Business Credit Cards Carry Hidden Risks

 Small business owners will find better protection, and often better rates, by using a personal, rather than small business credit card. Protections under the CARD Act of 2009 carry distinctions between the two. This probably explains the low take-up of small business cards while consumer cards flourish. The article recaps six risk factors between the two cards.

• Higher interest rates
• Potential to change terms overnight
• Due date changes by issuer
• More penalties
• Unpredictable rate increases
• Liability for employee purchases

Credit cards offer small businesses options for managing cashflow, but if a small business is between $1 million and $5 million in revenue, it might be a better option to have a dedicated consumer card.

Overview by Brian Riley, Director, Credit Advisory Service at Mercator Advisory Group

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