When opening a franchise opportunity, new unit owners will likely be solicited by a number of credit card companies which that special business cards. However, franchisees should be careful to understand the pros and cons that accompany these cards before becoming a cardholder.

A report by the Federal Reserve recently found that 83 percent of small businesses used credit cards in 2009, with 64 percent of those using small business cards, writes FranchiseKnowHow.com. Additionally, that same study revealed that business credit cards are a fairly new segment of the market, growing significantly from the mid-1990s.

These cards are generally more attractive than personal credit cards to franchisees thanks to higher spending limits. However, with a higher spending limit comes the temptation to use the card more if cash becomes scarce.

Small business cards will generally require franchisees to give a personal guarantee. This is no different than a personal credit card, however. It just means that both the company and the franchisee would be responsible for any unpaid balances, explains the Web site.

Interest rates may dissuade some franchisees from applying for a business card. Due to their rate of risk, unit owners will typically receive a higher interest rate than they would using a personal credit card. However, during the introductory period this rate can start out very low before increasing steadily. Additionally, any regulations and protections under the Truth in Lending Act that protect a cardholder from unexpected rate increases, among other things, do not apply to business cards.

When deciding which type of card to invest in, there are several pieces of advice franchisees should keep in mind. According to FranchiseKnowHow, franchisees may want to consider designating a second personal credit card for solely business use. While this may affect a franchisee's personal credit score, he or she will have the benefit of being protected under the Truth in Lending Act.

Personal credit cards may also have lower spending limits, but this could be an unexpected blessing for franchise owners, preventing them for overusing the card or purchasing unnecessary items. In the same vein, franchisees should not provide employees with company credit cards. Workers will be much more prudent with how they spend company money if they aren't able to swipe at the drop of a hat.

However, if franchisees still decide to go forward and apply for a business card, they should make sure to ask themselves and the card company a few questions, including: Will it work when and where a franchisee will need it? Are its rewards truly useful for the business? Will it show up on a personal credit report?

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