Important Points About Business Credit Cards

It is true that using credit cards for business brings many advantages especially for new or start-up businesses. First, it is a great tool to build your business credit history with. Second, it enables the business owner to separate business from personal finances. In addition, special features and functions that only business credit cards offer can help an entrepreneur in managing business finances more easily.Nevertheless, the risk of bad credit looms for those who cannot manage their accounts correctly.  Based upon experiences, some business owners found themselves stuck in bad debt as a result of poor credit card management. How can this be avoided? Let’s discuss some important pointers for business credit card holders:Can you pay on time?It is easy to charge purchases on your account or pay your bills with your business credit cards without really considering the real implications of your actions. Unfortunately, it is also easy for credit card debt to accumulate because of the high interest rate and penalty charges. If a business owner isn’t careful about using a business credit card in financing the company, the situation can become complicated.For this reason, business credit card holders are advised to use their credit lines with extreme caution. Before charging an expenditure to your credit card, plan your repayment ahead and seriously think about the possible consequences of not being able to pay off your charges.Take accountability!Do not think that just because you are using a credit card for business, you will be free from personal liability. The personal liability involved may have lessened but how you handle your debt and repayment can also affect your personal credit history. Furthermore, keep in mind that your business and personal credit can affect your business loan prospects. Many banks and lenders do check personal and business credit history when evaluating business loan applications.Pay in full each month.Although you have the option to defer your payments, it is not recommended. Do not forget that business credit cards come with interest rate so the longer you delay your payment, the more debts you incur.The best way to manage business credit card debt is to pay monthly charges in full. In addition, do not wait until your due date before submitting your payment. IF you can, pay off your complete debt in advance to avoid interest rate costs and protect your business credit as well.Watch out for changes in terms.Unlike personal credit cards, business credit cards are not covered by the provisions of the Credit CARD Act. Therefore, you might be subjected to sudden rate increases or changes in terms, depending on your chosen credit card company. In this case, you’ll have to be alert for such changes so you can speak the matter with your credit card company right away.Do not hesitate to ask for a lower rate or to ask your issuer to retain your present rate especially if you have a clean record as a business credit cardholder. Keep in mind that if you will not speak up, no issuer will volunteer to give you the rate that you truly deserve.