credit cards

Tips for small-business credit card users

Small-business credit cards can be vital to your company's success, but without a clear-cut map, they can also steer you in the wrong direction. Many small businesses lean too heavily on their small-business credit card, which ultimately leads to failure. According to the Kauffman Firm Survey, for every $1,000 in small-business credit card debt, the probability of failure increases by 2.2 percent. To maximize your chances of success, consider these small-business credit card tips.

Tip No. 1: Can you afford it?

It's easy to hope your business will be able to pay the credit card bill in full each month, but it's a lot harder when you didn't account for a couple of off months. Small-business owners often overlook the reality of their situation, and spend more than they ever make. Just because it's plastic doesn't mean you won't have to replace it with paper eventually. Make a habit of spending only what you have in the bank. Hold off on all unnecessary purchases. Small-business credit cards are a great way to manage cash flow, but be 99.9 percent sure you can afford it.

Tip No. 2: Would you personally buy it?

In a small-business situation, you may be less attached to the money or credit card than if it was your personal account. It's important to think of the credit card as your personal liability, because it might be. While most credit card companies don't automatically report small-business credit card use to the owners' personal credit reports, Capital One does. If you are delinquent on payments, you may also see it reflected on your personal credit report. So before you swipe, would you personally buy it? Maybe choose the cheaper office desk or store brand paper next time. You can read about these five expenses to keep and five expenses to cut at

Tip No. 3: Pay up each month

Get in the habit of paying the small-business credit card off in full each month. If you even slip one month, you may fall into a debt spiral. The best habit is to think in terms of cash and not credit. If you don't see the cash flowing out, you'll probably be less likely to increase the cash flowing in.

Tip No. 4: Keep an eye on your rate

Remember, most issuers don't offer the protections of the Credit CARD Act to small business credit cards. (The largest issuer, Bank of America, however, has extended the new rules to small-business cards.) Watch for any increases in your rates, and battle the company if they raise them. You may lose, but you can always take your business elsewhere. You can compare small-business credit cards at

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Editorial Disclaimer: The editorial content is not provided or commissioned by the credit card issuers. Opinions expressed here are author’s alone, not those of the credit card issuers, and have not been reviewed, approved or otherwise endorsed by the credit card issuers.

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