A business Credit Card often comes with a varied set of benefits. While the freedom to make purchases on an interest-free credit is one of the primary perks of such a Credit Card, other benefits such as reward points, discounts and cashbacks act as the cherry on the top. Needless to say, a dedicated Credit Card for business can make it much more comfortable as well as efficient to run a business and manage its day-to-day expenses.
That said, failing to make the bill payments for a Business Credit Card, even if just by a day, can have some severe repercussions. This can happen if your cash flow is inconsistent, or if you have other payments that need your attention. However, it is in your best interest to pay the bills on time, and ensure that you save yourself and your enterprise from the below-mentioned consequences:
Usually, business Credit Card providers in India issue monthly account reports, which are then sent to commercial bureaus. This maintains a distinct business credit history as well as a personal one. However, if you are negligent with your bill payments, and defer them by 30 or 60 days, your Credit Card issuer may report your behaviour to consumer credit bureaus. This may adversely impact your personal credit score, and you may end up losing anywhere between 50-150 points. While you can still manage to improve your score within a few months’ time, the late payment will reflect in your repayments history for as long as seven years, which is not ideal, especially if you are looking forward to taking significant loans.
In the case of consumer Credit Cards, a hike in annual percentage rate (APR) as a result of late payments can only be levied if you are late by a minimum of 60 days. Besides, the card provider needs to send across a written notice, at least 45 days before increasing the rate.
Unfortunately, these rules don’t apply to Credit Cards for business, and the card provider is free to increase the APR to 29.99% or even more, which is more than double the average rate. Just one missed payment from your end could result in this disaster, leading you to bear the increased rate, sometimes even indefinitely. As is evident, this one mistake can lead to a blow on your finances, and hence must be avoided at all costs.
As is the case with the vast majority of Credit Cards, even business cards offer an interest-free grace period of 15 to 45 days, from the date of your purchase to the due date of your bill payment. A great way to enjoy this perk, month after month, is to pay your bill in full, every single time.
If, however, you miss a payment or choose to carry forward a balance, you may lose the grace period for a month or two at a stretch. This implies that the moment you carry out a transaction using your card, the interest on the balance amount will start accruing, thus leading you to pay a hefty sum at the end of the next billing cycle.
Being late on a Credit Card can cost you in many ways, of which late fee is one! In case you miss a payment by one or more days, the bank can charge you anything between Rs. 100 and Rs. 1,000. While this may not seem like a significant amount, when combined with the other consequences state above, it will result in a pinch to your finances. Hence, it is best that you pay your dues timely.
Now that you’re aware of the repercussions of missing a payment, we believe that you will try your level best to avoid such a situation. However, if you have already missed a payment, and are looking for some ways to minimise the impact, here’s what you can do:
Of course, you may have to face some consequences of delayed payments; however, you can save yourself from facing all of them, if you merely make an effort to clear your dues within 30 days from your due date. As a matter of fact, even if your Credit Card provider has shot up your APR, making consecutive payments on time in the months to follow might compel them to trust in your ability to repay the credit, and they may eventually reverse their decision.
Just in case, you won’t be able to make an actual payment anytime soon, and if your bank has already eliminated your grace period, it would be in your best interest to transfer the balance to a low-interest Credit Card.
If you have been solely dependent on your business Credit Card for dealings, it may be time for you to apply for a second Credit Card, preferably one with an introductory 0% APR, or at least a lower APR than your current card. If you enjoy an otherwise good credit history, you can expect a quick approval on your application, and will, therefore, have a better chance of recuperating from the mistake of paying your dues later than the due date.
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