Business Credit Cards are not just for large corporations, they can be used by any size business. A business credit card enables even small companies to purchase goods and services on credit, with the promise to pay at a later date. Business credit card issuers differ greatly in their products. The fees, interest rates and terms for business credit cards vary greatly and comparing companies and cards can be very important. Here are some tips on getting the best credit card for your business.
Tip Number 1 – Credit Report
Often the interest rates and terms for a business credit card will be dependent on your personal credit rating. If the business is new, or it is a small business, the issuer will look at your personal credit rating. So the first step in shopping for a business credit card should be making sure that your credit report is correct.
Pull your three credit reports for free and make sure the information on them is correct. Try https://www.annualcreditreport.com/cra/index.jsp. This is a central site where you can request your free credit report on an annual basis. This site will provide the information from all three of the consumer credit reporting companies. These three nationwide companies are Equifax, Experian and TransUnion. This site will also allow you to submit almost all of the changes or discrepancies online.
Tip Number 2 – Secured Business Credit Card
If you have bad personal credit it might be difficult to get a business credit card. There are things you can do to improve this standing so that eventually you will be able to get a business credit card or business loan. One of the options is to apply for a secured business credit card. You can apply for one online or through many financial institutions. A secured card will require you to make a security cash deposit that is equal to the credit limit you are asking for.
Once you get the secured business credit card, you can use it for your expenses. It will allow you to make online purchases, pay for travel and be utilized as you would any business credit card. Then as you make your monthly payments, you will rebuild your credit history. Make sure you choose a provider that reports your business credit success to the reporting services.
Once you’ve had the secured card for a year, you can request that your status be upgraded to a non-secured account. Some of the credit card issuers will do this automatically, but make sure you understand the guidelines for your upgrade.
Tip Number 3 – Compare the Business Credit Cards
All business credit cards are not created equal. Terms, interest rates, rewards and other options vary greatly. You need to make sure you compare all the information. Some cards have annual fees, and the annual fees can vary greatly from $75 or so a year to several hundred. The same thing is true with interest rates. They can vary by double digit percentage points so make sure you evaluate all the options. If you are comparing introductory offers for business credit cards, make sure you know how long the introductory offer is for, and what the terms and conditions are once the introductory term expires.
Besides comparing the basics, consider how you will use the card and make sure to look at the extra fees and benefits. For instance, if you travel a lot, does the card provide flight insurance or car insurance on rental cars? If you travel overseas, what are the fees to convert charged purchases from the currency of the country you are in, back into US currency? The conversion fee can vary from 0% to 3% and higher.
Don’t forget to look at the rewards programs. Do you get cash back? Or points for travel and other purchases? To utilize these rewards do you have to hit a specific threshold? For instance, there is one business credit card out there that requires you to make $100,000 worth of purchases in a year before you can really utilize their rewards.
Summary
With so many options out there it is well worth spending the time to research the different cards and card issuers. Things change fast, and there are new cards and options coming out all the time. Do a comparison of any business cards that you have at least once a year to make sure you are still getting the best deal, best service and have the right business credit card for your company.
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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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The new laws and regulations that govern consumer credit cards will also affect business credit cards. These changes have to do with credit card interest rates, fees and credit terms offered on business credit cards. These changes started to take effect in 2009, but they will be fully in place by August 2010. These changes have come about because of a federal credit card law.
The regulations aren’t just for new credit cards. These changes will also impact the credit cards you already have. It’s important that you understand what the changes mean to your business. Below you will find highlights of some of the changes and how this might change your business credit card.
Billing Changes
One of the biggest changes is that the card issuers now has to give your business “a reasonable amount of time” to pay the credit card bill. They are required to send the bill out with a bill due date that is 21 days after bill delivery. This change came about because some credit card due dates were so close to delivery date that it was impossible to pay the bill before late charges could be assessed.
The new law also limits payment cut-off times. Instead of setting an arbitrary deadline for the payment to be due, the new law sets the cut-off time after 5pm on the due date. The issuer can’t start assessing late fees until the next time they are open for business, so if the date and time falls on a weekend, holiday or anytime the card issuer is closed for business there can be no late fee assessed.
Minimum Payment Consequences
Another change to the billing is that the credit card issuer has to include on the monthly billing what the consequences are if you make only the minimum monthly payment on the account. This means you will know how long it will take you to pay off your entire balance if you only make a minimum payment.
The second piece of information that they now have to include on the statement – is how much the payment would need to be each month if you wanted to pay the entire balance off within three years. The statements will also include the total amount of interest you will pay if you pay the bill off with minimum payments.
Notification of Interest Rate or Fee Changes
One of the major changes under the new law is that credit card issuers can only raise their interest rates annually, or under limited conditions. These conditions include the end of a promotional period, or if there is a variable rate stated for the card, or if the business makes one or more late payments.
Otherwise the interest rates can only go up after the first year. The other change is that if the company is going to raise your interest rate or other terms, the card issuer must now notify you in writing with at least 45 days advance notice of those changes. This time frame is supposed to give the cardholder plenty of time to shop for a new card if they don’t like the new rates.
Opt Out Rights
Once the credit card issuer notifies you of a change, you now have the option to “opt out” of the card. If the changes the card company wants to make are unacceptable to you, then you can reject them. This means you agree to close your account and not make any new charges. Then you will be allowed to pay off the remaining balance on the card under the old terms of the agreement. By law you be allowed at least five years to pay off your balance, but you have to make the minimum payment due under the old agreement.
Summary
The above represents only a few of the changes to business credit card regulations. Make sure you read up on the changes and understand what your new rights and obligations are. Credit card issuers will be changing their card terms to meet these new regulations so be sure and read any communications that concern credit cards you currently have.
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A Business Credit Card can be used by any size business. The credit card will enable the company to purchase goods and services on credit, with the promise to pay at a later date. The issuer of the Business credit card can be a bank or other financial institution, or the cards can be issued by the office supply store, other retail outlets or service company for their specific products. The card issuer sets a specific limit that basically assigns a line of credit to the card holder.
Business Credit Card versus Charge Card
Credit cards are different from charge cards. But sometimes the terms are intertwined and used to describe either one. A charge card will require you to pay off the total balance on the card at the end of the month. They normally don’t have a preset spending limit, but remember, the TOTAL balance must be paid in full each month. An example of this would be the traditional American Express Business Cards or the new JP Morgan Chase INK cards.
A true credit card will allow the business to carry forward a balance and pay anywhere from the minimum monthly payment, to the months entire balance. With a credit card, interest accrues each month on the balance left over after a payment is made.
Business Line of Credit versus Credit Cards
A business line of credit is a loan that businesses can utilize when they need to. A line of credit generally has a smaller interest rate than a credit card. But in the current financial climate, these lines of credit are harder to get. They often require you to present a business plan; work directly with the business lending area of the financial institute, and getting approval or hearing back from these institutions on your request can often take several weeks. Business Credit Card lending is typically easier to arrange. Often applications can be handled online and approval generated within minutes. Once you are approved, you generally receive your business credit card within just a few days.
Getting a Business Credit Card
For smaller businesses that don’t have their own credit history, the approval of the business credit card will often be based on the owner’s personal credit history. It is important that you make sure your credit report is as clean as it can be by getting the reports annually and looking at them to ensure the information is correct. You can do this free through any number of online sites; one popular site for this is www.annualcreditreport.com.
Benefits of a Business Card
There can be many reasons and benefits to utilize a Business Credit Card. One of the main benefits is to separate your business expenses from your personal ones. Especially if you are a small business owner who often uses their personal credit card and then has to go back and separate what was for the business and what was personal at tax time. A business credit card can save you time and confusion.
Especially since the business credit card issuer provides more detailed reports for your purchases. These itemized reports often categorize your expenses and provide a year-end summary that is perfect for reporting tax deductions. These reports can be beneficial not only at tax time, but for monthly bookkeeping tasks.
Having a business credit card helps you build credit for your business. This may help in the long run when you need to apply for larger financial assistance or loans to expand your business. Additionally, if you have employees you can distribute supplementary cards on the account if needed and utilize the cards to keep track of an employee’s spending.
Incentives and Awards
Many business credit cards have very attractive awards programs that are exclusive to business owners. From 3% cash back on all purchases to awards that will allow you to travel or pay part of your credit card bill, it is worth understanding what the differences are for the programs.
Credit Cards Differ
Don’t forget to compare all the charges and fees for a specific card. Some card issuers have multiple flavors of business credit cards and all the rates and fees differ even for the same company. Some cards have an annual fee, some don’t. The interest rates, late fees, and other charges vary greatly not only from company to company, but between cards within the same financial institution.
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The importance of business credit cards has increased significantly in the last 18 months. They can be very useful if you use it the right way. It is very important to make the distinction between a business credit card and a credit card that has your business name on it. The first one has the underwriting decision made on the employee identification number of your business while the second has the underwriting decision made on your social security number.
A personal credit file is generally made as soon as you are born and by the time you are 20 there is some credit information about your credit or use of credit, in short your credit history. It is wrong to assume that your business credit file starts the day you open your first corporation. For such a credit file to make sens you have to create and work on it.
The business operator files done in the Brad street and the D&B service tracks business credit versus FICO scors which is personal credit, also called paydex. Just like personal scors, business scores are important. The same way, but on another scale, if your paydex score is 80 or more you can get business lines of credit of different forms, based on you EIN.
The fastest way to built business credit is to get some straight lines of credit. Staples or office Depot, or Home Depot, or Lowes are the easiest way to get them. Use your credit card, pay it off a couple of times and that is going to built your line of business credit score, also called trade lines. There are many lenders that have business credit cards, based on EIN. A web site were you can go to find more is www.Rex.SBCAlliance.com . They offer you a number of cards for which you can apply and get your answer in a few days.
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