Should You Go For Business Credit Cards? Here Is a Look at the Merits and Demerits
Business entities often fall back to credit to finance critical operational activities. This becomes urgent, especially when the activities are necessary, but funds are insufficient. While normal credit lines are crucial to this end, there comes a time when a business needs more alternatives beyond them.
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What are business credit cards?
Credit cards are central to the financial lives of Americans. About 83% of Americans aged from 30 to 49 years are credit cardholders, according to survey data by Statista. Therefore, there is no doubt that you know what a credit card is and what role it plays in the economy and your life. In the simplest sense, a credit card enables cardholders to buy goods and services and pay later.
Similarly, business credit cards enable businesses to spend today and to pay later. With this card, a business can buy more stock and then pay after earning from the sale of the goods. Simply, this operates like a line of credit but one that is less sophisticated as long as the business meets the criteria. However, is this good for your business?
Merits of business credit cards
The highest selling point of credit cards is the ease of qualifying. Although different issuers unique qualification criteria, it is easy for one to acquire the card. Usually, issuers prefer customers who own a business and those who are of legal age to acquire the cards.
Another merit of business credit cards is that the more you use the facility, the more incentives you get from the issuer. Many credit card companies extend this offer to their customers. As such, you could end up earning back your cash if you purchase with the card more frequently.
Demerits of business credit cards
While it is easy to qualify for business credit cards, the cost of access could sometimes be punitive. Oftentimes, credit card companies charge high-interest rates on their loans. It gets worse when you get late with repayments.
Additionally, business credit cards suffer from the same problem that personal credit cards experience. This is the issue of security. If a hacker gets access to your card or someone steals your card number, you could end up losing a lot of money.
