Beware of Small Business Credit Cards with Personal Liability Clauses
Small business credit cards offer many small business owners loads of convenient and practical features that allow them to run their businesses more efficiently; which is why so many small business owners have flocked to small business credit cards over the last, few years.
You may think it is in your best interest to take out a small business credit card for your business, and that generally holds true, but there is an exception to this rule.
As more and more credit card companies put the brakes on consumer credit, there are a number of changes that have also taken place; in particular, there are many credit card companies that include personal liability clauses with their small business credit cards.
Personal Liability Clauses Increasing
A small business credit card that features a personal liability clause is something that you might want to steer clear of, mainly because it means that if you are unable to pay your credit card because your business didn’t succeed, you may be personally responsible for paying back that credit card debt.
In other words, the credit card company can come after you, the cardholder, to pay your business credit card. Most small business owners run their business so that the business’s assets and liabilities remain separate from their own, personal accounts. However, credit card companies, in an effort to recoup some of their losses due to the lousy credit market and equally lousy economy, have started attaching small business debt to the cardholders who own the businesses.
Your Small Business Card may be Linked to your Personal Assets
That essentially means that a creditor may now be able to come after your personal assets if you are unable to pay your small business debt.
Unfortunately, the new credit card legislation does not cover small businesses, leaving many small businesses on their own when it comes to fighting creditors.
It therefore pays to take the time to read the small print of your small business credit card. Ask questions if you don’t understand the card’s terms and conditions and, if the creditor has a personal liability clause in their card’s terms and conditions, consider looking for another small business credit card.
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