The cost and benefits of using credit cards for your business.
By Criag Miller
Most small-business owners have a love/hate relationship with credit cards and credit-card companies. While it’s difficult to find someone who doesn’t have a story about how a credit card saved the day, it’s also just as likely to come across a horror story about something bad that happened regarding a business or personal credit-card transaction.
During the last three years, credit cards have come to play a more significant role in how my own company has done business. Credit-card companies have opened up opportunities. But they’ve also made our lives more difficult.
Let’s address the hate part first, because it’s something I need to get off my chest. Feel free to pile on as you read this.
Why I hate credit-card companies
The problem with credit-card companies is that they are banks. One bank, which I won’t mention by name (but rhymes with another word for crappy), has been especially cruel to our small family-owned business during these hard times. In fact, we now refer to them as the other word for crappy bank. These moneychangers, of almost Biblical disrepute, canceled a major credit-card account for which we had never missed a payment. They did this without notice and, cruelest of all, took all the points we had accrued (you’ll read later why the loss of these points was so disastrous to our employees).
Another example of why I hate credit-card companies: In the early months of this recession, our business bank (not the same bank as the one just mentioned) cancelled our line of credit and our overdraft protection. I’ve talked to a number of my colleagues and they suffered the same indignity. I’ve always said that the only time a bank will loan you money is when you don’t need it. That’s been my experience and the recession provided small businesses with an even more squeaky-tight credit market. The good-karma part of this story is that this bank went bankrupt and we didn’t. So while this financial institution was being hypercritical about our money situation, it had demonstrated the height of hypocrisy by having done really stupid things with its depositors’ money for more than a decade.