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3 Factors that Affect Business Credit Card Rates

 

Business credit cards work like normal cards. It has its own credit limit and a minimum payment that needs to be settled every month. There are basically three factors affecting the interest rates of most business credit cards namely debt to income ratio, credit rating, repayment and payment history. Credit rates are usually connected with the United States Prime Rate. This is the national rate or the standard value mandated by the FRB or Federal Reserve Board. A credit card interest rate is computed towards the end of a certain billing period. Rates can vary from one company to another. If you manage to maintain a good financial reputation for your business, your credit card interest rates are definitely going to be lower, but if you do not maintain a good standing, the interest rates can go higher.

1. Credit History

Whether you are running a small or huge business, credit card companies will always look into your company's financial reports and probably your very own credit history as well. The better and higher your credit scores are, the better your chances of getting affordable interest rates from these financial institutions. If you are in the habit of paying late even when it comes to your business's bills, then expect higher interest rates. Many small medium entrepreneurs and business owners are advised to take credit management seminars to discover more about the effects of debts into their credit card interest rates. Most banks and financial institutions are often not very strict when it comes to imposing rates on clients because as long as you pay your monthly minimums on time, these banks wouldn't think twice of lowering your current rates.

2. Debt to Income Ratio

In a bad economy, many credit card companies will impose increasing interest rates on their cardholders. Many of these creditors even stricter when it comes to new applications. An applicant's financial capabilities are now being greatly considered before even handing over that card. If you think that your business is suffering from occasional late payments or may have accounts that were already sent to collections, then it is high time that you contact a debt settlement company. This will not only help you cut the cost of your interest rates, but will also make lenders accept lower pay offs.

3. Repayment & Payment History

Many consumers are attracted to credit cards because they can defer payments upon purchase. Credit card interest rates are the keys in managing your debts. Late and nonpayment records have a huge impact on your credit history. You can ask your present creditors or banks to lower your interest rates in order for you to pay off your balances. There are some banks that are amenable to such requests. Lenders usually give lower interest rates to individuals or businesses that make their payments on time. The best option you have is paying your outstanding balance in full. Take some time to analyze your business cost so that you can decrease spending for items which are not really necessary.

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