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With the growing popularity of small business credit cards and ever changing interest rates, now is the time to learn the 6 steps to effective small business credit card management.

We've entered into a new age of credit for small business. New opportunities apply but credit debt still needs to be approached with caution. Over 2/3 of small businesses use a credit card for expenses with only 40% using a business credit card exclusively, as indicated by a Tower Group report. Should you use a small business credit card over a personal card?

Yes. With prudent use and management, your small business credit card can provide many benefits including:

Advantages of Small Business Credit Cards

• Avoid Co-mingling: Mixing your business and personal transactions creates potential tax and money management problems. By using a small business credit card, you will let the IRS and anyone else know you are serious about your business.

• Easy Itemization: Tracking your business expenditures at year-end can be a nightmare for small business owners. Many credit card companies will provide you with a year-end statement summary with your transactions itemized and categorized. Why worry worry about a shoebox full of receipts? Organize your bookkeeping process with a small business credit card.

• Build Business Credit: A small business credit card provides a newly established business the opportunity to build business credit. This will be useful in the future as your business grows and you need capital in the form of credit lines or loans.

• Special Rewards: The competitive credit card and business market has led to the development of reward and discount programs for small business credit card users. Discounts and rewards range from office supplies and travel to software and phone services. Take advantage of using the credit card to lower your expenses.

• Manage Employee Spending: Another plus to small business credit cards is the ability to provide cards for your employees with preset limits. Just make sure you monitor their spending on the separate statements you receive.

A small business credit card is like most financial instruments - responsible use of credit can help your business - misuse of your business credit makes you personally liable in most cases and has the potential to destroy your business and dreams. Use these small business credit card tips to effectively manage your credit.

6 Steps to Effective Small Business Credit Card Management

1. Apply at Home: Always consider applying for your small business credit card at your existing financial institution. Your banking relationship can aid with the approval process. When you need a line of credit or loan you will have a relationship established with your lender helping with credit applications over $100,000 not using automated scoring systems.

2. Limit Card Hopping: Signing up for multiple cards to take advantage of deals can have a negative impact on your credit rating and make managing your cards more difficult.

3. Use Grace: The majority of small business credit cards offers a 21-day grace period before you have to make payment on your purchases. Improve your cash flow using a credit card instead of checks since the new Check 21 act creates quicker clearing of checks.

4. Pay Online: Save time and extra costs by paying your small business credit card online versus paying by teller at your local branch or mailing in your payment.

5. No Cash Advance: Reduce credit card fees and interest costs by not using the cash advance feature on your card. Cash advances incur more fees and costs. Use your business account debit when you need immediate funds.

6. Avoid Late Payments: Late fees and high interest rates quickly erode the merits of using your small business credit card. Be responsible by paying off your business credit each month.

Treat your business credit card ownership as a privilege and you will avoid the disastrous effect of credit card mismanagement. Apply the same level of responsibility as the rest of your business and you will enjoy many more years of profitable business growth.