Business Credit Cards: How to Use Them Well

The credit card reform law that went into effect this year shields consumers from such card-issuer practices as large jumps in fees and interest rates. But the new law applies only to credit cards issued to individuals, not to small businesses.

Consequently, small-business owners are more likely than ever to be pursued by credit card issuers.

Be wary of the offers, because a small business is vulnerable to interest rate fluctuation, especially if you miss a payment. Higher penalty rates are imposed for small-business cards than are legally permitted for regular consumers.

If you carry a credit card balance for business purchases, opt for using a card issued to you personally. Interest rates are generally 2% lower than for a card issued to the business.

You’ll need a business card if you must delegate one to an employee. To protect yourself, make sure these cards are paid in full each billing cycle. More important, never make a late payment.

Having a business credit card makes sense only when you always pay on time and don’t carry a balance. This allows you to capture the rewards of a cash-back card without incurring any costly downside.

Paying for products and materials with a reward card can put significant sums of cash into the company of a savvy business owner. Just be careful to avoid the catch of high fees and interest rates.

Card issuers are trying to capture these from small businesses now that ordinary consumers are insulated from such practices.