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The debate of choosing which option is better continues on many small business websites, with some people promoting the use of business credit cards as they offer corporations a revolving line of credit.  Others have continued to support the use of debit cards.  They are tied to a company’s bank and that prevents the business from spending more money than they have in their account.

Your preference in this area can play a role in the success or failure of your organization which is why you should never choose without first determining the strengths and weaknesses of each option.

 

Credit cards are attractive since they not only build up the company’s credit score, an achievement that makes future loans cheaper, but they are associated with rewards for businesses who have significant expenditures that add up in savings.  That being said, those savings are sometimes negated by the interest and fees attached to credit cards.  Also, unexpected disasters or events might occur and cause the organization’s credit card debt to skyrocket.

 

While debit cards fail to provide the emergency assistance for which credit cards are known, they are not accompanied by interest payments.  Of course, they also prevent overspending as businesses are limited by the funds present in their bank accounts.  As a result, this prevents irresponsible owners or staff members from accruing calamitous debts.

 

Neither avenue is inherently superior to the other which is why small business websites encourage businesses to consider the attributes of each option carefully before making a decision.  Ultimately, each organization’s approach to finances will shape their choice.
Companies that want to build their credit score and whose owners are comfortable with the notion of spending more money than they have in the bank are likely to choose credit cards.  On the other hand, businesses that have a tendency to pay in cash and want to eliminate unnecessary charges are more likely to use a debit card.