How a Rewards Card Can Help Your Small Business Through Hard Times

Smiling restaurant owner standing at kitchen counter

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As the coronavirus pandemic continues to impact the global economy, many small businesses have had to scale back, furlough employees or close shop for good. Understanding the tough decisions business owners are confronting during this time, some banks are offering small business credit card holders benefits like waived interest and late fees on payments in addition to existing perks like earning bonus points on various purchases.

Taking advantage of these perks and breaks can help you maximize your small business rewards card's earning potential and hopefully make it easier to keep your business going. Here's how to do it.

Types of Small Business Rewards Credit Card Relief Being Offered

Many small businesses operate on thin margins, and may have a harder time sustaining themselves for an extended period of time when customers are not spending money. They may not be able to get out of certain fixed expenses to lessen their own financial burden quickly, either. As a result, some credit card issuers, including American Express, Bank of America and Chase are offering their business customers options for financial relief until they can resume their normal payments on time.

To be clear, almost all of these relief measures are being extended to business owners on a case-by-case basis and you need to request this help directly from your bank. Do not just assume you can skip a payment and take advantage of these offers. If you think you will have issues paying your balance as agreed, call your financial institution as soon as possible. You might discover that they are offering some of the following courtesies.

  1. Waived minimum payments: During normal times, most credit cards require you to pay a minimum amount each month based on your interest rate and current balance. Although larger credit card payments help to minimize your interest charges, paying the minimum amount will at least keep your account in good standing and prevent delinquencies. Carrying a high balance can hurt your business credit score over time, but its impact won't be nearly as much as missing a payment would be. For the moment, your bank may allow you to skip making even the minimum payment for a few months if you request it. If you're granted this financial relief, it may help you get your finances in order and keep your business open.
  2. Waived late fees: When you are unable to pay even the minimum amount required before your statement due date, a credit card issuer typically charges you a late fee. For the time being, several major credit card issuers in the U.S. will consider waiving these fees for small business credit card holders who need the help.
  3. Waived interest: Under certain circumstances, your bank may also waive the interest on your balance for up to three months until you can begin paying it off. This is a useful tool for immediate relief, but don't count on this for too long since your bank will eventually resume interest charges.
  4. Deferred payments: Certain issuers, such as Chase, have posted online forms where both personal and business credit card holders can enroll for deferred payments for up to three months. You might not be deemed eligible, but it is an option that may be worth pursuing. Just note that you will eventually have to pay off your balances in full (including the deferred amount), so this is not a way of getting out of paying for good.
  5. Lower interest rates and minimum payments: If you can't get your bank to waive your interest altogether, you might have success negotiating a lower interest rate if you temporarily need to carry a balance. You might also be able to negotiate a lower minimum payment simply by asking, as well. If these options would help you, call your bank and ask what choices are available to you and how many months you can expect them to remain in place.
    If you take advantage of any of these options, be prepared to accept certain conditions from your bank in return. Your issuer might let you stop paying your credit card temporarily or lower the interest rate on your balances, but it also might require you to stop using your card until you begin making payments again, or freeze your linked rewards points account. Be sure you understand the conditions of any aid you are requesting before you accept the help.

Ongoing Benefits for Small Business Credit Cards

In addition to those coronavirus-related efforts, many business credit cards also offer customers perks to help them maximize their spending and earning. Here are some of the most important to be aware of.

  1. Welcome bonuses: If you recently applied for a business credit card, or are using this time as a chance to launch your own new enterprise and need a business credit card to help you do so, it pays to take advantage of the introductory offers currently available. What's more, some issuers are allowing folks who recently applied for certain credit cards six months rather than the usual three to meet the spending requirements for earning a welcome offer.

    For instance, the Chase Ink Business Preferred® credit card usually offers new cardholders up to 100,000 Ultimate Rewards points after making $15,000 in eligible purchases within 3 months. However, Chase has extended the spending window to 6 months for some recent applicants who were approved in January, February or March of 2020. Ultimate Rewards points transfer to over a dozen travel partners including airlines and hotels, so they can come in handy for when you are able to travel again.

  2. 0% Intro APR offers: Like some consumer credit cards, certain small business credit cards offer new members 0% APR (annual percentage rate) interest on purchases and balance transfers for a limited period of time. For example, both the Blue Business® Plus Credit Card from American Express and the Blue Business Cash™ Card from American Express are currently offering new cardholders 0% introductory APR on purchases for 12 months from the date of account opening. After that, the APRs become a variable rate of 13.24 to 19.24%. Not paying interest on balances for a year can be a savvy way to leverage your credit, but remember you will eventually have to pay off your balance. If you carry your balance past the end of your 0% APR intro period, you'll start incurring much higher interest rates. Terms apply.
  3. Category bonuses: Many rewards credit cards, both business and personal, earn extra points or miles on a variety of purchases. If you are still buying things for your business, make sure you're using a card that earns you multiple rewards points per dollar spent. The American Express® Business Gold Card, for instance, earns 4 Membership Rewards points per dollar automatically on the two categories where you do most of your spending each month. This rate can be earned on the first $150,000 in combined purchases in the two categories each calendar year (spending categories include U.S. shipping and U.S. purchases from select technology companies and restaurants). Terms apply. The Chase Ink Business Preferred® credit card, meanwhile, earns 3 Ultimate Rewards points per dollar on the first $150,000 spent in combined purchases on travel, shipping, internet, cable and phone services, and on advertising with social media sites and search engines each account year.

Why You Should Use Your Business Credit Card

If you need to make large purchases for work, using your business credit card is also a good way to separate your professional expenses from your personal ones. It also helps to prevent your business credit from affecting your personal credit report. One factor that determines your personal credit score is how much of your overall line of credit you are using, and driving up your personal balances to cover business expenses can quickly make a difference in your scores. Payment history, including whether you make late payments, is another significant factor.

Using your business credit line for purchases can usually keep these factors from affecting your personal credit report. But keep in mind that you can still be held personally responsible for paying off your business credit cards, so this is not an excuse to spend irresponsibly or rack up a lot of credit card debt without severe consequences.

Things to Keep in Mind for Maximizing Your Business Rewards Card

Business credit cards offer several advantages that personal ones do not, and that might be worth taking advantage of during this difficult time. Using them for large, work-related expenses can keep this activity off your personal credit report and leave your personal credit score untouched. Some business credit cards also offer lucrative sign-up bonuses, everyday earning opportunities, and money-saving statement credits towards the types of purchases that small businesses tend to make.

At the moment, some credit card issuers are also offering temporary relief measures to help business owners make it through this stressful period. Depending on your card, your bank and your history as a customer, you might be eligible for offers such as temporarily deferred payments, or waived interest or late fees. If you are a small business owner in a tough situation, contact your credit card issuer, ask what options are available to you, and do not be afraid to take advantage of any that seem worth it and that you can handle responsibly.

All information about Chase Ink Business Preferred®, Blue Business® Plus Credit Card, Blue Business Cash™ Card from American Express, American Express® Business Gold Card, and Business Platinum Card® has been collected independently by Experian and has not been reviewed or provided by the card issuer.