Freeing yourself from credit card debt

Over-using your business credit card is a common fault of many SME owners who find themselves in debt. Although credit cards offer a reasonable alternative to owners that can't secure other funding, the high interest rates and regular repayments make them a risky resource to turn to.

Freeing yourself from credit card debt while operating a business at the same time can be a difficult challenge for even the most savvy business owners.

Here are four tips that can help you pay off your accumulating debt.

  1. Stop using all credit cards. Even if you have only the one credit card that's in debt it's vital that you restrict yourself from using any cards you may have. It's easy to build debt on other cards while you aim to pay off the one in debt so it's a better idea to play it safe and avoid any future card use.
  2. Consolidate your debt. If you are juggling more than one card it's a good idea to transfer your debt over to a card with sensible interest rates. It's important to remember your main goal in this process; freeing yourself from debt, so try not to fall victim to a high interest rewards card.
  3. Outspend your minimum repayments. If you are trying to free yourself from debt that has been accumulated it's vital that you regularly exceed your minimum monthly repayments until the debt is gone. Approach your bank and try to organise a regular direct debit that fits within your weekly or monthly budget, that way you are guaranteed to make payments and avoid penalties in the process.
  4. Make debt repayments a priority. As a business owner it's likely that you have a monthly budget set aside for your expenses. If you are truly committed to the idea of freeing yourself from debt it's a good idea to remove any non-essential payments from your budget and focus on paying off your debt as a priority.

Growing interest rates and multiple credit cards can make accumulated debt crippling for small businesses. However, finding a solution can be as simple as finding a new card and following a stricter budget.

Although it's never easy to free yourself from debt, the solution can be simplified by ignoring future credit card use and allocating an extensive amount of your weekly budget to your credit card obligations.

Don't have a business credit card yet, but thinking about getting one? Here are some things to consider before applying for a business credit card.

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