How to Choose a Business Credit Card
As you start a business, you'll be paying out money left and
right for various fees and supplies needed to get things going.
If you're expanding your business, you'll most likely be in the
same situation. One of the best ways to handle expenses for your
business, whether they are start up costs or ongoing incidentals
that occur, is to obtain a business credit card. With a business
credit card, you'll have an organized reporting of expenses in
addition to a quick and easy way to pay for your purchases.
Choosing the best business credit card takes a little more
research than finding one for your personal use, but the time
spent educating yourself on credit limits, interest rates and
repayment options will pay off in the long run.
Corporate Credit Card or Business Credit Card?
A corporate credit card has no interest rate, but it does
require either a monthly or annual fee to keep the card. It's a
good idea to find a corporate charge card that offers a single
bill for all the charge cards on the account, as this will save
you time and expense of writing multiple checks to pay for the
charges. Just be sure that the employees who have access to the
cards are using them for business purposes only- and if there is
any question about the honesty of your employees, you may want
to get itemized listings for each card so you can track each
person's usage on a monthly basis.
A business credit card is not all that different from a personal
credit card. Business credit cards generally have a credit
limit, and minimum monthly payments to pay. When lenders are
deciding whether or not to extend a business credit to a
company, they will look at the business owner's credit as well
as anyone else's credit who will have permission to use the
account.
Evaluating Interest Rates
If you decide to go with a business credit card over a corporate
card, you'll want to pay close attention to the interest rates
of any cards you are considering. While promotional rates that
scream 0% APR sound wonderful, don't forget to check into what
that rate will change to once the promotional period has ended.
A 0% interest for six months that later changes to 29% is not as
good as a card that offers an always low interest rate of 8% or
so. Your other possibility is to obtain a card with an
introductory offer, and before the time period ends, transfer
your balance to a new credit card with a 0% introductory offer.
It all depends on whether or not you want to be bothered with
the constant applying and transferring of funds.
If you've decided to use a corporate credit card, look for a
card with a monthly or annual fee that is reasonable in
comparison to the amount of spending you believe you will be
doing with the card. Also find out what services the card
includes, sometimes paying a higher annual fee is worth the
money in return for having discounts at office supply stores or
airlines.
Consider Rewards Programs
Many business credit cards (and corporate cards for that
matter), offer rewards programs for using their card. Do you do
alot of traveling for your business? It would make sense for you
to look into credit cards that offer rewards in the form of
airline miles, discounted airfare, travel accident insurance, or
car rentals. Do you tend to purchase supplies from a specific
vendor on a regular basis? There are rewards programs that earn
you points or cash back for purchases made at specific
locations, and this makes sense for businesses who make repeat
purchases from that location. Why not be rewarded for spending
you have to do anyway?
Pick a Card, NOT Any Card
Choosing a credit card for business use is not a decision to
take lightly, as the card will be a major factor in the amount
of money you spend for your purchases, the ease in which you can
track your business expenses, and the potential for earning free
items or cash back.