Finding the best business credit cards can affect the company’s bottom line and even be instrumental in its chances of success. They are both useful tools as well as potential lifelines and therefore, must be chosen wisely.
A chance for credit
While it is never a good idea to pile up credit card debt, taking out some debt can be a necessary evil in business. In most business startups, it is easier to get a business credit card than a loan. In addition, even more established businesses sometimes have slow seasons that a credit card can help them pull through. That being said, always keep in mind that the greater the debt a business takes on the greater the chances of failure.
A word of caution with business credit cards
Business credit cards are not covered by the same consumer protections that individual cards are. While some companies do follow the same guidelines as they do with individual credit cards, they are not obligated to and many do not. Therefore, those with business credit cards may be subject to changes in conditions without notice and other practices that regulations forbid with individual cards.
It is also very important to remember that the person who takes out a business credit card is usually personally responsible for any debt even if the company fails. “Individual and company liability” clauses will specify that the person who applied for the card will be jointly responsible with the business for any debts.
Advantages of business credit cards
These cards have different advantages besides the obvious line of credit they offer and the ability to keep personal and business spending separate.
- Some credit cards, particularly those for more established businesses, offer various awards programs. Cash back is a favorite, and some business cards offer 2%. Other cards offer the chance to earn miles or special awards for certain business expenses to include office supplies.
- Business credit cards will have the option of separate credit cards for different employees with each card having its own spending limit. This offers conveniences and eliminates the need to reimburse employees for company expenses.
- In addition, many business credit cards now come with various online management tools that make tracking spending, doing taxes and other money management duties easier as well as possible from any computer.
Getting the best business credit card
Just like with personal credit cards, issuers are looking at risk. Those businesses that have been in business for a couple of years or more can generally get the best cards, especially if they make timely payments and have a positive cash flow. People seeking a card for a new business should check their credit history before applying to make sure there are not any errors on their credit reports that would negatively affect their chances.
The best business credit card will depend on the credit history and needs of the business. Stop and consider how the card will be used before applying. If a lot of debt has been built up, a debt transfer card may be in order. Those businesses that will likely be carrying a balance on their credit cards will probably want a low-interest credit card while those who will not may want to go with a cash back credit card. Finally, a frequent flier credit card may be the way to go for businesses that require a lot of traveling.
Some things to look for in business credit cards
Once the type of card has been decided on consider:
- Annual fees: These can add up over time so it is never a smart to go for a card with a high fee unless it is offering something valuable in return. With very good credit, it may be possible to get a card with no annual fee at all.
- Credit cards for employees: Make sure the card offers a plan that is suitable for the business.
- Discounts and rewards: Even within a type of credit card, the types of bonuses and rewards can vary considerably. A card with product rewards that are relevant to the business can save a lot of money over time.
- Software for expense tracking and online interface: With the right software, categorizing and organizing expenses becomes a lot easier and more efficient. In addition, services to include quarterly itemized expense reports are very helpful.
- Penalties and fees: Look carefully at the fine print and avoid cards with excessive fees or penalties.
Resources for finding the best business credit card
Too many checks on one’s credit history can negatively affect one’s chances of getting credit, so it is important to consider carefully before applying. While it is fine to consider one’s current financial institutions when looking for a card, it is also necessary look around. To find the most suitable card and best deals, look at the different credit card comparator sites to include the following: