Credit cards denote forms of payment documents given to users to enable them to buy goods and services founded on the promise of catering for their costs and an additional agreed fee later. Card issuers (which are mostly banks) open revolving accounts for cardholders and provide a line of credit, which enables them to settle payments with the financial institution or borrow cash. There are some important features that a person may consider when choosing a credit for business purposes. Such features encompass interest charges, grace period, repayment deals, credit limits, and additional benefits (for instance, insurance protection and reward schemes) (Agarwal, Chomsisengphet, Mahoney, & Stroebel, 2014). The major characteristics of a business credit card include an alternative to cash, a set credit limit, regular charges, a provided grace period, and high-interest rates. Business credit cards enable payments in both local and foreign currencies and keep an accurate record of all transactions.
Though business credit cards offer traders considerable benefits over personal credit cards, they have drawbacks. One of their disadvantages is the issue of personal accountability. Credit card regulations do not allow as many protections for business credit cards as in the case of personal credit cards. The second disadvantage is that business credit cards are charged high-interest rates. The third disadvantage of business credit cards is their risk of employee misuse. Workers may abuse business credit cards by paying for their personal goods (Cheng, 2015). Such occurrences have negative effects on organizations since business credit cards have inadequate protections. To safeguard businesses against the risk of employee abuse, workers should be allowed only to buy goods and services in cash because it is simpler to oversee and control where and how company money is being spent.
References
Agarwal, S., Chomsisengphet, S., Mahoney, N., & Stroebel, J. (2014). Regulating consumer financial products: Evidence from credit cards. The Quarterly Journal of Economics, 130(1), 111-164. Web.
Cheng, S. (2015). Potential lending discrimination? Insights from small business financing and new venture survival. Journal of Small Business Management, 53(4), 905-923. Web.