If you are a small business owner, you may have run into problems when it comes to financing. But you don’t have to face financing woes alone, try a business credit card. These cards are different from traditional unsecured credit cards and offer business owners extra perks, but recent legislation that protects unsecured credit cards does not apply to business credit cards.
Business credit cards are not covered under the Credit CARD Act of 2009 or the Truth in Lending Act, this means that business credit cards have not been regulated in the same manner that traditional credit cards have. This is important to note, because this means that the credit card issuers can increase charges on already existing balances, send bills at different times of the month, and shorten the time between bill payments, which are forbidden with unsecured credit cards.
Under the CARD Act, consumers with unsecured credit cards have a slight degree of protection from increases in rates. The act requires that credit card issuers give consumers 45 days notice prior to increasing their rate. And even when the rate increases, all extra charges will be applied to future balances, not the existing balance. While business credit cards are not required to comply with the CARD Act, a few of them do such as some offered by Bank of America and American Express. Read the fine print to know exactly how your business credit card handles rate increases.
Keeping this in mind, business credit cards
do offer some perks. First, it becomes easier to separate personal expenses from business expenses, which is very helpful for entrepreneurs and bookkeeping. Also, these cards are more likely to offer accommodating payment options for business owners, in addition to spending tracking capabilities and larger lines of credit. There are also business rewards cards, which offer business-targeted rewards, such as points or cash-back on office supplies and cleaning equipment. Other cards offer special rewards in the form of accounting services and detailed billing.
Some business credit cards also come with introductory or promotional rates where interest is low or sometimes non-existent for a certain number of months, not to exceed 24 months. Be careful, because after these rates expire consumers may be subject to painfully high interest rates that could make running a business near impossible.
A business credit card is drastically different from a traditional unsecured credit card, but if you have a business there could be some benefits to owning one of these credit cards, as it could help finance your small business.