Advantages and Disadvantages of Small Business Credit Cards

Elsewhere on this web site I have looked at using a credit card to build small business credit. So, building business credit where you have had a poor credit record, or you just want to establish your credit credentials in a new small business, can be an advantage of a business credit card.

The article below by David Hall looks at the advantages of having a business credit card if you have a small business. What, though, can be the disadvantages?

The disadvantages are not many, and it is likely, if you have your own business and especially if you travel, that a credit card may be an essential tool of your business. Here, though, are a few disadvantages that come to mind:

1. Interest rates on credit cards do tend to be higher than an ordinary business loan; at least, that is the case in the UK. So, you really do need to ensure you pay your bills on time each month, and do not start running up large late payment charges and allow your outstanding debt to increase. That would be a very bad start for a new business, would diminish business assets, and reduce your profits (or increase losses).

2. If the business credit card is for your use in your own small business, and you have had credit card problems in the past, it could become a temptation for you to use it on personal expenditure and allow yourself to fall back into bad old habits.

It really is quite difficult to think of any other disadvantages to using a small business credit card, but if you do misuse the card, it could be many years before you are in a position to get a new one. It really does need to be used with care and as a business tool, rather than a temptation into personal spending.

Small Business Credit Card Advantages

Obtaining a business credit card enables the small business owner to separate personal expenses from business expenses. Offering business credit cards to their employees eliminates the need for employees to use their personal credit cards or cash to make company purchases. Employees using a business credit card will not need to fill out expense statements, wait for approval and reimbursement from their company. Transactions are itemized and reported on quarterly statements that make it easy for management to make changes if needed. Business credit cards can be provided to the employees with preset spending limit and helps in controlling employee spending.

One of the main advantages of a business credit card is that it provides efficiency and control over company expenses by consolidating individual expenses. Instead of receiving a flood of invoices and expense statements, the company can receive one expense statement each quarter with itemized employee expense. Also business credit card companies can provide an itemized year-end statement with summary of all transactions. This enables the manager to track expenses very clearly and also simplifies the figuring out of the company tax return.

Business credit cards offer many benefits such as 0% intro APR on your balance transfers and purchases, cash back rewards on business purchases, business travel rewards, no annual fee, online account management and discount on everyday business purchases plus a host of other features and benefits. These bonuses and rewards can lower the company expenses and add up to a significant amount of savings for the company. An important feature of business credit card is the ability to build the company credit standing and receive incremental increases in credit line and cash flow over time.

With a business credit card, employees are less likely to make impulse purchase, because they are aware that the business credit card is company property and should not be used to make personal purchases. Avoid mismanagement of your business credit card by always making payment on time thus avoiding late fees and higher interest rate. Make sure you read and understand the terms of use of your small business credit card.

About The Author:

David Hall owner of the popular site http://www.iCreditOnline.com He has tools for finding a wide range of financial services including secured and unsecured cards, student and business cards, auto loans, and more from the most reputable companies in the industry. You can also compare multiple credit card offers, securely complete an online credit card application, and receive a credit decision in at least 60 seconds. Visit David's site today: http://www.iCreditOnline.com

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