Thousands of businesses a small business credit card in order to help boost their company’s finance options; unfortunately it isn’t all plain sailing. Sometimes these credit cards go wrong and when it goes wrong, it goes horribly wrong. However, they aren’t always bad, not when you use them correctly and approach them with a bit of careful thinking.
The following are a few reasons for and against credit card financing.
There Are Savings to Be Had
The biggest reason why many should consider using credit card financing is down to the fact that there are plenty of savings available. Really there are lots of savings because every time a purchase is made, the card holder can receive rewards in some way. Some credit cards can offer cash back while others offer points but all of these things can add up. This could actually help you to free up a great deal of cash later down the line.
Technically in the US credit card rewards are non-taxable income. Now this is the case when you earn cash back and such rewards. This is not only good for you but can be really useful for the entire company. However, when it comes to air miles, things get a little clouded. Putting that to one side if you were to choose a credit card with cash back you could have great price reduction at the end of the year which could give you a big break.
Creating More History for You
When you take out a credit card you are technically aiming to build up some good credit history and that is a big reason to use a small business credit card. They can be a fantastic way to help establish some form of credit and build on your history too. If you make all payments on time then you can increase your score and later potentially even get a higher limit card.
More Interest to Pay
One of the biggest arguments against using a small business credit card has to be the interest. Now as most will know when you have a credit card you have to pay interest and it’s the same with a small business card too. There is going to be a lot of interest to be repaid and unless you pay off the entire balance at once you end up paying a few hundred dollars each year just in interest alone. This is quite bad especially when you don’t have a great deal of money to play with.
Less Protection for Small Business Cards
The CARD Act of 2009 was brought into place to help protect customers and consumers however they are not really designed to protect a small business owner. The reason why is simply because small business credit cards have been excluded somewhat from the CARD Act and that can be devastating. That is why today it is even more important to take the time to carefully go over every little detail associated with the credit card. Always read the fine print.
There Is More Liability Put On You
Businesses who give their employees the chance to be put on the credit card is quite risky. As most will know people tend to spend before they think and could end up potentially charge a lot of money. However at the end of the day you are the one who is responsible for the repayments and even though they charged it, you are still held accountable.