Risks Businesses Take With Credit Cards

Borrowing, Business Loans & Lines of Credit, Credit Cards, Credit Rating


Many businesses make use of credit cards for daily purchases, and some new small business owners even finance their entire business on credit cards in the beginning. A business can make use of various reward points and other perks to save money and build up its credit score, but there are some downsides to using business credit, too. Just as with individual credit cards, there are risks. Here are a few things a business needs to be wary of.

Multiple employees can have credit cards connected to the same account, making it easy for businesses with several employees who need to make regular purchases. However, these employees can abuse their credit cards by using them for personal purchases. The business is responsible for these purchases, even if they did not authorize them.

If several employees make payments, interest and debt can run up quickly, especially if employees are making frivolous charges or buying expensive items. A business may find that it has little credit left after only a few years of opening the account.

There are also fewer protections on business credit card accounts. In 2009, the CARD Act was introduced. This laid out exactly what fees credit card companies could charge, and what had to be listed in the cardholder agreement. However, the act did not cover business credit cards, meaning that business owners need to read the terms of their contract carefully.

If you want more credit, check out MoneyTips’ list of credit card offers.



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