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When you look at the balance on your business credit card, it can be tempting to just charge everything off and then pay nothing off. After all, if you only pay the minimum payment every month, it seems that you are making progress. However, this is not how your card plans operate. When you first obtain a business credit card, your company will usually have some sort of fee attached to it. You must read this carefully in order to avoid being surprised with additional payments when your company decides to change their rules.

Most business credit cards offer an introductory interest rate of anywhere from six months to about twelve months. This is where your business credit card begins its zero APR period. During this time, you will find that your interest rate is effectively four times what it was at the beginning. It can be tempting to just pay off as much of your debt as possible during this introductory period, but this can be financially disastrous. The reason for this is that your interest rate will return to normal rates after the introductory period is over. If you do not plan to keep your business credit card active, then it is a good idea to cancel it prior to the introductory period ends.

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As you would expect, this means that you need to calculate how much you need to pay off each month in order to keep your business credit card at an attractive rate. Many cardholders, who do not pay off enough of their outstanding balance, wind up in a worse position than when they started. Because cardholders with higher balances pay lower interest rates, this works against those with lower balances. They pay more interest because they carry a larger balance. This does not mean that you should not pay off your balance at all. Instead, use the extra money to reduce your monthly payment or increase the length of the introductory period.

Keep in mind that it will take quite a while before your business credit card balance decreases to zero. In fact, this may be faster than you anticipate because of the positive cash flow you will enjoy once you begin to pay off your balance on time each month. As you make progress, you will see your interest payments begin to decrease. This will put your business into a better financial situation.

Using your business credit card for purchases is a fine way to grow your business. However, if you do not carefully consider the expenses you should make each month, you could end up repaying a portion of your credit card debt instead of building your business. Therefore, be sure that you can afford the purchases you make. If you can not afford to pay cash for something each month, make the extra effort to find another way to finance the item.

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Finally, remember to pay off your balance as soon as you can. The longer you hold a charge card, the more of your hard-earned cash is available to be applied to your business. If you do not pay off your balance within the time frame specified on your promotional offer, your business credit card will negatively impact your credit rating and future credit offers.

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