Can impact credit score: Missing payments, maxing out cards, or making other errors can negatively impact your credit score.May increase debt: When spending money using credit accounts, your business accumulates more debt.Fraud prevention: Compared to debit, credit can more effectively protect against fraud.Warranty and protections: Credit may add protections for items your business purchases.Good credit history: With timely payments and a low credit utilization ratio, your business can use credit to build a positive credit history.The credit entry typically goes on the right side of a journal. Other fees: Debit cards may require fees for monthly maintenance, overdrafts, returns, and foreign ATM use.Ī credit (or “CR” for short) is an accounting entry that decreases assets and increases liabilities.įor example, when paying rent for your firm’s office each month, you would enter a credit in your liability account.Doesn’t build credit: Even if you’re paying bills on time, you can’t establish a good credit history from debit card transactions.Fewer rewards: For the most part, you won’t earn points, miles, or cash back for debit card purchases.
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