There are a few questions to ask as you decide which card to use. You must know your needs, patterns, and specific details that pertain to both your purchases and your payback timeline. For you and your merchant account it pays to know!
Debit Cards for Business Purchases
When using a debit card for business purchases, remember it is directly connected to your merchant bank account. The prime benefit is that it allows you to manage your budget as it will not work if you do not have money in the account. Each purchase made from the debit card deducts right away from your bank account. Therefore, it is very easy for you or your company to audit and track all purchases made immediately.
Credit Cards for Business Purchases
With credit cards, you are essentially borrowing money for your expenses. You can pay it back at a later time, in installments if needed, which can greatly affect your business in both a good and a bad way. The double edged sword of credit cards boils down to this: You can make a purchase separate from any cash flow problems, but, it also results in possible interest being added to the original purchase. There are true benefits, however. Credit cards are more secure than debit cards as money is not taken out directly, so you have time to validate purchases. Most U.S. card brands offer 0% liability for fraud. Credit card companies also usually offer “cash-back” or “points” as rewards for purchases, which can have perks for the bottom line and your employees or customers.
Bottom line, it depends on your business purchasing needs. One will be more useful than the other in certain situations. The are also both relatively secure payment methods. There are advantages and disadvantages for both - so use them wisely. Regardless of which card you choose it is best to implement policies on spending, have a clear expenses plan, and a reasonable limit. You do not want to the added expense of interest payments and fees.
We’d like to hear from you on how you prefer to make business purchases! Schedule an appointment with us for more tips and solution for your business. Call us at (800) 644-3909 or send us an email to [email protected].