“Lenders are courting small-business owners like you with growing numbers of new credit cards and generous rewards programs.”
So begins The Wall Street Journal‘s report on the growing reliance of U.S. small businesses on credit cards as a source of financing.
The report cites a survey by the National Small Business Association determining that about 42 percent of all American small-business owners actively hold a credit-card balance.
It’s also pointed out that, while the “average interest rate on personal credit cards is 12.4 percent … the average rate small-business cardholders pay is 15 percent.”
The conclusion: Getting credit cards is much easier for most small businesses than securing small-business loans, but the risks are great, too.
“On consumer cards, issuers can’t raise that interest rate on existing balances unless the cardholder is at least 60 days late with a payment. But on small-business cards, issuers can change it whenever they’d like,” the CEO of CardHub told the WSJ.
Share your comments below on the risks on small businesses obtaining credit cards. What are the main pros and cons? Do the pros outweigh the cons?
Originally published: Jan 16, 2012