Business credit cards are arguably better than a personal credit card, especially if you purchase a lot of items at a time. You can use them for earning rewards, and you can even avail a cash back from your purchases.
However, what you might not know is that business cards are not covered by a certain act called Credit CARD of 2009. According to Roisman, this act is mostly targeted for the benefit of personal credit card owners. Hence, carrying a business card might not be as beneficial as you think.
Hembree of Money Geek listed the hidden risks of carrying business credit cards that you might want to start paying attention to.
1. Higher interest rates
Compared to getting a personal credit card, business cards come with higher interest rates which will vary depending on your credit score. In addition to this, Federal Reserve has also increased the standard interest rate in 2016. As of now, interest rates have been ranging from 16% to 29%.
2. Overnight changes in terms
Did you know that your credit card issuer can modify your card’s terms of agreements any time with little to no notice? Although, this does not apply to your personal credit card but only to your business card.
3. Changing due dates
When it comes to your payment’s due date, your card issuer is allowed to change them at their own discretion. So make sure to always be up to date with your due dates or else, you might miss out on paying them.
4. More penalties
Card issuers impose a stricter penalty for business credit card holders. Even if you’re just a day late to your payment, they can instantly increase the interest rate of your outstanding balance. On the other hand, if you’re a credit card holder, you can still have a leeway of 60 days to pay.
5. Unpredictable rate increases
Card issuers can also change interest rates on your business card without notice. On the other hand, credit card issuers will usually give youa 45-day notice if they are going to increase their interest rates.
6. Liability for employee purchases
As a business owner, you will be liable for the purchases of the employees using your business card. That’s why it is advisable to impose rules and prohibitions for the use of the card. Otherwise, it can easily be taken advantage of.
While it may seem that carrying a personal credit card is much better, business credit cards still have useful purposes. For example, if you are buying in bulk for your office supplies, using a business card can allow you to have rewards and cashbacks. It is also a feasible business financing option since it is cheaper to loan through a business card if you pay on time.
At the end of the day, whether you are a personal or a business credit card holder, what’s most important is for you to pay your credit on time. Also, make sure to be mindful of your due dates to avoid penalties and interests.