Top three questions and answers about Business Credit Cards
A business credit card enables companies to purchase goods and services on credit, with the promise to pay at a later date. There are several types of business credit cards and business credit card issuers often offer several different business products within their brand. Choosing the right card for your business can be difficult. Here are some answers to basic questions about business credit cards.
How big does my business need to be to qualify for a business credit card?
The answer to that question is there are no size limitations. In the past business credit cards were only issued to large companies and corporations, but today you can get a business credit card even if you are a home-based business owner with only one employee. The business credit card would have your company name printed on the card and come with many of the benefits that larger corporations enjoy.
If your business doesn’t have a credit history then the personal credit of the owner will be used to determine whether or not you get a business credit card and what the limit for that card will be. It is important to ensure that the owner’s personal credit report is correct. To do this, utilize one of the online credit review sites like www.annualcreditreport.com to get a copy of all three of the credit reports and challenge any discrepancies before you shop for a business credit card.
If your personal credit history won’t allow you to get a business credit card, there are options to help you build credit and have a credit card that you can used to make business purchases. This is called a secured credit card.
A secured business credit card is available for those companies or personal owners with either bad credit history or no credit history. You get a secured credit card by applying for it, and then submitting a security deposit to the account. The amount of security deposit will mirror the amount you are given as a credit limit. If you make your payments on time, a secured business credit card works to rebuild your credit. Once you’ve made payments for a year, the credit card issuer will re-evaluate your credit history with them and should issue a regular business credit card without the security.
Why does my small business need a business credit card?
The advantages for a small business owner start with helping to establish credit for the business, versus your personal credit rating. Your business expenses will be separated from personal purchases, making bookkeeping and tracking expenses for tax reporting easier. Often the annual summary will break your expenses down and categorize them for you, which will help you budget specifically for your business.
There seem to be a lot of reward business credit cards, are they really worth it?
The answer to this question depends on your business and how you utilize the business credit card, it also depends on the terms and conditions for the specific reward card. Often the business rewards credit cards have higher interest rates than non-rewards business cards. They often charge an annual fee for reward cards, while non-reward cards usually have no fees.
So check the differences between card types very carefully. If you plan on paying off your charges each month in full to avoid the interest costs, it might be worth it. Or if you can get a business credit card with awards at a similar rate to a non-reward card it can provide some definite benefits.
A quick perusal of award cards showed that there are options like 3% cash back from gas stations and office supply stores, with 1% cash back on other purchases. Some of the card issuers allowed redemption of awards for as little as $50 in reward money, while others had much higher reward limits. As with any credit card, you need to understand the benefits and the costs and then compare these benefits to your estimated spending patterns.
Summary
There are so many options available for business credit cards. It is important to take the time to understand what those options are and compare the fees, interest rates and benefits of the cards you are interested in. There are several online comparison websites that will help you do that. To find one, search – business credit card comparison.
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