If you’re running a business and want to explore more options for financing, a business credit card can do wonders. It enables you to separate your spending from your business expenses.
There are many more benefits to owning a business credit card, but you also need to be careful and avoid the pitfalls of having a bad business credit card.
If you want to learn more about business credit cards, check out the practical guide on choosing the right business cards for you down below.
What is a Business Credit Card?
Business credit cards are often used to cover certain expenses on your business, such as supplies and utility bills.
Certain business cards also cover client dinners and many other features that can help you with running your business.
Having a credit card that is exclusive to all of your business transactions means that you don’t have to worry about mingling your transactions with your business expenses.
Difference Between a Personal and Business Credit Card
There are a lot of differences between a personal and business credit card.
The rewards, features, and benefits of a business credit card are often tailored to how businesses can benefit from using the card.
These cards also have higher credit limits, and you can manage your cash flow. Some cards offer travel-related perks and, overall, help increase your business credit score.
Understand How Business Credit Cards Work
Before you apply for a business credit card, you should always know how it works and how it can help improve your business.
Business credit cards work differently from personal credit cards. Before you can even apply for a business credit card, you also need to have your business credit score.
It is separate from the usual credit score that you have with your credit card.
This will allow the issuer to know if you are a responsible business owner.
Application is More Complex and Rigid
Applying for a business credit card is also a lot more complicated than a personal credit card.
When choosing the right business credit card, you should be looking at what your business needs and how you can supplement it through your card.
The application will still require the same personal information but with the added business details, including your business credit score.
Always read the terms and conditions first before you sign up. This will help you determine if the card that you’re choosing is worth every penny that you spend.
Identify Your Needs and Expenditures
Now that you understand how business credit cards work, you should start reviewing and identifying the needs and expenditures of your business.
You will need to ask yourself if your business requires you or your employees to travel regularly or if you need to entertain different clients every week.
Other questions you need to ask yourself include any weekly supply runs and if you can handle them personally, as well as if your business requires a lot of driving around.
These needs and expenditures will help you determine the kind of business credit card you want.
Check the Perks
A lot of business credit cards often have a very robust rewards system. These rewards are not the only thing that will let you use the card.
Most business credit cards often have very good perks and benefits.
Some of them provide detailed reports on all of your transactions, making it very easy for you to monitor and manage your expenditures.
There is also an option to customize the reports so you can incorporate them directly into your accounting program.
Always Check for Annual Fees and Interest Rates
This is where things vary from one business owner to the next. Many business credit cards have a very high annual fee and have many other extra charges.
Look for a business credit card that offers low annual fees and decent interest rates without compromising the quality of the service and benefits.
Research properly and make sure that you follow through with your financial goals before you apply for any business credit card.
Find Out If There Are Added Features and Benefits
Many business credit cards offer countless features and benefits.
These include special financing offers that can be as long as several months to a year and even purchase protection as well as insurance.
Most business credit cards have luxury perks that include airline credits, which can help offset the high annual fee.
Check with the credit card company and their website to see which of these business credit cards have added features and benefits.
Inquire About the Welcome Bonus
One of the best features that many credit cards offer is the welcome bonus.
They often entice cardholders to make good use of their credit card, especially early on.
Inquire about the welcome bonus before you even apply for a certain business credit card.
Most offer cash-back rewards after you meet a certain spending threshold, but others simply want to reward you for owning the credit card.
Compare How Much You Can Save
Another great way to select a business credit card that is good for your business is how it compares to the average amount of savings that you can get.
It is always good to compare different rates and charges with other credit cards.
This includes the annual fee and many others since these fees also affect your savings.
Make sure that you choose a credit card that does not cancel out your savings against all of your fees. Instead, go for the ones that encourage you to save more instead.
Make Customer Service Your Priority
Customer service should always be your priority when it comes to choosing the right business credit card.
You do not want to have a credit card that is not reliable, especially in an emergency.
Read reviews and talk to other business owners to see if the customer service for a specific business credit card is responsive and helpful.
Conclusion
Business credit cards are very useful in building business credit scores as well as helping finance your business. You even get to earn rewards and take advantage of premium benefits and perks if you’re able to choose the perfect business credit card for you.
