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The Pros and Cons of a Business Credit Card

Aug 17, 2007
Getting a sense out of a deal is, in some instances, the most difficult thing to do. This is because most people could not instantly figure out the benefits they can derive from obtaining it.

Take for example the case of business credit cards. Some people contend that business credit cards are crucial in the growth of a business, while other s contend that it is just one way of losing their investments.

But whatever the point there is, only one this is certain, it is still a credit card and just like any financial decisions, extensive consideration is a must.

So, for those who want to know whether getting a business credit card will be good for their company, here are some of the pros and cons to be considered first.

PROS

1. It is efficient and provides management on the company's financial charges.

With the business credit card, most entrepreneurs can manipulate their costs and payments through separate charges consolidation. This means that the company will only have one billing statement with details on the employees' expenses instead of having various statements and invoices.

2. Business credit cards provide their client's with the opportunity to curb overspending in their employees.

Because the business owners are given the right to "preset' the credit limit of their employees, they are able to impede any probable overspending of their employees instead. This, in turn, poses great discipline among the people.

The statements that go to the manager or to the financial administrator are in full details of all the financial transactions incurred at a specific time. Hence, the company can track down the kind of spending habits of their employees.

CONS

1. It is still a credit card.

This means that even if it is a company's property, employees will still have the tendency to over spend or splurge into more cashless shopping. This can be very risky especially to business management who is primarily the one responsible for the accounts.

2. Any errors or faults can damage credit ratings.

If credit history is very important to common individuals, it has a greater impact on businesses. So, if something goes wrong with their business credit card, the effect is mostly imposed on the business rather on the employee.

So, what's the bottom line here? As compared to other types of credit, it is always best to monitor the spending habits. Credit cards can really be feasible where it serve its purpose, but can also do more harm than good if misused and taken for granted.
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