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<\/div>2. Financing the wrong purchases<\/h3>\n
Your credit card isn’t just a convenient and safe payment method; it likely also offers a line of credit that allows you to finance purchases over time. Using your credit card this way is convenient and won’t require a new credit application or open your request up to scrutiny by a lender.<\/p>\n
With some card issuers offering 0% introductory APRs for as long as 12-18 months on business credit card purchases and\/or cash advances, credit cards may provide an inexpensive way to preserve cash flow in your business.<\/p>\n
However, credit cards are best used for short-term financing needs. Otherwise, you may find your business saddled with expensive debt once the low introductory rate expires. Making the minimum payment compounds this problem by allowing you to stretch out payments for years or even decades.<\/p>\n
Solution<\/strong>: For large purchases or those that require longer-term financing, consider other types of small business financing<\/a>, such as equipment financing, term loans, or even an SBA loan.<\/p>\n Business credit card rewards can add up quickly. But if you haven’t thought about your rewards lately, you may not get the right ones.<\/p>\n A perfect example right now is travel rewards. Maybe you’re paying a high annual fee for a premium airline miles card, but you’ve canceled in-person business trips for the near future. Or perhaps your fuel costs have increased, and a gas card with bonus cash back could save you money.<\/p>\n Finally, if you are considering switching to a new card, consider that many issuers offer welcome offers with additional points, miles, or cash back if you meet specific spending thresholds within the first few months of card ownership. Welcome offers (also called “limited-time offers”) can make choosing and applying for a new card truly rewarding.<\/p>\n Solution<\/strong>: Review your credit card rewards program annually to ensure you’re taking advantage of your cards’ perks and to think about whether it’s time for a change.<\/p>\n You should always try to pay your credit card bill on time. Doing so protects your credit scores and helps you avoid late fees, while also helping you to manage and settle credit card debt, if necessary.<\/p>\n But with business credit cards, paying on time is even more critical. That’s because you won’t likely get the same wiggle room you do with personal credit cards. For businesses looking to manage their cash flow more effectively, a buy now pay later<\/a> option could be a strategic move.<\/p>\n The Credit CARD Act doesn’t cover business credit cards like personal ones. Miss a payment by even an hour, and your issuer likely can (and will) raise your interest rate to the “default” or “penalty” rate. That new rate can apply to existing balances as well as new purchases.<\/p>\n Solution<\/strong>: Set up automatic payments for at least the minimum amount. As long as the minimum is paid on time, you won’t suffer the consequences of a missed payment.<\/p>\n Credit cards, including business cards, offer some of the best fraud protection of any payment method. You can dispute unauthorized purchases<\/a> and purchases where the goods or services were not delivered as agreed. Those protections enshrined in the Truth In Lending Act extend to consumer and business credit cards.<\/p>\n But you can still get stuck with fraudulent purchases. How? Here are two examples:<\/p>\n * You aren’t paying attention. If you are paying your credit card bill without reviewing individual charges, you may pay for a purchase you didn’t make or approve.3. Missing out on rewards<\/h3>\n
4. Paying late<\/h3>\n
5. Falling victim to fraud<\/h3>\n
\n* You give a card to an employee or contractor who makes an unauthorized purchase. If you’ve authorized them to use your card, you’re responsible for all the charges they make.<\/p>\n
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