Your Business and Credit Cards

From LoveToKnow Creditcards

Whether you’re a longtime business owner or a new entrepreneur, you know your business and credit cards go hand in hand. This article will provide an overview of how a credit card can become a valuable funding source and money management instrument for your business.

Small Business Credit Cards

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Your Business and Credit Cards: Benefits

Simplified year-end reporting and expense management. All your business expenses, from client luncheons and trade show registration to copier toner and pencils for the office, all on one monthly statement. This might also be a helpful accounts payable tool.

Multiple cards for co-principals and employees. Primary benefit is, again, more efficient expense management, especially for traveling employees. In addition, certain lenders don’t charge a fee for additional cards and employees’ cards can have limit caps set and changed by you.

Reasonable annual percentage rates. Lenders view companies as slightly more financially sound than the average individual. Thus, interest rates are often fixed between 2.99 percent and 10.99 percent.

A higher spending limit. Need to outfit the entire office with new technology? Many business credit cards have available credit lines starting at $100,000 after approval. Some cards don’t even set a spending limit.

Various incentives. Assorted business credit cards offer cash back, merchandise, travel, auto and other incentives. So if your business requires a lot of travel, for example, a credit card with air miles, hotel points, restaurant vouchers and other perks based on purchases can really reduce the bottom line.

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Things to Watch For

An annual percentage rate of 0 percent may be limited to as little as six months for new card members, then dramatically increase after the introductory period. This type of card may still be beneficial to get the company up and running, but like Cinderella’s coach, the 0 percent interest rate will soon turn into a fat pumpkin, so do the research.

APRs fixed to automatic payment options. It’s not exactly a bait and switch for lenders to offer a lower Interest Rate if a company allows automatic withdrawal, but it’s also not uncommon to see different APRs advertised based on conditions like this. Read the fine print.

Annual fees can be a costly way to reap the offered incentives. If you’re not going to be flying much for your business, for example, don’t pay for an annual fee of $150 on a business credit card because it offers frequent flyer miles as an incentive.

If a card that promises tax benefits, it’s best to consult with your tax advisor on deductibility of interest and annual fees on a business credit card. Generally, the answer is no, unless the credit card is associated to an extendable line of credit obtained through a home mortgage, a common form of start up funding for a small business.

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Review Business Credit Cards and Apply

This selection is the proverbial tip of the credit card iceberg, but hopefully it will demonstrate that there are tremendous options available to the business owner. Take a second to review these business credit cards and then apply.

Advanta Business Card

No annual fee
Cash back and travel rewards incentive of up to 6 percent
Special limited APR of 2.99 percent on balance transfers

American Express Blue Cash Business Credit Card

No annual fee
After introductory 0 percent APR, variable APR as low as 10.49 percent
Approval in less than 60 seconds with good credit rating
Primary cardholder earns cash rewards based on purchases of additional cardholders

Chase Platinum Business Card

No annual fee
0 percent APR for the first 12 billing cycles after opening an account on balance transfers and purchases
The Visa Business Partner Advantage program available through this card offers savings and incentives
Lost luggage and travel accident insurance

Citibusiness Card

No annual fee
Special limited 0 percent APR on balance transfers, regular APR 10.99 percent
Free additional employee cards
Larger than average credit line

United Mileage Plus Platinum Business Card

Miles earned at 1 mile per 1 dollar purchased
After first purchase, granted 17,500 bonus miles, plus a discount travel certificate and bonus miles at participating restaurants
All united.com purchases earn double miles

Here are a few links to help you find the business credit card right for the needs of your company:

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Be Proactive with Financial Management

If you have yet to apply for a business credit card but would like to, try your current financial institution first, as you probably already have a relationship with them through a checking account or loan. Note that as the owner of the company, your credit report will probably be checked, so it's a good idea to familarize yourself with it. Also, try not to apply to a variety of lenders. It’s better to build credit slowly and prove the financial stability of the company.

Like many financial vehicles, the constructive combination of your business and credit cards can greatly enhance options for your company’s growth. Managed responsibly, business credit cards are a mechanism that can improve cash flow, allow for more purchasing freedom and more effective expense management.

Written by: TK2

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