Credit Card Debt Management

There are many pros and cons to having any credit card, but these can be magnified when that credit card is used for a business. For instance, the good aspects of credit cards include heightened cash flow and rewards points. In almost any business, cash flow is king and can make the difference between sinking or swimming. And you know you’re going to have to buy stuff for your business, so why not collect the rewards points?

However, credit card drawbacks like interest charges that make every purchase cost more can also be magnified when it comes to doing business. One thing’s for sure — credit card companies have put together some pretty enticing offers specifically designed for business owners. Business credit cards often provide lower interest rates, higher credit limits, better rewards and more generous balance transfer terms. What’s not to love?

Each business owner must do some individual soul-searching. Do you have the self-discipline to pay off the balance each month? That is absolutely critical to making a business credit card work in your favor instead of letting the card control you.

One strategy to consider is to avoid using the card for everything – instead use it only for purchases like gas or meals to woo clients. That might keep the balance lower and more manageable. Just make sure you’re not blowing the gas fund elsewhere. Still keep that cash in place to pay off the credit card balance at month’s end — after you collect your reward points!

Here is an interesting article stating that only 21 percent of small business owners use business credit cards. That’s only $300 billion of $4 trillion total spending on small business purchases. You know the credit card companies are tearing their hair out! The article goes on to discuss the merits of the different business credit cards. Very enlightening.
For those who like to see the numbers in black and white and think it out for themselves through side-by-side comparisons, check out this list of business credit cards compiled by Banks.com.

Bottom line: If you just prefer to keep business spending within the limits of the revenue being brought in, that’s fine. If you don’t want to use credit cards, I (for one) will not think you odd. However, if you are going to use credit cards for your business, do not turn your back on the awesome options available to you as a business owner. You can get such a better deal than the average Joe!