CardRates.com Guide: Small Business
Entrepreneurs and small business owners who use credit cards to make business purchases should consider business credit cards. But with all of the choices out there, which is the best one for your business?
With many factors to consider, choosing a card for your business ultimately rests with you. To help you make the best decision for your enterprise, here are some of the things to think about when choosing a business credit card.
1. Compare rewards
A card that offers rewards may seem like a good idea, but ask whether the rewards are worth it. Most cards that offer a rewards program will also charge a fee…per card. If you have many employees who will receive cards on your business account, this may not be a cost-effective way to go. However, if you plan to spend a certain amount each month anyway and could make use of the rewards (such a airline and hotel perks), then why not take advantage of it?
2. Think about the fees
Typically a business credit card account has a fee structure that’s directly proportional to the rewards and business benefits it offers. In other words, if you want access to the perks, you’ll pay a fee for them. Decide whether the rewards and benefits are worth the monthly or annual fee amount.
3. Ask about the grace period
The amount of time the issuer gives you to submit payments can make a big difference in the ultimate cost to you. If you only have 21 days to pay off charges, it can sometimes conflict with your business accounting schedule. If the card begins charging interest from the date of purchase, this can add to your expenses as well. Be sure to research this carefully.
4. Figure out the APR
The interest rate or APR you pay will also impact your overall expenses. If the card offers an introductory or teaser rate, how long is that good for? What will the rate be after that period? It’s always best to simply choose a low rate at the outset so you’re not surprised later.
5. Business credit reporting
If building a good business credit history is important to you – and it should be – then choose a card that reports to one of the business credit bureaus. Believe it or not, some of the big card issuers do not report to directly to a business credit rating agency.
Choosing to keep your professional and personal expenses separate is an important part of maintaining a healthy business. That’s why opening a business credit card account can be a great choice. Be sure to research all of the potential card plans and select the one that best matches your unique goals and situation.
Photo source: huffpost.com
Editorial Note: Opinions expressed here are author's alone, not those of any bank, credit card issuer, airlines or hotel chain, and have not been reviewed, approved or otherwise endorsed by any of these entities.