Released: November 15, 2006

Credit cards target small businesses

Source: Jim Hopkins, USA Today

Small-business owners face an onslaught of choices as companies blitz them with new credit card offers.

American Express just launched a cash-back card aimed at small companies. Visa this month is rolling out a card targeting small firms with big appetites, those spending $25,000 or more a year. Discover entered the market for the first time this past summer.

Business owners should move cautiously, just as they would when shopping for a personal credit card. Rock-bottom interest rates can jump after the introductory period ends. They often soar, too, if owners make a late payment. Cash-back rewards may sound like great money savers, but not if you carry a balance subject to high interest.

Marketers smell opportunity in the 90% or more of small-business spending not on credit cards — up to $4.8 billion a year, says Visa.

The surging interest in small firms comes as the corporate market is pinched. Growth in the number of big employers — those with 500 or more workers — has been flat since the end of the 2001 recession. There are now about 17,000, the latest Small Business Administration data show. In the same period, the number of small employers grew 4%, to 5.9 million.

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