Defaulting on a Business Credit Card

Like a personal credit card, business cards allow you to make charges on behalf of your business during times when cash isn't flowing as freely as you'd like. It also offers rewards programs for business owners, including discounts on office supplies and services. But if you default on a business credit card you can still experience some of the same issues as a personal card.

What Is Default?

In most cases, a default on a credit card is a failure to make full payment on the account within a certain period of time. When you miss the payment due date on a business credit card, the creditor may take adverse action against the account though the account might not be placed in default status immediately. In some cases the credit card company may not start taking action until the account is more than 30 days overdue. At 60 to 90 days overdue, an unpaid account commonly falls into default status.

Higher Rates

One of the potential effects of defaulting on a business credit card is a higher interest rate. When the account hits default status, you could lose any special introductory rates and standard rates could rise as well --- sometimes as high as two and three times the original level. You could also lose access to business rewards points accumulated on the account.

Negative Information on Business Report

Another result of defaulting on a business credit card is that the creditor may report the data to a business credit reporting agency, like Equifax Business or Dun & Bradstreet. When business credit reporting bureaus receive information about a default on the card, it could lower your business credit score (which usually ranges from about 0 to 100) and decrease the chance of getting more commercial credit in the future.

What About Your Personal Credit Report?

In the past, information about business credit cards were only reported to business credit reporting agencies. But according to a 2009 BusinessWeek article, reporting to personal credit reports is more common. The final decision on this matter rests in the hands of each individual lender or creditor.