A business credit card can be a valuable tool for extra funds and managing your company’s finances.
It can also establish the credit score of the business and you become eligible for higher loan offers if you know how to handle everything well. But with so many options on the market, it can be hard to know which card is right for your business.
Whenever you need extra funds, a credit line from a bank card will give you the money to buy essential inventory and equipment for your business. Over time, when you’re building your rating and paying off the bills on time, this can be helpful if you ever need to take out a loan.
The right providers can also help you manage your expenses and keep track of your spending. Additionally, these cards offer rewards and perks that can save you money in the long run.
If you’re considering getting a business credit card, be sure to research and compare different offers to find the one that’s right for you. Consider what type of rewards and perks you’re looking for and the fees or interest rates that are included in the offer. With so many options available, you’re sure to find one that meets your needs.
What are the Things to Look For?
1. Rewards and Cash Backs
You can earn rewards and cash back with the right credit card. Many owners enjoy cash-back incentives for traveling, and when it comes to rewards, every offer is different.
Choose the ones that would make the most sense to your industry. Some might offer you a reward for spending on advertising, shipping, utilities like phone bills, and business-related travel. Select the ones that reflect more on the expenditure of the business and compare how they are structured.
Other companies might offer more miles, cash back, and points than others. They might also require you to reach a certain tier before they increase the rewards. It’s also worth noting the spending cap of the dollar amounts you can receive each year. Anniversary and introductory offers might also be helpful, and this can create a lot of opportunities for you to rack up a lot of points.
2. Know the Annual Fees
Some banks or financing companies don’t charge annual fees, while these are present in others. Generally, the better the rewards and features, the higher the costs you will need to pay at the end of the year.
You need to compare the pros and cons and choose the ones with reasonable fees. When you’re eyeing the platinum cards, you might want to spend more on prepaid hotel bookings and flights several times a year before you can recoup the annual fees. If you’re frequently going from one place to another, the airline’s free credits can still offer you some value over the long run.
There are also $0 introductory fees for the first year, where you can earn double air miles for every eligible purchase that you make. Watch out for those with no category restrictions to make things simple for you.
3. The Interest Rates Matter
The interest rates on top of the principal make the credit cards more expensive. You can pay the balance in full each time you receive your card statement. When you can’t help but only pay the minimum amount and carry the balance for the next few months, it’s important to know the annual percentage rate and see if you can afford this.
Choosing the ones with a 0% promotional rate in the first year will make sense. Generally, the better your personal credit score, the lower the APR that you can qualify for. Others won’t require you to for exorbitant interest rates, but you need to pay the full amount on the statement. When you would like to see some flexibility, avoid charge cards and see what other platforms have to offer.
4. More Benefits
A business credit card will not only offer you personal benefits, but you can find the other rewards to be valuable, including the following:
- Insurance: You’ll get insurance when you’re traveling or if there are trip cancellations. Others will provide roadside assistance and baggage delay coverage if the situation calls for them.
- Benefits when Traveling: You’ll get access to the exclusive airport lounge, in-flight food, and resort upgrades that are all beneficial when you’re always traveling to another place.
- Protection for your Phone: Purchase protection, fraud, and phone insurance are available if you get cards from the right providers.
- Get Discounts with Account Management Software: Bookkeeping software upgrades, subscription purchases, and account management packages can be discounted when you’re in the right provider.
- Perks and Cash-Backs on Computer Software or Hardware: Any purchases related to computer software or hardware can be eligible for cash backs. You can also take advantage of cloud storage or necessary upgrades with a business credit card.
Other Types of Business Credit
When you have clear plans to improve your business but are short on funds, credit cards can be a good option for you. However, this double-edged sword can make or break you, so you must handle your finances carefully.
Invest in the company’s future and make sure to establish an excellent credit history so you can qualify for loans with lower interest rates in the future. Learn more about building credit on this website.
You might want to check for credit lines that various financing companies are offering. For example, you might get approved for a $2,000 credit line, and these are revolving accounts you can spend any time without undergoing a pre-approval process.
There are also business loans where you will receive a lump sum that you need while paying the rest of the balance in installments. Most lenders will generally look at your business plans, the number of years your business has been operating, your personal credit score standing, and whether you offer collateral. Shop for lenders with easy requirements and secure an amount to help you get through the first years of opening your business.
Using the Credit Responsibly
When you’re approved for a line of credit or a loan, you need to be responsible for handling your finances. Make sure that all expenses are business-related, and you can pay the full amount each month. Here are other tips to help you out:
- Understand your credit limit and statement balance: Your credit limit is the maximum amount you’re allowed to spend on your card, while your statement balance is the total amount you owe at the end of each billing cycle. Understanding both of these is important, so you don’t accidentally max out your card or get overwhelmed by your statement balance.
- Make sure you can pay off your balance in full: This is important for two reasons: first, because carrying a balance from month to month will accrue interest charges; and second, paying only the minimum amount due will lower your credit score. If you can’t pay off your balance in full, try to pay more than the minimum due at least.
- Use your business credit card for business expenses only: This may seem like a no-brainer, but it’s important to use your business credit card only for business expenses. That way, you can easily keep track of your finances. Avoid mixing your personal expenses to avoid trouble over the long run.
A Final Word
There are a lot of business credit cards on the market, and it can be tough to choose the right one for your needs. However, by keeping a few key factors in mind, you can narrow down your options and find a card that will work well for your business.
Consider what features are most important to you and your business spending. Then, compare different cards and their offers to see which one is the best fit, and read the fine print carefully to ensure you understand all the terms and conditions before applying.