How to Manage Your Business Credit Card Debt

Starting or expanding a business usually involves debt.  You expect it and you plan for it. If your business takes off like you hope, then that debt was a smart investment in your future.

For many small businesses and new businesses, the business credit card is the easiest way to purchase what you need to operate.  In that sense, the business credit card is like the line of credit that banks give to larger business customers.

Applying for a business credit card online is the fastest way to get approved and start buying what you need for work.  Just like a personal credit card, a business credit card can become a debt trap if you fail to use it responsibly.

You can start to appreciate the credit card company’s problem when you bill your customers and the payments arrive late - or not at all. If you notice a chronic late payment problem, you may need to change the payment due date on your business credit card so that you aren’t getting hit with so many late fees.

Your business credit card also comes with cash advance perks. Think of it as a privilege – it’s like a signature loan on demand. When you need cash for the business, you can take out money as a cash advance.

Do this only when needed and not routinely. Those $100 or $300 cash advances add up fast and are slapped with high credit card interest rates. With some business cards, the rate for cash advances is higher than the rate on the balance charged.

Don’t use cash advances as a substitute for petty cash.  The cost of using this money is definitely not petty.  Make sure all of your basic bills are covered each month. You can set up free online bill payment from your business credit card to various vendors.

Instead of writing a series of checks for payment, you write just one check at the end of the month. That’s easier for you. The record of the bill payments is available from your online statement to view at any time.

Every business experiences fluctuations. Some are seasonal and predictable.  Others are sudden and part of an overall economic downturn. You have to stay current on all debts to protect yourself during those lower-earning times.

That’s when you really need good credit and possibly cash advances to keep going.  If you’ve used credit wisely and not overspent or been tagged with late payment fees, then you have room to use your business credit card during the leaner times.

As you use your business credit card and establish a solid history of on-time payments and staying within your limits, you’re building a good credit rating. That credit rating becomes one of your most valuable business assets as you seek to grow or expand to capture your share of the marketplace.