No. of Recommendations: 0
1) Tax-free income from a credit card?

2) Increase your net worth, just by changing the way you pay your bills?

3) Don't interest charges eat-up any income benefits?

4) Why are you giving your bank account number, where you bank, and a copy of your signature to strangers?

5) Could employee debit cards could sink your business?
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1) Yes, income from a cash-back card is considered a rebate, not income, by the IRS.

2) On the face of it, of course, getting cash-back for purchases can increase your personal and/or business net worth...but, by how much? Personally, if you pay $3,000/mo. in bills, that could be paid by a cash-back credit card, that's $360/yr. in tax-free income (assuming 1% cash-back). For businesses, if you pay $10,000/mo. in bills, it's $1,200/yr. in tax-free income - just by switching from paying with a check/debit card to a cash-back card.

3) Yes, if you don't pay-off the card monthly. Find a cash-back card that has a 30-day grace period, then pay-off that card, monthly. Presto, no interest charges! This only works if you treat the cash-back like a debit card and pay-off the balance every month. Also, make sure there are no annual fees.

4) You give your account number, where you bank, and a copy of your signature to strangers, every time you write a check. Should fraud occur and someone writes a check against your account, you'll probably get your money back. However, it may take days or weeks, before the missing funds are replaced. In the meantime, you've got rent, mortgage, car payment, etc. to make. On the other hand, if you use a credit card for purchases and periodically check your card statement, you can catch the fraud before any funds are deducted from your account. Headache...avoided.

5) Yes, employee debit card misuse could sink your business. As in the answer above, missing funds could cause problems that spiral out of your control. The solution is to use a business credit card that does not hold you accountable for employee misuse. For example, 2 employees buy a Disney vacation for $1,000, with their company-issued cards. One uses an company debit card and the other a company credit card. Both employees are terminated. The owner of the debit card spends weeks trying to collect the $1,000. The owner of the credit card calls the card company, disavows the $1,000 expense, and the debt is removed from the balance.

So, in summary, cash-back credit cards could provide a boost to your bottom-line and give you fraud protection, if you use them wisely.

Generally, look for a card that offers these attributes:

- No annual fee.
- Cash-back on every purchase.
- 30-day grace period.
- No owner liability for employee misuse, (for business credit cards) if employee is terminated.


Thanks,

Richard
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