4 Steps to Overcome Business Credit Card Debt

Business credit card debt can be as detrimental to a company’s finances as readily as it is for personal debt. The company's bottom line can suffer and debt can restrict growth and ultimately alter financial dreams. When business credit card debt is high, a company’s financial future and credit rating can suffer.

Getting out of business credit card debt is possible, but it often demands an effective strategy and discipline. There are a number of steps that help a company get out of business credit card debt. The process to effectively get out of debt is time consuming, but it can pay off with a solid financial record.

Step 1 – Assess All Business Credit Card Debt

Before trying to eliminate debt, it is important to fully assess the company's financial situation. To do this, examine credit card statements and outstanding balances. Also review minimum payment requirements for each account.  Keep in mind the payment terms and rates for each account. Also, look at available cash to make payments on credit cards and leverage as much as possible for this goal without cutting into vital operational expenses.

Step 2 – Target A Single Card

Once the overall picture is clear, pick the highest rate/lowest balance to pay off first. Target the card with overpayments.  Make sure all other cards have at least their minimum payments met so that you don't fall behind.  The idea is to pay as much as possible each month on a single card until the balance is paid in full. Targeting the lowest balance card first simply makes it more efficient to finalize the first pay off before moving on to the next card.

Step 3 – Rinse And Repeat

Once you have eradicated the debt of one card, move on to the next card in the line. Again, pick the highest rate and lowest balance card and pay it off as quickly as possible.  As the payoff process moves forward, larger payments will become available to pay off larger balance cards more quickly. As business credit card debt is handled, a company’s credit standing is likely to improve in the process.

Step 4 – Reassess Business Credit Card Needs

It is important to regularly assess business credit card needs to avoid the same problems from occurring again and again. Be sure to carefully review your financial standing and pay your card balances as quickly as possible.  Close accounts that are not necessary and take steps to avoid overuse of cards in the future.

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