We often hear that credit cards for business are great tools for making your life easier as a business owner. However, just as there are risks in using personal credit cards, the incorrect use of business credit cards can also be a disadvantage. Today, let’s discuss these possible risks so you’ll know how to avoid them.

The Drawbacks of Business Credit Cards

The personal liability clause. All business credit cards you have a personal liability clause which makes you, the business owner, personally accountable for all the charges in your account. This means, your personal credit history will be directly affected depending on how you manage your account.

Do you have employees working for you? Issuers of business credit cards allow the distribution of employee credit cards. These cards are linked to the primary cardholder’s account. This means, the business owner is held responsible for debt repayment regardless of who made those purchases. If one of your employees happen to misuse your business credit card for his/her personal benefit, you will be paying the consequences. You must pay off those bills or your personal credit history will be damaged.

Thus, business owners must be particularly cautious in distributing supplementary cards to employees. Regularly monitor your account so you’ll know exactly how your account is being used. See to it that your employees will only use their cards for important and approved business purchases.

You can’t dispute charges on your account. A business credit card account is considered to be the property of the business and therefore, is not covered by the Consumer’s Bill of Rights. As a personal credit card owner, perhaps you are aware about your rights to dispute unauthorized charges. However, your rights as a consumer do not apply to your business credit card account.

What can you do if you discover unauthorized charges in your business credit card account? The best thing to do is call the merchant involved so you can work out an arrangement. Nevertheless, the arrangements will still depend upon the merchant. Some merchants may agree to waive the fees while others may still demand you to pay off the purchase.

The risk of credit card debt. Debt is a risk that faces all credit card holders. It doesn’t matter whether you own a business credit card or not. However, because business owners tend to make bigger purchases or larger expenses, the risk of getting stuck in bad debt is far greater.

If you’re going to use your business credit card for a certain purchase, see to it that you have a means to pay off your balances. Make it a goal to pay off your balances in full each month. This way, you can reduce the risk of uncontrolled debt and bad credit.

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