Mydad had mentioned a news article story a month ago about some company charging a whole bunch of people $.01 each on their credit cards; presumably with the thought that no one would complain about a $.01 charge, and since they charged a million people or something, they made a bunch of money.

It seems to me that the credit card companies should simply remove those charges automatically, once the fraud is discovered, but Citibank Business (AKA worse service than Citibank Personal) didn't, and I had to call to get it removed.

I was also calling to close the account anyway, since they lowered my credit limit recently.  Their reason was because I wasn't using the card very much, and so didn't think I wanted the credit limit (which I do, since occasionally I buy a server, etc.)  But, there isn't anything they can do.

Citibank Personal (a completely different company) said they would be happy to issue me a second credit card that I can use for my business, and they'll even let me pick a rewards option (which are harder to come by with business cards).

So, I applied for a second card, but in the meantime, (re)discovered that I already have two other business credit cards that I can start using as my main cards.

Too bad for Citibank Business - They always tell me on the personal side what a great customer I am (I put everything on the personal credit card for the last thirteen years, and their service is great, so I won't be leaving them anytime soon) - but, the computer tells them I can't have more than a $2000 credit limit for the business card.

American Express thought that reasoning was pretty odd, and said the only reason they would lower my credit limit (currently $7000, and can be increased if I wanted to) is if I don't pay the bills, etc.

Citibank has a self-fulfilling prophecy - they said I wasn't using the card as much, and they are correct - no more use from me...

Posted by Jon Daley on January 26, 2009, 3:55 pm | Read 62735 times
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We've also had credit cards cancel and/or lower our credit limit for no reason other than that we weren't charging enough. Must be a "you're not doing your part to stimulate the economy" penalty. :)

There is a legitimate reason for a $0.01 charge -- companies sometimes use that to make sure the card is legitimate. But it's supposed to be temporary and disappear before you have to pay it.

Posted by SursumCorda on January 30, 2009, 12:56 pm

This reminded me about Citizen's Bank, which says they don't have a minimum balance for their bank accounts, but they actually require $0.01 in every account, otherwise, they are automatically closed.

An account manager called me shortly after I had created an account with him, and left a message saying that I had to deposit some money into the account, otherwise it would be closed. I asked what balance was required, and he said that there wasn't a minimum. Eventually, he agreed that really, it should be called a one penny minimum balance. So, (after we got home from Switzerland, and had our account closed) I brought two pennies into the bank, and filled out the two deposit slips (for the savings and checking accounts) and handed them to the lady. She laughed, but said she knew why I was doing it. An awful lot of paperwork for something so silly.

Lime Daley is not immune from this, and we had a customer who overpaid by $.56 by rounding to the nearest dollar to save time writing on the check (which I do too - I had never considered the havoc it would wreak on certain financial systems). On the next invoice, Heather asked him to subtract the $.56 from the current invoice, and so he responded by rounding down to the nearest dollar, thus causing him to owe us an extra $.44 the next time around. Heather tried putting it on the invoice for a while, but he never paid it, so then she created a "petty cash" category for Lime Daley, and paid the left over from there. However, we don't really have a cash container for Lime Daley, and it would probably more confusing for us on the cash end, trying to keep cash separate. So, we have to do business equity/owner draws in order to switch cash to and from the personal and business sides of the accounting.

In the process of doing this year's taxes (and with the upcoming audit of our unpaid Pittsburgh back taxes) we organized our things a little better - we hadn't understood how the owner draw stuff worked when we first started, we switched from Microsoft Money to GnuCash at one point, and separated the business and personal books into separate files at one point, and so there were various shortcuts using fake accounts and things to make the double-accounting work out.

But, as of last night (and ten hours later) our books are all properly accounted for on both sides for the last 6 years, and using Gnucash's relatively new "close books" feature, a bunch of reports and charts that it knows how to generate now make sense. We lose the ability to run multi-year reports without some hand-editing, but current year reports work wonderfully, and last year reports (prior to finishing our taxes, when we'll close last year's books) work very nicely as well.

Heather wondered how people do it - ie. when they start a business, do they go and take an accounting course, or have someone else tell them how to do it, etc. because it is really hard to switch once you have started something.

Our current issues are related to our misunderstanding of accounting and software processes.

One that won't ever be solved is that we started out using cash accounting, which makes the most sense for small businesses, I think - if you have a dollar in your pocket then you pay taxes on it, if you haven't received it, you don't pay taxes. No weird games or anything.

GnuCash wants to use accrual accounting, which allows you to play strange games (that most (all?) businesses do with writing checks at certain times, having strict deadlines about not accepting money requests or payments close to the end of the month or year, etc.

Since Gnucash wants to do accrual accounting, it would be easier if that is what we did, and we now understand it more, so it wouldn't be that bad - and you don't have to play games in order to use that method, it just makes it easier for strange things to happen, and more annoying things if you have invoiced someone for something, and they don't pay it for a long time, particularly if it is a large amount, because you have to pay taxes on it as soon as you invoice it.

But, according to the IRS's estimates, it takes 45 hours to read and fill out the paperwork to switch to accounting methods; we are quite unlikely to spend that much time just to do a trivial switch like that (since we don't carry any inventory and have various times during the year when we have no outstanding invoices or bills, it would be easy from a non-IRS perspective to switch - almost no effort at all, in fact).

So, we'll just continue our current mode, which is to not bill anyone in December who won't be likely to pay in December, so then Gnucash is happy, and reports correctly, even though it is using accrual accounting.

Posted by jondaley on January 31, 2009, 4:10 pm

Don't take the IRS estimates too seriously -- I don't think they've ever been right, though I can't remember if they were high or low.

Janet was the one who took accounting as a fun, different course -- I wonder if she is going to end up needing to design costumes? ;)

Posted by SursumCorda on January 31, 2009, 8:21 pm

Haha! I did have to do some work on the costumes for the Baroque dance performance, but don't suppose that counts. Accounting can be confusing, but that's because people just made up rules for reasons you're not entirely sure of, so it is different from pure math in that respect. I can deal with it, but it means you have to remember more and can't solve all the problems with just your smarts. I'm not so sure it will be easy to trick your financial program with the cash/accrual game, but I hope it works out for you.

Posted by IrishOboe on February 1, 2009, 9:06 am

The "trick" is that if we have an invoice that is posted in December that is not paid until January, I re-post it for January. That is what I did last year. This year, we gave our previously-December-billed customers a month grace period and billed them in January instead.

Posted by joyful on February 1, 2009, 5:31 pm
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