Having a business credit card comes in handy when you need to perform financial business transactions that require more cash than you have in your corporate account or on hand. Furthermore, it also helps you simplify work-life by keeping business and personal payments separate.
Business credit cards provide start-ups and entrepreneurs with a revolving line of credit to make corporate purchases or withdraw cash to meet the financial needs of businesses. This line of credit comes with a set credit limit. But it is also important to consider that business credit cards are not a size fits all and you need to decide which one is suitable to your business needs.
In order to make things easier, here we have listed the 5 most important things you should look out for in a credit card for a business to make a wise selection.
Credit card providers offer a variety of cards specifically designed for different financial needs and purposes. That’s why you should choose the right card type to ensure the card meets all your financial business needs. Interest free credit card, card with reward programs, secured business credit card, and an unsecured business credit card are some of the common card types and you can choose an appropriate one by going through the terms and conditions. For instance, if you often travel for business, you can consider an airline business credit card that offers free mileages. This type of card helps you earn a lot of airline mileages upon every transaction you make through the card.
Benefits & Perks
When having a credit card for business, there are several expenses that are associated and can be charged to your new card. This is where choosing a credit card with amazing benefits and perks like cash backs and free rewards comes into play. So, be sure to check the benefits and perks offered by the credit card provider to choose the right one. For instance, make sure to check the specific spending categories with a specific amount to earn free rewards, points, or cashback. As a result, you will be able to save a significant sum of business money that can be spent on other productive things.
Annual Percentage Rate (APR)
Business credit cards with 0% introductory interest rate or balance transfer option are a great way to finance your small business or make corporate purchases without having cash on hand. In this way, you are able to make payments for things like inventory without spending a single penny on interest. 0% annual percentage rate introductory periods may differ by the company to company but can help you save a lot of business bucks in terms of not paying interest amount. That’s why you should also check the APR period offered by the provider to make a wise and profitable choice.
Applicable Charges and Fees
Before signing a credit card agreement, make sure you are aware of all the possible applicable fees and charges associated with the card you are about to own. Some of the service charges and fees are worth paying. While there are many other that must be avoided to save the business money. You need to check fees and charges like annual fee, foreign transaction charges, late payment fees and cash advance fees, etc. If you often travel abroad and need to execute transactions via credit card, consider a card provider with a minimum foreign transaction fee to save a lot of business dollars while making your overseas stay comfortable and convenient.
Almost all credit card providers check the personal credit score of a business owner to determine the solvency of the applicant. If you use EIN (employer identification number) to apply for a business credit card, your personal credit report will be used to review the application and make a final credit decision. Along with experiencing a tough assessment, a new credit card will also show up on your personal credit report as a liability. That is the reason, you should always consider a credit card provider that only report to the business credit reporting entities. It will not only shield your personal credit score but also helps you build a corporate credit identity.