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Credit Cards

What happens if you can’t keep up with the payments?

The best way to use a small business secured credit card, especially if you have signed up for one in the hope of improving your credit score, is to never spend more than half your limit and pay the balance off in full each month. Over time this kind of behavior will lead to the fastest possible rise in your credit score.

Although you may start out this way the uncertainties of the business world mean you may sometimes have to carry over some of the balance for a longer period than you would ideally like. If you experience real difficulties, you may even find yourself unable to make the payments at all.

Even though you may hope and think that this will never happen to you, it is worth checking what procedures each card company puts in place for those who default as some are far more forgiving that others. If you think this may be even a remote possibility, choosing the right company can make the difference between trashing your credit score even further or surviving a shaky month or two with little to no negative impact.

If you miss your monthly payment you are likely to be charged a late fee. If you know in advance that your funds are going to be delayed, this fee can sometimes be waived if you call your creditor ahead of time and let them know there is a problem. This may also help avoid a black mark on your credit rating.

If a payment fails because there are insufficient funds in your bank account you will also be liable for a return check fee. Together, such fees can easily push you over your credit limit, especially if you have ended the month being previously close to it. If this happens you will then end up having to pay out once again, this time for an over limit fee which can be up to $40 at a time. If you think this is a possibility and have some spare cash available it may be worth making a deposit to ensure you can avoid this financial penalty.