credit cards

New law doesn't help business credit cards

In addition, blending personal and business purchases on a consumer credit card can create accounting issues. "If you keep all your business purchases on one card, you likely can deduct the interest and the fees for that card," says Detweiler. "Once you start commingling personal purchases, any accountant will tell you it gets pretty hard to distinguish how much of the balance is due to personal purchases and how much is due to business purchases."

The business debt would also show up on your personal credit report, and the surge in debt could lower your credit scores. An important factor in FICO scores is the usage of available credit on revolving accounts. Increasing this ratio will cause your score to drop.

Unless an account is delinquent, small-business cards don't usually appear on personal credit reports. There is an exception to that: Capital One-issued cards. Capital One spokeswoman Pam Girardo says that the bank recently began reporting small-business loan information to business and consumer credit bureaus.

Business card accounts that show up on personal credit reports get treated like personal debt in terms of the credit score.

What to do

Make sure to open all communications from the business credit card issuer so that you can make adjustments for account changes.

Have a back-up plan, suggests Detweiler. She says this might include having a personal card with no balance on it, to which you could transfer a balance, or a personal loan.

Some purchases shouldn't be funded by a small-business credit card, says Bob Seiwert, senior vice president at the American Bankers Association Center for Commercial Lending and Business Banking. "If you're buying a piece of equipment, and you can't pay that off within the normal billing period, you shouldn't be financing that piece of equipment with a business credit card. You should go to your bank and get a term loan for it."

For additional information, read the new series of white papers on small business borrowing and banking from the American Bankers Association.

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