Choosing a Business Credit Card
You may or may not be aware of the benefits of using business credit cards, not limited to being able to make purchases over the phone, online, simplifying book keeping by having all your company expenses on a single card and saving money on checks. Other benefits include rewards programs for business travel, office supplies, cash back on purchases and more.
When deciding on a business credit card for your company, there are several things to take into account.
Corporate Credit Card or Business Credit Card?
Corporate credit cards do not carry interest rates but do require monthly or annual fees. You’ll want to find a corporate credit card that gives you a single bill for all of the credit cards you have on your corporate account. You can opt for itemized listings for purchases when you are issuing corporate credit cards to multiple employees in your organization for accountability in spending.
Business credit cards, on the other hand, are a lot like personal credit cards in that they have a credit limit and monthly payments are required. Your business’ credit rating is a factor when lenders decide whether or not to grant you credit, and an interest rate will be applied accordingly.
Dissecting Interest Rates
Should you choose a business credit card over a corporate credit card, pay attention to the interest rate! 0% APR interest rates sound good, but this rate is only effective for a limited period of a few months to a year. A 9.9% credit card could be better in the long run than a 0% APR if you are unable to pay off the balance completely within the low interest period. Often new businesses are not able to pay down credit card debt completely, and getting hooked into a temporary low rate that balloons over 30% can be disastrous. Typically, lower interest rate credit cards (5.9% to 14%) carry annual fees, so if you are conscientious to pay off debts each month in full, then the annual fee would be applied as an additional expense. However, an annual fee of $25 to $100 may be considered a drop in the bucket compared to the low rate “insurance” this type of card provides you.
Sometimes higher interest rates in exchange for credit card reward programs on corporate travel, cash back or discounts on online purchases can be worth it too. If your business credit is not very strong, a prepaid credit card or secured business credit card could be the answer, and will help you establish a better credit rating for your business.
The Final Decision
It’s always a good idea to compare several credit card options and their plans. There are many websites that can help you compare credit card offers and even apply online. A simple Google search can help you find offers, popular business credit cards include Advanta, Chase, Discover and American Express.
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