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According to the Institute of Chartered Accountants for England and Wales, credit cards can be a valuable source of finance for daily expenditure and purchases by small businesses. Although credit cards hold an element of risk and can be expensive, used correctly and with caution they can be beneficial to Small and Medium Enterprises.

Clive Lewis, the head of enterprise for ICAEW points out that credit cards can offer security and flexibility, in addition to an easy form of finance. They can also assist the monitoring and control of spending of a small business. Consumers are typically associated with the use of credit cards, being provided with an option to pay for larger purchases and pay interest on repayments. However, as the ICAEW points out, a number of card companies offer a period for repayment which is interest free, and providing the outstanding balance is repaid in full by the specified date, no interest is paid on the amount borrowed.

In addition to the possibility of interest free finance, credit card companies offer additional legal protection for faulty goods. According to the Consumer Credit Act 1974, the liability for breaches of contract or misrepresentation of goods with a value over £100 and less than £30,000 falls jointly with the card company and trader.

Start-ups will also benefit from using a credit card, as this will contribute to their credit rating which could lead to beneficial rates on other sources of finance in the future. Lewis warns companies to shop around for interest free deals and low interest rates.

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