Why You Can’t Afford to Pay Your Business Credit Card Late. Using a business credit card can make it easier to run your business and get rewards and perks along the way. But if you miss a payment by as little as one day, your card could become a thorn in your side overnight. So, if your cash flow is intermittent and you’re considering prioritizing other payments first, think again.
4 negative consequences of paying your business credit card late
Four things can happen if you make a late payment on your business credit card. While you can avoid some of them, others could cost you now and in the long run.
1. It could harm your personal credit
Most business credit card issuers don’t report your account activity to the consumer credit bureaus. But if you’re delinquent on your payments — typically 30 or 60 days late — some will report that information on your personal credit report.
Your payment history is the most important factor in your FICO credit score. Having a late payment could drop your score significantly, even if your credit history is otherwise spotless. What’s more, that late payment will stay on your credit reports for seven years.
2. You could get hit with a penalty APR
Many business credit cards have a penalty APR, which can be 29.99% or more. For consumer credit cards, the Credit CARD Act of 2009 requires card issuers to wait until you’re 60 days late, plus they need to give you written notice 45 days before the rate increase.
But the law doesn’t apply to business credit cards, so you may trigger a penalty APR with just one missed payment. And depending on the card you have, it could remain on your account indefinitely.
3. You may lose your grace period
Most business credit cards offer a grace period of 20 to 25 days between your statement date and your due date. If you pay your balance in full during this time, you won’t have to pay any interest on the debt you incurred.
But if you miss a payment or carry a balance, you could lose that benefit for that month plus the next one. This means that interest will start accruing on your purchases immediately. Combined with a penalty APR, losing your grace period could be devastating, especially if you have a large balance.
4. You’ll be charged a late payment fee
Even if you’re just a few hours late on your payment, your card issuer will assess a late payment fee on your account.
The actual fee will depend on the card issuer and your late balance, but the fee can be as high as $39 with some major banks.