Have Consumers Finally Beat the Recession?

May 19, 2014
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According to recent data from the Federal Reserve, consumer borrowing rose from $13 billion in February to $17.5 billion in March. This increase is the highest reported in one month since borrowing grew by $19.3 billion in February 2013.

According to the Federal Reserve, credit card borrowing increased $1.1 billion in March, after a $2.7 billion drop in February. Student loan and auto loan borrowing also increased $16.4 billion in March. The Fed reports that total consumer borrowing in March was estimated at $3.14 trillion.

These are snapshots of a greater trend of Americans increasing their borrowing behaviors over the past year. Banks are showing more of a willingness to give loans to deserving consumers, as job growth and stock-market gains have emboldened consumers to borrow. Non-revolving debt, which includes auto purchases and college tuition, increased $16.4 billion.

In March, auto sales increased from 15.3 million to 16.33 million, the fastest increase since May 2007 according to the Ward’s Automotive Group. The Federal government has also increased its educational loans by $2.6 billion.

Although consumer confidence is growing, domestic banks cite an increase in competition for easing terms and standards on industrial and commercial loans. On bank competition, the Fed said, “smaller numbers of banks also attributed their easing to a more favorable or less uncertain economic outlook and increased tolerance for risk.”

Economists see an increase in consumer borrowing as a sign that consumers have started to believe in the economy again. But they warn that an increase in debt is only a short term solution to long term economic woes. “We are just adding more debt to the balance sheets of American households,” Jay Morelock, an economist with FTN Financial, said to Bloomberg Businessweek. “What would be great is an increase of well-paying jobs that make consumers more credit-worthy.”

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Having a merchant account allows an account holder to take advantage of merchant cash advances. When a merchant is approved for an advance, the business agrees to receive a lump sum of cash in exchange for an agreed-upon percentage of future credit card sales.

Pricing varies depending on the merchant’s industry, past credit card processing history, the type of business seeking the account, average ticket sales, and average transaction volumes.

Yes, EMB works with merchants who are building their credit, as well as those who have poor credit. EMB also approves merchants that have no credit card processing history and businesses that have lost their merchant accounts due to high chargebacks.

Several factors influence a merchant’s risk level. Though only one factor likely will not get a merchant classified as high risk, a combination of these may: business size, location, and industry, credit score, credit card processing history, a industry’s reputation for excessive chargebacks, a prior history of high chargeback ratios, and whether a merchant exclusively sells online.

Virtual terminals are stationed on a merchant’s website, making it easy for customers to make a payment or purchase online. Merchants or a payment processor can easily set up virtual terminals, so online businesses can accept credit and debit card and e-check transactions.

A merchant account is a business account with an acquiring bank. Without this business account, which actually works more like a line of credit, a merchant cannot accept and process credit and debit card transactions. Businesses need a merchant account to accept major credit cards via a static point-of-sale terminal, mobile card reader, or through a virtual payment gateway.

After filling out EMB’s simple online application and submitting any necessary, requested documents, many merchants get approved within 24 and 48 hours.

EMB specializes in working with high-risk merchants. EMB works with many merchants, including but not limited to businesses in these industries: gambling and gaming, adult entertainment, nutraceuticals, vaping and e-cigarettes, electronics, tech support, travel, high-end furniture, weight loss programs, calling cards, e-books and software, and telecommunications.

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