How To Use (& How To Avoid Using) Business Credit During The Coronavirus Pandemic

Just like any point in recent history, credit cards are and will continue to be a useful tool for businesses — even though we have the COVID-19 coronavirus looming over our heads. However, credit cards can also still be costly and harmful when used wrong. Plus, many businesses are seeing financial struggles in the pandemic’s fallout. As such, it’s crucial for you to understand how to use credit cards smartly for your business.

That’s why we’ve written this guide — find out below how you can use credit cards to help your business weather the storm created by the coronavirus pandemic.

Utilize Mobile Apps

With social distancing recommended for the general public, going into physical banks to discuss your credit card may not be the best option. Even though you may not be a high-risk candidate for the coronavirus, the disease can still spread asymptomatically, meaning that it is in everyone’s best interests to limit in-person contact as much as possible.

As such, you’ll want to take advantage of other tools provided by your card issuer. While many issuers have customer service available over the phone, customers have been experiencing longer-than-usual wait times — sometimes up to three hours. With this in mind, managing your credit card account via an app or online may be your best bet. A number of the major credit card issuers offer Android and iOS apps for account management:

• American Express
• Bank of America
• Capital One
• Chase
• Citi
• Discover
• U.S. Bank

Look Into 0% APR Credit Cards

Some credit cards offer 0% interest (also known as “APR” in the credit card world) for the first few months after you sign up for the card. If you apply and are approved for such a card, you’ll be able to carry a balance for several months without worrying about paying interest. That could be helpful if the coronavirus is impacting your current cash flow — but you believe you’ll start picking up more business in a few months.

Here are a few of our favorite business credit cards with 0% APR introductory periods:

• American Express Blue Business Plus: 0% APR on purchases and balance transfers for your first 12 months
• Chase Ink Business Unlimited: 0% APR on purchases for your first 12 months
• Capital One Spark Cash Select: 0% APR on purchases for your first nine months

Which of the above cards works best for your business may come down to each card’s rewards scheme. Amex’s Blue Business Plus nets two points per dollar on the first $50,000 spent each year (and one point per dollar thereafter). For both Chase’s Ink Business Unlimited and Capital One’s Spark Cash Select, you’ll receive a simple and unlimited 1.5% cash back across all purchases.

For a more in-depth look at 0% intro rate credit cards, check out Merchant Maverick’s article.

Consider Requesting A Credit Line Increase

If you find yourself bumping up close to your credit card’s credit limit because of extra charges and cash flow problems due to the coronavirus, you may be able to request that your line be increased. Increasing your credit line will enable you to put more charges on your balance as well as potentially lower your credit utilization ratio (essentially the amount of debt you owe versus the amount of your credit limit).

Some issuers, such as Citi, have actively advised customers that credit line increases are an option during the pandemic crisis. For many issuers, you can request a credit line increase without calling or speaking to someone in person. Instead, apps and websites can process credit line increase requests — saving you time and limiting the strain on customer service lines.

A word of warning, however. Just because you receive a credit line increase doesn’t mean you should then go and max out your credit card. Doing so can negatively impact your credit utilization ratio — a statistic that plays a role in your credit score. Instead, make sure you still exercise smart spending habits and only spend extra when absolutely necessary.

Explain Your Struggles To Your Issuer

At this time, many credit card issuers are focused on working with customers impacted financially by the coronavirus. By contacting your issuer and explaining the problems you might be having with paying your bill, you may be able to receive some sort of relief.

Some issuers, such as American Express, have been granting cardholders interest-free periods, bonus points, and more. Others, such as the Apple Card (issued in conjunction by Apple and Goldman Sachs), have allowed customers to skip a payment period without incurring interest or late fees.

Merchant Maverick has previously detailed what a number of different issuers are doing to help financially-strapped customers during the coronavirus’s impact.

Keep Making Payments

If your issuer won’t extend payment deadlines, and you are unable to pay your credit card bill in full, making sure you at least make the minimum payment due is still helpful. When making the minimum payment, you will be charged interest on your remaining balance. However, you will also avoid costly late fees — as well as potentially harming your credit score.

Use Your Card Responsibly

If your business has no cash reserves, it may be enticing to start overloading your credit cards with expenses. However, putting charges on your card today that you won’t be able to pay off in a month, six months, or even a year could put you in a world of hurt.

Besides potentially being hit with late fees and interest on unpaid charges, failing to pay your bill on time can damage your credit. Having a healthy credit history could be important down the line — your credit can affect your ability to apply for loans and credit cards as well as impact your insurance rates and more.

Consider Other Financing Options

So instead of maxing out your business’s credit cards, turning to a different financing source could work for your business. Some businesses may find success by applying for a line of credit. You may also find financial assistance with SBA disaster loans or emergency business loans.

Regardless of how you handle your credit card during this tumultuous time, know that you are not alone. Small businesses in these cities have started support groups to help their communities (you may be able to find something similar close to you):

• Asheville, North Carolina
• Louisville, Kentucky
• Seattle, Oregon

We at Merchant Maverick have also been working to create helpful resources; you can find more of what we’ve written at our coronavirus hub. The CDC also has useful information on its website.