Can a business credit card help your company?Monday, June 04, 2012 at 5:59:10 PM
If you own a small business and are looking at ways to expand your operations in one way or another, you may have considered the benefits that a credit card would provide for your company.
There are many reasons a small business owner might want to get a credit card for their company, including the added flexibility it gives to them as they attempt to become a larger and more successful venture. In fact, some studies have even shown that having access to credit cards gives small businesses a greater chance to hire more employees that they otherwise might not have had.
So when you're looking at a number of credit card offers as a means of increasing the size of your business, there are a few things you'll need to keep in mind:
The rules are different for business cards
If you're accustomed to dealing with credit cards for consumers, you're probably used to a number of protections provided to you by federal law. The Credit Card Accountability, Responsibility and Disclosure Act of 2009 gave consumers a number of protections, but
did not extend them to cards for businesses. For this reason, you might not be able to receive as much information about your changes to your account going forward as you may be used to.
Further, this increases the necessity for
carefully reviewing a large number of credit card applications prior to deciding on one to make sure that all aspects of the account you end up getting work best for you and your company.
Everything is bigger
Lenders know that companies, no matter what their size, have greater needs than normal people might, and for this reason, many small business credit cards come with larger credit limits. This can be helpful in keeping your company afloat as you try to expand, but at the same time, it can also lead to more credit card debt, which you'll have to be prepared for going forward.
Along similar lines, and related to the point about different rules, is that interest rates on business credit cards are typically a bit higher than you might be used to for consumer accounts. For this reason, you will need to be aware of and prepare for the added charges you'll face for carrying a balance from one month to the next.