommend you do NOT keep a balance on your personal line of credit or use the funds for an extended period of time because it does report to your personal credit profile and it WILL lower your FICO score. As long as you only use this new credit line as a transitional account, you should be fine.

12 12 Page 12. The real estate investor/ rehabber special: This one works best with business cards that offer 0% intro rate on PURCHASES. You use your new business card to purchase all you materials (Lowe s, Home Depot, Menards, etc...). You rehab the property and sell it. When you receive the check at closing, you DO NOT pay back the credit cards in a lump sum. You make the minimum payment. After all, you re not paying any interest for a specified amount of time anyways. In order to maximize the effectiveness of this strategy, you must make sure you have your next project lined up and ready to purchase as soon as you sell your first rehabbed property. You can do this over and over and make a game out of how many properties you can rehab and flip before your 0% intro rate expires! We do recommend that you pay the card in full at least once per year to show the Lender that your business does produce revolving income. This will cultivate your relationship with the Lender and set you up for credit line increases in the future. Lenders do not like it when you make only the minimum payment for an extended period of time. Extended period of time is defined as 12 months or more. We hope you have found this information both informative and helpful. Properly utilizing business credit cards can not only be one of the cheapest ways to access capital for your new or cash poor business but also a very smart way to build your business. The possibilities are endless. It may not provide you with all the funding you need but when properly acquired, the financing you obtain will almost certainly carry the very best terms available anywhere for your short term capital needs. If you or anyone you know is looking to start a business or grow an existing business it requires access to capital...simply put, you have to create debt in order to build or grow a business. JDB Financial specializes in helping business owners manage their existing debt and properly create new debt that will allow the business to grow and become more profitable. We help our clients separate their personal debts from their business debts. JDB Financial has acquired the knowledge of these strategies over the many years that we have been helping business owners obtain funding to start, grow and expand their business enterprises. We are constantly searching for methods to further educate and inform our Clients and Commercial Finance Agencies on How to Play the Money Game. If you have or come across any tactics that will help others liquidate credit into cash please share them with us. FOR MORE INFORMATION ON CASH CONVERSION OR TO SHARE YOUR STRATEGIES: ubloc@jdbfinancialllc.com

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