Credit Policy for businesses and how to extend credit and manage credit risk

In the May issue of Consumer Reports under the Viewpoint column where they give the consumers perspective I found a great little "letter" that could be from any one of our banks. I wanted to share this with you since it is so true and if you are more aware of how credit cards and their banks work, you can protect your business and make better credit card decisions.

"Dear Credit card user,

You owe us money.  We can raise your interest rate just because we feel like it. We can do this even if you have always paid us on time and your credit is still good.

We gave you a 0% interest rate to entice you to transfer a balance to us.  Now that you have, we can raise your rate from 0 to our standard rate or even higher, to our default rate, if you pay us late or go over your credit limit just one time.

You may have to get your payment to us 20 days from when we mail you the bill.  Mail delays in either direction are your problem.  If your payment is late even once, we can boost your interest rate to as high as 29.99%.

And you out there on the West Coast:  Your electronic payment is late if you set it up after 2 p.m. Pacific time on the date that it is due.

Sincerely,

Your bank"

Special.