Bad small business credit card management

Bad small business credit card management is becoming more and more common. And it may go from bad to worse as more small business owners charge business and personal expenses. In fact, banks have become more lenient in giving out credit cards, even to people with bad credit. That’s because people who manage their credit poorly tend to max out cards, carry a balance, end up with financing fees, and put up with high interest rates. However, as I mentioned in my previous posts on new business line of credit options, using credit cards for general small business cash flow management is a bad idea.

Of course, a small business credit card can come in handy for charging meals and entertainment, travel expenses and other items. It allows you to delay payment during the grace period. Depending on the credit card you choose, it may allow you to benefit from loyalty programs, rebates, extended warranties, car insurance and other perks. Your credit card might even offer a special low interest rate for new balance transfers or new accounts.

However, just as with a line of credit for your new business, you should shop around for a credit card. Check with various lenders to see who offers the best rates, longest grace periods, fewest penalties and most rewards. If you already have cards, contact your lenders and ask if you can get a better rate. It never hurts to ask. But, more importantly, make sure you know how to use credit for your small business. Review the Federal Trade Commission’s guidelines for choosing and using credit cards.

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