Business credit cards have their benefits, but it’s good to know their downsides as well.
When your company needs a little extra credit, it might be tempting to fill out one of those business credit card offers stuffed in your mailbox. Before you act, here are a few things you should know.
1. Small-business cards aren’t regulated by the 2009 Credit Card Accountability, Responsibility and Disclosure Act, which protects consumers from such practices as arbitrary interest-rate increases. The Pew Health Group warns that such an increase could amount to hundreds or thousands of dollars in extra costs for your business. Just check the fine print: Some issuers have voluntarily adopted these protections.
2. While consumers often look for cards with no annual fees, credit card expert Beverly Harzog of Credit.com says small-business customers should evaluate the full package of costs and benefits, which may include baggage insurance, concierge service, employee-expense tracking and even access to airline clubs. “If the card is offering you something you’d otherwise pay for or that’s worth it to you–like having a comfortable place for employees to work if they’re stuck in an airport for hours–then it may be worth it to choose that card,” she says, “even if it has an annual fee.”
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