Credit Cards Going Small

With growth in the consumer credit card business beginning to slow, many credit card companies are beginning to pay attention to small business owners.

According to an article in the Chicago Tribune, credit card companies are aggressively pushing small business credit cards.

Many small businesses make due with the use of personal credit cards, which isn’t always the ideal solution to the needs of a business. Having a dedicated small business credit card can simplify the record keeping and expense reporting without blurring the line between personal and business expenditures.

In addition, having a business credit card is nice if you have more than one employee as it is more convenient to provide a separate card for any employee that will need to have purchasing power.

While this may sound attractive if you own your own business, don’t rush out and start signing up for new business credit cards. The first step is honestly evaluating how you handle your personal levels of debt. If you are struggling to stay current on your personal credit cards, you may want to focus on cleaning that up before you extend the business with an additional line of credit.

According to the National Small Business Association, 71 percent of small business owners are carrying a monthly balance. Depending on the type of expense and the interest rates on the card, it may make more sense to obtain a traditional loan as opposed to using credit.

Many of the big names in the credit industry, such as American Express, Discover and Chase, are offering special cards tailored to the small business owner. In most cases, these credit cards carry rewards programs like many standard credit cards although some of the rewards programs are more specific to business owners.

For example, American Express has a program that provides an automatic discount at specific merchants such as Kinko’s. Discover introduced a card that permits cardholders to write a special check that is considered to be a credit card transaction, which allows a business owner to pay for goods or services that may not accept credit card payments.

If you are a small business owner, take some time to review the small business credit cards that are available and select one that best suits your needs as a business.

You may also like...

6 Responses

  1. This is yet another way that financial institutions make money. Obviously a credit card will be useful for most businesses since every place has emergencies at one time or another.

    Whenever there are special perks for cards though you should look for the annual fee or higher interest rate (even with good credit)

    • mnc says:

      You’re right that many rewards cards come with higher interest rates and/or annual fees. For that reason, you will receive the best benefit from a rewards card if you do not carry a balance from month to month.

      FWIW, I refuse to carry a credit card that charges an annual fee regardless of the reward.

      • The question here is of course, why?

        • mnc says:

          Mark, sorry but to what aspect are you asking why?

          • About the card with an annual fee with no reward. I haven’t seen anything that sets those cards apart from the no annual fee cards except maybe a smaller interest rate sometimes.

          • mnc says:

            Mark, I believe the cards that carry an annual fee but do not offer any type of reward are often targeted towards those with less than stellar credit.

            Without a quality credit score, your options are limited as to the type of cards that you will be approved. Often times you will see the cards willing to approve people with a spotty credit history have an annual fee.

            Does that make sense?

Leave a Reply

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