More and more small businesses in Florida could start to see an increase in the amount of credit card offers received. Why? Because small businesses are excluded from the credit card reform legislature, which means that those cards can still carry high interest rates.
According to sources, these practices put small businesses in a tricky situation. Often times small business owners will rely on credit cards, especially for those that are either too new or even too small to qualify for a traditional loan from a bank. However, by accepting these enticing offers, owners put themselves in the situation of acquiring too much debt on too many different cards.
The debt on these cards can also build up quite rapidly as these credit cards traditionally have higher interest rates than those offered to the average consumer. When looking at some of the more common cards offered to businesses, the interest rates fall between close to 15 percent and almost 23 percent, which makes it hard to pay off anything other than the monthly interest rate.
One solution to too much debt being on too many cards is debt consolidation. By deciding to consolidate all of the debt through one lender, often times business owners are able to shop around to find the lowest interest rate offered and then pick that one lender to make one lump monthly payment through.
Of course debt consolidation is just one of the many debt relief solutions that are available to business owners, as sometimes filing for bankruptcy or a loan workout is the best option.
Source: Los Angeles Times, “Small businesses likely to see more credit card offers,” Cyndia Zwahlen, 24 Jan 2011