Nowadays businesses increasingly use credit cards for raising funds, covering urgent cash needs and smoothing their spending and purchases. Appearance and further development of such credit instruments allows small businesses to raise cash in the most convenient way possible, save time associated with making purchases by making purchases of goods and services online and accurately record all transactions.
There is a question that often arises: how many credit cards should a business own?
One, two or several dozen?
Well, although it is very useful to have one credit card to build a successful credit history for our business, having several rewards credit cards may not be beneficial and result in several problems for the business.
There are many reasons why more than one credit card can cause a problem for your business and for you as an owner of the business personally. We will briefly discuss them below.
First of all, this is a signaling tool: having several credit cards sends lenders the wrong kind of message: that you are a borrower that can get into very large debt very easily, since you have credit instruments that allow you that.
Therefore creditors may refuse to extend you a loan just because you own many credit cards at the same time.
Secondly, when a person owns large number of credit cards with low approval requirements, there is higher risk that they will be lost, stolen or misused.
Thirdly, many credit cards means many monthly statements that need to be carefully analyzed to eliminate the possibility that one of your easy approval credit cards information may be stolen and a credit card thief may be misusing your personal information by making purchases online, by phone or any other available means.
This increases work that must be done with papers.
And finally the most simple, but usually quite painful disadvantage of many intro credit cards is that owner has to pay annual fees that results in higher costs for the business.
Having two credit cards, one of them personal one and second credit card just for your business may be a good idea to separate personal and business expenses from each other. In fact having two business cards from two different banks is also acceptable. This may help business owners to build credit history at two different banking institutions, but applying for more cards may become a nightmare, since even one delay in debt repayments can ruin your credit history and harm your credit rating.
It is also extremely helpful at tax time to when you can pull each file independent of the other. Trust me, mixing your business credit file with your personal credit history is not something you want to untangle.