All Articles Finance 3 credit card missteps that could harm your small business

3 credit card missteps that could harm your small business

3 min read


This Spotlight on Business Credit Cards is brought to you by American Express OPEN, the leading issuer of small-business credit cards and charge cards in the U.S. OPEN offers business owners products and services to help them run and grow their businesses.

Credit cards are a popular method for making payments to keep small businesses running. Forty-five percent of small employers use personal credit cards and more than half use business credit cards, according to a survey by the National Federation of Independent Business.

Credit cards are convenient and often easier to get than other types of bank financing, and when used correctly, they are an effective tool. But some common mistakes could land you and your company in financial hot water.

1. Not doing your research

Read the fine print before signing up for a small-business credit card. Incredible introductory offers have to end some time, and when they do, you don’t want to be stuck with a card with exorbitant interest rates and high yearly fees. “Small-business owners should consider these solicitations like they would consider any new prospective vendor: with a healthy dose of skepticism,” said Credit Card Assist founder Bill Hazelton in a post on

Compare credit cards carefully, and be sure you’re getting the best long-term deal available. Consider not only the annual percentage rate (APR) and fees, but also any rewards programs that a card offers.

2. Not understanding the rules of business credit cards

As long as you use your small-business credit card only for business expenses, your personal score will be protected if your company goes south, right? Unfortunately, the answer is often, “No.” “All major credit card companies hold small business owners personally liable for business credit card use,” writes Odysseas Papadimitriou, founder of the card-comparison website Card Hub.

Bottom line: You could be on the hook, so make sure you charge responsibly with your credit card.

Also remember that small-business credit cards aren’t covered by the CARD Act, the credit card reform legislation that passed in 2009. That means that card companies have more leeway to increase the interest rates on a business credit card than they do on consumer cards. So be especially careful about accumulating a large debt on a business card.

“To get the same protection, consider applying for a personal card in your business’s name,” founder Curtis Arnold said in a post on “As long as you’re not actually mixing your business and personal accounts, you’re fine.”

3. Paying the minimum

Try to pay more than the minimum amount due on your cards. Making minimum payments might leave you with more cash at the time, but you will rack up costly interest fees. This rule may be especially true for small-business credit cards, on which cardholders tend to carry larger balances.

Twenty-five percent of respondents to the NFIB survey who did not pay off their business cards in full every month reported carrying balances of at least $10,000.

Also make sure you always pay on time to avoid racking up costly late fees, which can be a further financial burden on your business. Some card companies may also revoke the rewards you have earned if you pay late.