Is a Business Credit Card Right for you?
Most small business owners agree that having access to credit is essential for the smooth operation of their business. Credit cards can play a very important role when it comes to managing a small business, and can provide business owners with the resources necessary to keep the business running when cash is tight.
Small Business Card vs. Consumer Credit Card
However, it is important for business owners to understand that small business credit cards were not included in the credit CARD Act; this means that, as a small business owner, you may not have the protection that has been granted to consumer credit customers.
In other words, you may be personally responsible for any debt incurred through your business, even though it is for business purposes. As such, it may make more sense to simply carry a personal credit card for business purchases that you may not be able to pay back immediately. As a consumer, you will have protection through the CARD Act; as a business owner with a business card you will not.
Some of the protection offered for consumer credit cards under the CARD Act include: the credit card company cannot increase the interest rate on existing balances and cannot activate a penalty APR unless the credit card customer is at least 60 days delinquent. But many of the credit card companies, such as Capital One, JP Morgan Chase and Bank of America, need not adhere to these guidelines when it comes to business credit cards.
Business Credit Card Advantages
With that in mind, there are many advantages to owning a business credit card if you are a small business owner. For example, you can set individual credit limits for key employees and more easily track expenses In addition, business credit cards often come with higher credit limits than consumer credit cards and are much easier to handle when multiple people are using the same account.
In the end, your decision to use either a consumer credit card or a business credit card will depend on your business’ financial needs, so weigh your options
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