business credit cards
Credit card hawkers inceasingly eager to get smaller business accounts
Small business owners spent more than $4.7 trillion last year,
according to a Visa report. Just a tiny portion, a little over $300
billion, was on credit cards.
The credit card companies don’t like those numbers. They want a bigger
piece of the pie - maybe even the whole pie.
By Jennifer Heldt Powell/ Small Business Matters found at http://business.bostonherald.com
Friday, February 2, 2007 - Updated: 12:11 AM EST
That’s potentially good news for small businesses. There’s a host of new cards and services designed to catch their eye.
Getting a credit card is probably the fastest and easiest way to get your hands on some extra money. It can be a smart financial move - or a really big mistake.
Having a dedicated credit card can help you separate your business from your personal finances, which is crucial, said Jack Calkins, chairman of the Boston chapter of SCORE, counselors to America’s small businesses. And if you pick the right card, you can get bonuses.
Some of the cards offer discounts or cash back. Others offer rewards such as airline miles. The big companies have also added or improved special online services that can help you track spending and compile records for tax time. You can pay some of your bills with credit cards, which helps in monitoring how much is going out.
Using a credit card can be more efficient than cash or checks, said Raghav Lal, Visa’s senior vice president for small business products. You can get a monthly statement of your expenditures and a handy reference list come tax time.
“You have better cash-flow management,” he said.
The problem is that entrepreneurs often operate close to the edge and they tend to be eternal optimists, convinced that the next big paycheck is just around the corner, said Gene Fairbrother, lead small business consultant for the National Association for the Self Employed. Entrepreneurs using credit cards for their business have to keep an eye not only on their balances, but also on the interest rates they are being charged.
“You have to be very, very careful in business that you control the use of that money, because it can get very, very expensive,” Fairbrother said.
If you’re concerned about your willpower, you might want to consider a debit card, which will take money directly from your checking account. Many now come with the same benefits and protections of credit cards.
If you need to use a credit card for a short-term loan, be aware of the costs, Calkins advises. You should know how much you will pay in interest and you should have a plan to pay it off.
You might be better off getting a loan from a bank or other lender, even if it’s a little more complicated.
“Using a credit card is no different than going to a bank and getting a loan,” Fairbrother said. “But if you go to a bank, they will make sure you have a way to pay it back.”
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“There’s so much inventory out there that the buyer can pick and choose,” said Susan Sirles Fidler, a Realtor at Re/Max 10, Oak Lawn. But she cautioned, “The stuff that’s almost free is almost free because it’s going to cost you an arm and a leg to put it back together. It’s not buyer beware as much as buyer be smart.”
