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Beware of Small Business Credit Cards with Personal Liability Clauses

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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.

Beware of Credit Card Scammers Asking for your Security Code

Identity Theft

We all know to be aware of credit card scammers, but sometimes a new scam comes along that simply throws us for a loop – and scammers are counting on it.

Many of us already know that retailers are now using the security codes on the back our credit cards as a way to curb credit card fraud. For example, the last time you made a credit card purchase over the phone or online the retailer likely asked for your credit card’s three-digit security code, as well as the card’s number and expiration date.

This is done to prevent credit card thieves from placing unauthorized charges on your credit card account without your knowledge. In other words, having a credit card holder’s credit card numbers is now simply not enough for scammers; they must also have the card’s security code to break into your account.

The Newest Scam and how it Works

Credit card scammers have now found a new way to fool credit card customers into giving up their three-digit security code (surprise, surprise), so here’s what you need to know about this scam so it doesn’t happen to you.

The scam goes something like this: a credit card thief (who is already in possession of your credit card number) calls you, claiming to be from your credit card company; probably from the security or fraud division of your credit card company. The caller then recites your address to ensure that you are the cardholder, and lets you know that your card may have been stolen, or that unauthorized charges were placed on your account.

The caller then asks you to verify that you have the card in your possession. And, of course, the only way to do this is by reciting your security code to the caller. Bingo – you’ve just been scammed.

It is important to understand that, at no time, will your credit card company ask you to reveal any private information, including your security code. If you have any doubt about the legitimacy of a call, simply hang up and contact the credit card company directly.