Are "Small Business" Credit Cards a Scam?

You start a small business and need easy access to short-term credit. Of course, you set your sights on a small business credit card, right?

Not so fast!

Many small business owners are quickly learning that a credit card labeled as a “small business ” credit card may not be what it seems. In fact, many experts point out that credit cards specifically designed and marketed for small business may come with extra liability – which small business owners may not want to take on.

Why Small Business Credit Cards May Not be Ideal

Although the Credit Card Holder Bill of Rights, which was signed into law by President Obama over the summer and is expected to go into full effect in February 2010, is designed to protect credit card holders, there are still ways for creditors to get around these reforms and tack another level of liability onto small business owners through their small business credit cards.

In fact, there is no specific offer of protection from the Credit Card Holder Bill of Rights for small business owners, leaving them quite vulnerable to the ploys of credit card companies.

This extra level of liability makes sure that BOTH the company and the cardholder remain responsible for the credit card debt. In other words, if your business is unable to pay the business credit card debt, the credit card company has the right to go after you, as an individual, for the repayment of the debt.

Better Financing Options

Subsequently, many industry experts have recommended that small business owners, in lieu of securing a small business credit card, simply secure a personal credit card for business expenses and pay the expenses from their business accounts.

Although many creditors offer small business credit cards to entrepreneurs and tout them as more convenient and practical than standard personal credit cards, the reality is that you may be able to use a personal credit for your business just as easily as you can with a business credit card.

There are many special features that creditors offer to small businesses through small business credit cards, but the reality is that you often find these features on personal credit cards as well – without double the liability.

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