Conquer credit card debt rebuild profits
Credit cards certainly are handy financial tools. It’s so simple to pull out a credit card from your wallet and pay expenses on the go. Credit is handy for one-time and recurring business expenses, also. Financing purchases with a credit card is simpler than taking out a loan. Plus, plastic is easier to track than cash payments. Businesses like the convenience of plastic – along with its special perks like miles, points, and cashback. Companies that pay the full balance of their credit cards every month have a convenient and effective way to pay their bills. These organizations avoid costly interest and penalties often associated with credit cards. Whenever possible, businesses should pay off their balance in full, or at the very least, pay more than the minimum due. However, sometimes paying more than the minimum just isn’t possible. That’s when credit card debt mounts and profitability suffers.
Eliminate Mountains of Credit Card Debt
Credit cards often carry double-digit interest rates. Paying interest on credit cards significantly raises the true price of the goods and services purchased. High-interest rates and low minimum payments are a recipe for accruing debt. If balances are high, paying off credit card debt can take years, even decades, to accomplish. Eliminating the mountain of credit card debt will help an organization prosper.
The first step to reducing credit card debt is to get a handle on your finances. Answer these four questions:
- How many credit cards is the company using?
- How much does the company owe on each account?
- What is the interest rate associated with each card?
- What are the repayment terms, including deadlines?
Create a Credit Card Repayment Plan
Next, create a repayment plan. Use a credit card payoff calculator like this
https://www.bankrate.com/calculators/credit-cards/credit-card-payoff-calculator.aspx to help you determine the total amount of principal and interest you would repay.
Input these three numbers into the credit card payoff calculator:
- Credit card balance
- Interest rate
- Payment per month that you can afford or the time in which you want the debt to be paid in full
By inputting different amounts and time frames, you can experiment with different scenarios until you determine a reasonable strategy. Use the results to set an achievable timeline and method to pay off the credit card debt.
Prioritize Repayment & Consolidate Debt
Furthermore, consider paying off the credit card with the highest interest rate first. This is your most expensive debt, and the payoff will result in nice cost savings. Also, consider consolidating debt to a credit card or a lender offering the lowest interest rate. You’ll avoid the higher interest rates and have just one payment to make every month, which makes life so much simpler.
Seek Advice from Finance Experts
Companies that are facing a mountain of credit card debt can benefit by contacting a credit counseling or debt settlement organization. Contact the local chamber of commerce, economic development organization, or technical college for free business finance resources. Also, contact our team at Prosperity Bookkeeping. We help business owners become good financial stewards. We have the tools and expertise to help you reach your business goals while ensuring your business stays financially healthy. Tell us your bookkeeping story to get started. https://docs.google.com/forms/d/e/1FAIpQLSeT8EX1dxXQOMZFniiPkzAbIpxJJ4-acSbiSZ8A0VJ_8z-4rg/viewform