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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.

Have you Considered a Small Business Credit Card?

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We all know that credit cards play an important role in our day-to-day living. It should therefore come as no shock that small businesses rely heavily on credit from time to time.

Bridge the Income Gap

Many small businesses use small business credit cards to bridge the gap between income and expenses. A revolving line of credit is important for many small businesses or start-up businesses, as this enables the company to continue operating the business, even when cash flow is an issue.

Search for a Low, Fixed Interest Rate

Small business cards are similar to traditional credit cards, as the credit card balances are subject to interest charges; therefore, it is extremely important for small business owners to shop around and find a small business credit card with a low, fixed interest rate.

Take Advantage of Online Tools

Small business credit cards may also prove useful to small business owners who want to track their weekly, monthly and yearly spending. Most small business credit cards offer a myriad of online tools to help small business owners track expenses. In addition, year-end account summaries are also very useful, as they enable small business owners to see the overall picture regarding their yearly expenditures.

Protect yourself Against Credit Card Theft

Like traditional credit cards, small business credit cards feature protection against fraud or credit card theft, as well. For many small business owners, the ability to check the account online is important, as they can monitor the account on a weekly – or even daily – basis to ensure that there are no unapproved charges on the card.

Include Additional, Authorized Users to the Account

Small business owners can also add certain employees to the account, thereby enabling them to purchase supplies when needed. And, because all expenses are tracked and accounted for, the small business owner does not need to worry about frivolous expenditures. For many small business owners that rely on employees to make purchases and order supplies, this account feature may prove extremely beneficial.

Keep Business and Personal Expenses Separate

For many small business owners, it may prove useful to separate business expenses from personal expenses, so it may be a good idea for small business owners to obtain a small business credit card and use it solely for business expenditures, thereby eliminating the problem of confusing bookkeeping.