A credit card is a convenient way for your business to rapidly grow the business by increasing or even completely eliminating the expenses and overhead associated with capital equipment or payroll. This type of business credit is also known as a capital line. This card enables you to make purchases on a collateral basis in the areas you have capitalized on and then pay off all of these capital accounts at the end of the year. This way, you do not have to worry about the loss that comes with buying a stock line for your business but rather instead you can simply write ‘Appreciation’ on the line and enjoy the benefits of receiving payments on the monthly basis. The downside is that for many credit card companies and corporations, the increase in capital expenses can be very short-lasting, so for the majority of small business owners, this option may be only a thought. What other solutions do you have for consolidating your credit card debt?
Keep in mind that not all lenders will offer you this type of option, but for a vast majority of small businesses, consolidating your debt or obtaining a consolidation loan can be a win-win situation. One small business credit card that is specifically designed to help with your small business credit card debt consolidation won’t make it worth your while to transfer a large amount of your existing credit card debt from your existing credit cards. If this is your situation, then do not be discouraged by the availability of a small business credit card – start trying to consolidate now!
Do not assume that all credit card companies are offering consolidation services. Certain credit card companies and organizations also offer rewards programs and low or no set rates of interest on their credit card debt consolidation offerings. However, those are just recommendations; do not treat a credit card with suspicion. Yes, online services that allow you to take your existing credit card debt as an extension of a rewards program are a great option for small businesses. Even if your business has completely lost its way using your credit card, it’s still a step in the right direction.
When you consolidate your credit card debts, you are not just consolidating credit card expenses into one low or standard rate of interest. You are also consolidating credit card benefits into one low or standard rate of interest. Before initiating this process, you should make sure that you’re thinking of consolidating credit card expenses into one specific low or standard rate of interest, and then stop. For example, you may decide that not applying for a low or standard rate of credit card after the consolidation process has ended is a good idea and consolidate your credit card debt into a zero interest credit card. However, do not turn your personal credit card debt into a credit card for your business. There are limits as to how much such credit card debt can grow and multiply at any one time. The majority of small businesses, especially those that are starting out from scratch, usually do not realize that they can use cash flow from your existing credit cards to supplement their existing income stream without leaving you heavily dependent upon your credit card to pay for those capital accounts.
Unfortunately, there are also fees associated with consolidation procedures and credits found in many of the small business credit card offers. For those that may not be aware of these fees and what they are, here is a list of some of the more typical fees:
1) Annual fees: Many small business credit card issuers require an annual fee to initiate the process of converting a balance from your existing credit card to a new credit card. Do keep in mind that these fees are only charged if you initiate the process of converting the balance to a new card for free; they often do not have annual fees or may only apply to just about 1% of issuers.
2) Rewards points: These are typically limited to a specific kind of purchase. For example, airline rewards may only be available on certain purchases made by the employee with the account at the business. The minimum percentage must also be listed on the card or, in some cases, at the end of the introductory offer, under the heading “Rewards Bonus.” No magic rewards are made; only cash rewards often are.
3) Annual fees: While credit card issuers generally charge an annual fee for the points program, some credit card companies waive the annual fee in certain circumstances. This is usually for exceptional circumstances, for example, medical emergencies, or for making purchases while traveling. Be sure to read your statement carefully, though, to learn if the annual fee is a fee or not.
4) Rewards points reward: Some companies also offer new rewards points points that can be transferred to the new card and then an added bonus to that card from the new card after the introductory offer is over. If the points that you earn are in any way related to the card new rewards, then it is not in the offer. Thus cash reward is not considered on the new card.