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A business credit card can be convenient for charging travel, office supplies and other expenses for your small business. But with a financial downturn, payments can be a struggle.
If you find it very difficult to pay the minimum, a program using a credit card can help you. Here’s what you need to know about this option if you have a small business credit card.
Credit card programs may offer payment assistance
Credit card programs help improve your financial life if you have problems with credit card payments.
These programs, offered by card issuers and banks, can make credit card debt more manageable. Depending on the terms of the program and your circumstances, credit card relaxation options may include:
Temporarily waives the fee.
Lowering the interest rate in the short term.
Decrease in monthly payment.
No late payments are reported to the credit bureau.
Suggestions will help prevent your account from being overdue.
In extreme situations such as a global pandemic like COVID-19, sophisticated credit card programs can go a step further. Instead of lowering your monthly payment, you can defer credit card payments.
Can you get a credit card for a business card?
Each card issuer has a different policy regarding difficulties. But the short answer is yes, you can get financial help for a business credit card.
Here is a list of some card issuers that currently offer credit card assistance to business and personal account holders:
If you are considering credit card assistance, be prepared to explain the details of your situation and why you cannot make regular payments. This can help the issuer of your card better understand what type of credit card assistance is appropriate.
Know what you agree to
Credit card programs can create some financial breathing space for your business. But make sure you know what the deal covers.
For example, the issuer of your card allows you to pay for the payment within six months. You do not have to make monthly minimums during this time and missed payments to credit bureaus are not reported.
This sounds good, but be sure to ask if there will be interest or fees on your balance during this time. In this case, your business may exit the credit card difficulty program due to more than before.
Next, ask how your payments will be restructured after the ban expires. Going forward, you can have a new higher monthly minimum payment to make up for the six months of payments you missed.
Also, be aware of whether the issuer of your card will allow you to keep your account active during times of difficulty. If your card is temporarily suspended, it will damage your ability to make new purchases for your business to cover costs.
If you need cash to keep your business afloat and your card is suspended, consider opening a new business credit card or applying for a business loan. But be careful: it can supplement your business’s debt, which can make it harder to get on your feet if you’re trying to give up a significant drop in sales.
Consider other ways to process business credit cards
If you have a hard time keeping up with business credit card payments, a credit card program can help, but it’s not the only option.
Transferring credit card debt to a card with the introduction of 0% per annum can help reduce payments and save on interest. You will need to spend time researching best small business credit cards to find out which one has the best promotional offer.
Applying for a business loan to consolidate credit cards is another option. Small business loans don’t usually offer introductory interest rates, but if you can’t find an offer to transfer your balance at 0%, this may be the next best solution.
When comparing business loans it is important to consider interest rates, fees and maturities to make sure payments are made. Failure to take out a loan for a business can damage your credit and potentially lead to other negative financial consequences such as litigation with the lender.
If after exploring these options your business is still struggling with debt, feel free to seek help. Get to Fr. nonprofit credit business consultant can help you look at the best credit management solutions during the financial crisis.
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