Business Credit Cards

More so today than ever before, business credit cards are growing in popularity. Regardless of size and industry, companies are finding that they can improve their financial situation through the use of a business credit card. As the name suggests, business credit cards are to be used for business purposes only. Expenses range from office supplies to travel, and everything in between. As long as you are spending for your business, using this type of credit card makes good sense, especially when your spending gets rewarded with points.

How to Choose a Business Credit Card

With all the major banks offering business credit cards, it is important to compare many options before proceeding with the application process. As you compare offers it will become obvious that some are better suited to your type of business and the way that you spend money. To ensure efficiency in your comparison, ask yourself the following questions.

• What is the interest rate? – This is an important question for most business credit card users because carrying a balance from one month to the next is quite common. The same holds true for balance transfers and cash advances. It is good to know what rate of interest you will be charged for different activities.
• Is there a rewards program? – It is not uncommon for businesses to spend tens of thousands of dollars on their credit card every year, and in many cases, every month. No matter how often you use your card, it should have a rewards program that allows you to accumulate points with every dollar spent.
• What is the credit limit? – This is more important to some businesses than others. However, you should know what limit you qualify for so that you can determine whether the card offers enough flexibility to handle all your expenses.

Pros

• Built for businesses – Why use a personal credit card for business use when you don’t have to? Every aspect of a business credit card is meant to better the financial situation of your company.
• Rewards can save you money in the long run – With every dollar you spend you will earn points. In turn, you can cash these in for everything from flights to hotel accommodations and much more. You might as well get something in return for using your card, right?
• Keep business and personal expenses separate – This is an important advantage as it will benefit you and your company in many ways. With a business credit card it is easier to track expenses, keep accurate accounting records, and pay your taxes – all of which are extremely important. They also make everyday accounting much easier as most dedicated credit cards for businesses prepare your BAS for you automatically.

Cons

• Higher interest rates – When compared to standard level personal credit cards, you will find that a business offer generally has a higher interest rate on purchases. Interest can add up quickly if not paid off in full each month, so make sure you keep an eye on your statement.
• Fees – Most business credit cards have fees that you need to be aware of. Annual fees, for example, are very common. Are you willing to pay this fee every year for the right to use a particular credit card?
• Lack of balance transfers – Have a look at what’s available and it’s plainly obvious that most credit cards for companies lack a balance transfer offer of any sort. Unfortunately, a balance transfer is one of the best ways to cut costs, so not having access to one for your business will probably mean paying more interest.