Not only Advantages has Disadvantages of Credit Card
Advantages and Benefits of Credit Cards

Business Credit Card Cons – Before rushing to apply for a business credit card, it’s important to consider these potential downsides:

Not only Advantages has Disadvantages of Credit Card

Security Issues: Security measures should be created to ensure that cards or card information is not stolen by employees, vendors, contractors and others who come through the office space. It’s also important to make sure that employees that are authorized to use the card do not use the cards for personal spending, and that they take precautions when making online transactions to avoid being hacked.

More Expensive: The convenience and ease of small business credit cards come at a price: They typically charge a much higher interest rate (1-3% over prime) than a small business loan or fixed line of credit offered by a bank. That interest can add up quickly if card activity is not repaid on time and in full each month. In addition, without a system to regularly and carefully monitor card usage it can be easy to accidentally overextend your firm financially by going over your firm’s credit limit or incurring late fees or penalties. (For more on this, read Six Major Credit Card Mistakes.)

Fluctuating Interest Rates: Unlike a loan or fixed line of credit, the company that issues your credit card can reset the interest rate on your credit card depending on how you use and manage your account.

Personal Legal Liability: Most small business credit cards require a personal-liability agreement (your personal security) to repay debt. This means that any late or nonpayment could result in a negative personal credit report and the inability to personally borrow money. You also may have to pay more with a higher interest rate.

Ensure Accountability – “The most important step a small business can take to make sure credit cards are used effectively is to set up a bomb-proof accountability system,” says John Burton, CEO of Moonshadow Learning Services, a leadership development company near Asheville, N.C. “This could mean everything from pre-approval of all credit card spending, to rigorous requiring of receipts, to pulling credit cards from those who do not report completely and on time with receipts,” says Burton.

No Comments

Leave a Reply

Your email address will not be published. Required fields are marked *

Experts give 12 tips for using credit cards to your advantage
Advantages and Benefits of Credit Cards
Does your company accept cards as a form of payment?

Advantages for companies accepting credit card In general, card sales bring benefits to companies of all sizes. However, companies with higher sales volume can benefit more, since this is the main criterion used by the accrediting companies in the formation of their prices… Related

Make Credit Card No Leave Home
Advantages and Benefits of Credit Cards
Top Benefits of Business Credit Cards

What Are the Advantages of Business Credit Cards? What They Are – Small business credit cards provide business owners with easy access to a revolving line of credit with a set credit limit in order to make purchases and withdraw cash. Like a consumer credit card, a small business credit …