Business credit cards have certain advantages when compared to personal credit cards. Business credit cards generally have higher credit limits. They also allow you to establish good business credit. Credit cards specifically for business can simplify operational management by eliminating the use of your personal accounts.
You want to do your homework before choosing a credit card for your business. You must compare credit card companies as well as the credit cards themselves. You also need to know the difference between a credit card and a charge card. Credit cards, such as Mastercard and Visa allow you to carry a balance over from month-to-month. A charge card such as American Express green card, must be paid off each month. Some criteria to consider are listed below.
Annual fees are often charged for the services of maintaining a business credit card. In addition to comparing these fees among providers, find make sure to find out what's included. Do you simply receive the basic service, or are there any special benefits included with your card? Basically, if you see an annual fee, don't be alarmed just make sure you're getting the most for your money.
It's especially important to know what your initial interest rate is and how it may change. Many people don't get into credit trouble because of their purchases. They find themselves in real trouble because they can't afford to pay off the compounding interest on those purchases. Find out what interest rate is offered by each card that you are considering. You will also need to know what the policy is for increasing your interest rate in the future. Try looking for a card with a cap on interest rate increases so you know you'll be able to afford your card in the future.
Some credit cards for business offer special rewards programs. Receiving cash back, frequent flyer miles, and discounts on business items are all examples of possible rewards for using your card. After you find out what is offered, find out if the rewards are free. Are the rewards based on purchase history, included in an annual fee? Is an extra fee required to take advantage of them?
Be realistic about how likely you will be to take advantage of rewards programs. Credit card companies use rewards programs as “hooks” to get your business. Nothing wrong with that, it is just good marketing. However, if your business is not one that requires a lot of travel, you do need to concern yourself with the best frequent flyer rewards. Conversely, a rewards program may be a great benefit if you travel a lot.
This is an area where should investigate thoroughly. One of the complaints with some credit companies in recent years has been the intentionally late mailing of statements. Receiving your statement a few days before the due will force your monthly payment to be late and the bank can then charge a late fee. Recent laws instituted by the federal government have eliminated this unfair practice. Still you should avoid making late payments if at all possible. You do not want your payment history to adversely affect your business credit rating.
Make purchases and pay your bills on time. Business credit cards allow you to build up a good reputation by increasing your business credit score. However, if your card is not used cautiously and responsibly, you could end up doing more damage to your score than if you never had the card in the first place!
You can use a business credit card as a business line of credit if you are financing the start-up of your business. Look for a card with a grace period of either low interest or no interest. This will enable you to purchase the equipment or supplies that you need without having the interest work against you while you are building cash revenue.
An alternative to using a credit card in your business is to get a business line of credit, sometimes referred to as a BLOC. For more information on getting a
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