Credit Cards for Small Business

There are two types of cards that can be used for businesses; debit cards and credit cards. Debit cards are attached to your bank account and they take out money that you already have in the account. Credit cards can be used as a kind of loan to withdraw money that may be needed immediately to pay for goods. If you are sensible with money, or your business is doing well, then having credit cards for small business may be a good idea. However, it is important to ensure you stay within the limits of your paying ability, otherwise you may find yourself with spiraling debt that you cannot afford to repay. Credit cards for small business are preferable to a secured bank loan as the money is made available and is not tied to your home or any other assets associated with the business.

The different kinds of credit cards
The financial companies all want to get their hands on your money and as such they offer enticements. These can vary from company to company and may include such things as air miles, minimum monthly repayment or interest-free transfer in period. Some credit card companies allow the cards to be issued to employees to allow them to use for expenses when entertaining clients. If you choose a credit card for this purpose you must ensure you cap the limit, otherwise you could find yourself with a huge bill at the end of the month that you weren’t expecting.

Transfer your balance for free credit
Some credit cards offer a free balance transfer that allows you to transfer the balances of other credit cards to them. More often than not this will include a period of time where you will not have to pay an interest on the balance of the credit card. This can sometimes be 6 months or more in some cases. This can help a small business to get on top of its finances more quickly. Some credit cards will charge an annual fee for the use of the credit cards, although not all do this, so check around.

In addition, some credit card companies will charge a reduced rate of interest by way of an introductory rate. This will usually be limited to around 3 months at which point you will be liable for paying the full amount of interest on the balance of the credit card. If you can manage to pay off the credit card in full each month then you will save a huge amount of interest. The longer there is a balance on the credit card, the more interest is accrued on the remaining balance, and the longer it will take to pay off.

Protection from fraud
An additional benefit of credit cards for small business is the protection from fraud element. Most credit card companies have realized that identity fraud is a growing concern and many people and businesses have suffered at the hand of fraudsters. This is all changing and credit card companies are becoming more amenable and helpful in the prevention of fraud and putting more security checks are in place. If someone is able to obtain a credit card by using your details then they are more unlikely to pay and, as it has your name on it, the debt will be secured to you.

This means your credit history may be adversely affected. You will probably not even know this until the next time you try to get credit. However, with more complex security checks being administered by credit card companies, it is becoming more difficult for identity thieves to operate in this way. Many credit cards have purchase protection to, so if someone uses your credit card details to buy something and you are unaware of it then you are not held liable to pay for it.