At the end of each billing cycle, you’ll be asked to make at least a minimum payment by a certain date. The way credit card companies structure these payments can vary, so you should refer to the terms and conditions before you apply. For example, the company may ask you to pay the greater of a small percentage of the balance (perhaps 2%) or a low dollar amount. This will be based on the previous balance as shown on the statement, less any payments or credits made and any new purchases, cash advances, finance charges, or fees.
Note that companies may charge a different APR (annual percentage rate) for cash advances than for new purchases, which may affect the balance and, thereby, the minimum payment. If you make a payment in excess of the minimum required, this will be first allocated to a balance with the highest APR. Remember that if you pay the new balance in full by the due date, you will not incur any finance charges.
Business credit card companies use the periodic rate when calculating interest. This is the annual interest rate divided by the number of periods, typically monthly or quarterly. The company may also apply the periodic rate to the average daily balance over the accounting period to calculate the finance charge amount.
These cards may not need to conform with the Credit Card Accountability Responsibility Disclosure Act of 2009 (CARD Act). This legislation was put in place to protect consumers against unfair practices in this industry, but some card providers may choose to comply with some of the laws. These laws may affect how much the company can charge if you pay the bill late, and may give you a choice of whether to accept a pending interest rate or opt out.
Estimate your credit card payments using the Lendzero Business Credit Card Payment Calculator.
