Feb 16, 2010

New Credit Card Rules Don't Help Small Businesses

New credit card rules designed to protect consumers from overreaching practices by credit card companies take effect on February 22nd. These new rules, however, apply only to consumers--they do not cover credit cards issued to small business owners. So small businesses that carry credit card debt won't benefit from the new credit card rules unless they start charging business expenses on their personal credit cards. But, as noted by Emily Maltby in "Entrepreneurs Weigh Credit-Card Options,"while this may sound tempting, it's probably not a good idea. First, the new rules are intended to protect consumers, not businesses--they may not cover a personal credit card that is used too much for business purposes. Also, one of the first things most business owners do when they get started is to separate personal and business spending and expenses for tax and other reasons. Going back on this basic good business practice is not a good idea.