Pros and cons of business with credit cards

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Credit Card Applications » Research » Guides » Cards for Business » Pros and cons of business with credit cards

Pros and cons of business with credit cards

The content is accurate at the time of publication and is subject to change.

There are several credit card companies that offer credit cards specifically to clients running their own small businesses. Business credit cards provide a lot of benefits to the card holders but there are some inherent problems associated with them as well. At the end of the day, it boils down to how these cards are used by the business owners.

Friendly payment schemes

Several credit card companies offer friendly payment schemes for the business credit cards. For example, if there is a massive expenditure you have to make for your business, you can separate it out from your outstanding balance. The card company helps you draft a separate payment plan for that debt while the rest of the card expenses can be normally taken care of by the card owner. This way, a single large expenditure will not affect your credit history and payments or attract penalties.

Add on cards

If you have a small business with a few employees, you can use the option of taking addon credit cards that you can give out to your employees. There are two benefits of doing so. Firstly, the expenses made by the employees will let you get additional reward points that can be redeemed through your card. Secondly you can use this as a mode of payment of salaries to your employees.

Special monthly expenditure reports

Business credit cards will provide you a chance to overview the overall income and expenditure related to your business through the elaborate monthly expenses report. This will give you a very good idea of where you have spent most of your money. This will also allow you to spot wastage and reduce your expenses over a period of time. This detailed monthly expenditure report can be a good way of auditing or tracking your income and expenditure. It makes things much easier for you compared to cash expenses which are always harder to track down.

Card debt and interest

The card debt that is available to you based on your credit limit can work both ways when you are doing business. The credit card can be used to make all payments, so that you need to transfer cash from your savings account after a month or sometimes even more time after the actual expense. However, there is always the risk of paying exorbitant interest rates, sometimes even more than the loan interests that banks charge.

Disclaimer: This editorial content is not provided or commissioned by the credit card issuer(s). Opinions expressed here are the author's alone, not those of the credit card issuer(s), and have not been reviewed, approved or otherwise endorsed by the credit card issuer(s). Reasonable efforts are made to present accurate information, however all information is presented without warranty. Consult a card's issuing bank for the terms & conditions.
All rates and fees, and other terms and conditions of the products mentioned in this article/post are actual as of the last update date but are subject to change. See the current products' Terms & Conditions on the issuing banks' websites.
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