Low Interest Business Credit Cards

Wednesday, June 13, 2012 at 9:14pm by Site Administrator

Keeping Interest Rates Low on Your Business Card

As a business owner, every expense eats into your profit margin. Controlling interest rates and eliminating every expense possible will help put you in the black. If you use a business credit card for miscellaneous purchases and rewards, then you can benefit greatly from lowering that interest rate. Here is the information you need to earn a lower interest rate.

The Risk of Business Cards

Before taking out a business card, you should be aware of the laws regarding business credit cards. Card holders are not required to provide you with advance notice before increasing interest rates. Terms can change at any time, and you will not have the luxury of opting out by closing the account. Balance the risk by making sure you can pay the card off if necessary, and take steps to ensure that you are rewarded with low interest rates.

Your Credit Score Matters

If you are a small business owner, then your personal credit score will probably be used to determine your rate. Earn a lower rate by making sure you keep your credit score as high as possible. Make sure payments to all your credit cards and loans are made on time. Keep debt ratios low to show responsibility, and apply for a minimal amount of credit. Paying a personal card could be all it takes to prompt an interest rate hike on the business account.

Business Credit Reports

If your business has a credit report, then you should be prepared for that report to also be examined. Make sure payments are made on time, and pay a little extra when possible. Resist the urge to open multiple cards for introductory specials or temporary bonuses. The credit limit on every debt account you hold will be taken into account, and that can drive your interest rates higher. Taking out too many business accounts can make lenders nervous and result in higher rates on your existing accounts.

Credit Report Errors

Mistakes on your business or personal credit report can damage your rating and drive interest rates up. Examine your reports on a regular basis, and have any errors corrected as soon as possible. This process can take a little time, but it is worth the effort. It might even be worth the investment to have a credit monitoring service that will notify you immediately if any negative information is placed on your reports.

Payments and Usage

Most business credit cards have special default rates, and these can be as high as 29.99%. If you make a late payment on the card, miss a payment or exceed your credit line, then your interest rate can automatically increase to the default level. Avoid this problem by making all payments on time and paying a little more than the minimum. Prevent missed payments by enrolling in online banking and having the system send payments automatically. Know what your credit limit is and do not exceed that amount. Ideally, you should always have open credit on the card of at least 30% of the limit.

Credit card companies keep track of your credit usage. If you establish a pattern of charging a few thousand dollars a month, then suddenly charging 10,000 in a month can set off alarm bells with the lender. If they become concerned about the health of your business venture, then they could drastically increase interest rates to ensure that they get their money back. If your business changes and you will suddenly start charging more, you might want to talk to the credit card company to inform them of the change in needs.

Business credit cards can repay you with attractive rewards and a convenient line of credit. Rising interest rates will cut into your profit margin, but controlling rates and keeping them low will reward you. Help your business stay in the black by making payments on time, watching credit usage and keeping your credit score high.

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