Beware of Small-Business Credit Cards

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Small business owners have been through enough the past three years. If your business made it through the Great Recession, Congratulations are in order. In a country where 85% of small businesses fail within the first three years, you should be proud to have overcome such incredible obstacles. In fact, as a result of all of your hard work and dedication, we are going to reward you with tips to selecting the best small-business card for your business.

Speaking of that terrible Recession, desperate times called for desperate measures, and many business owners relied on credit cards to keep doors open. The Federal Reserve reported that only one-third of the small businesses who applied for loans were approved in 2009. However, 75% of small businesses were approved for business credit cards.

Although stricter regulations have been placed on consumer cards, the Federal Reserve warned Congress of the negative implications of imposing similar regulations on small business credit cards. Although it will remain easy for business to get credit card approval, this means that business will continue to remain vulnerable to credit card companies.

Beware of the risks involved with Citibank and American Express small-business cards. They favor harsh penalties for minor infractions. Consider Citibank, one late payment will cause your rate to go up by 29.99%, applied to current and future balances. If you use American Express, two minor infractions a returned check will result in a penalty of up to 27.24%.

If you carry balances from month to month, then consider the Bank of America small business card. It is the only major credit card company that voluntarily implemented protections for small-business owners. They do not raise interest rates on existing balances. They also provide a minimum of 45 days notice before implementing a rate change.