7 Steps to Take Before You Pick a Business Credit Card

As a business owner I’m sure you agree that it's critical to maintain maintaining accurate records of your business purchases and expenses. Besides helping you run a more efficient business, it saves your bookkeeper from wasting time separating your personal expenses from business expenses.

One of the ways you can separate and record your purchases is by using a business credit card. With a company credit card you can receive the type of detailed reporting that makes it easy for you to budget, plan, and spot tax deductions. 

With over 500 business credit cards to choose from, however, it can be quite a challenge for you to decide which card is best. Many of these cards serve a unique purpose that is fine for one business but completely inappropriate for another.

So before you apply for a business credit card, I suggest following a seven-step plan to choose the right card for your small business:

1. Conduct a credit assessment. Be fully aware of where your credit stands on a personal and company level. Start by obtaining copies of your personal and business credit reports with your credit scores. Remember, you are entitled to one free report per year from all three major consumer credit agencies.
2. Determine which type of business credit card you need. You should understand the primary functions of the card you are applying for -- including its limitations. Whether it’s a business debit card, prepaid business credit card, unsecured/secured corporate credit card, charge card, fleet card, or merchant card, make sure you select the one that best fits the needs of your business.
3. Read the fine print. Just because a card issuer offers all kinds of special perks and rewards doesn’t mean it’s necessarily the best card. Always read the fine print so you completely understand the terms and conditions and fees associated with the card.
4. Look out for teaser rates and special offers. While offers like a no-interest promo are a heck of a deal since they give you the ability to borrow money interest-free, most of these offers come with strings attached. Make sure you understand what conditions must be met and how long your teaser rate stays in effect.
5. Apply for a business credit card that builds your company’s credit. To protect your personal credit you should apply for cards that report your payment experience to your company’s credit files. 
6. Avoid supplying a personal guarantee if possible. A small segment of card issuers will extend credit without a personal guarantee if your business has established strong credit ratings or has substantial revenues. 
7. Do not apply for too many cards. Be selective on which cards to apply for because excessive inquiries can raise a red flag with creditors as well as negatively impact your ratings.

On a final note it’s important to realize that even though business credit cards are not covered under the new CARD Act certain issuers extend CARD Act protections to its business credit card holders. This is just another factor to consider when applying for a card for your business.

Don’t make the mistake of putting your personal credit and assets at risk when it comes to running your business. Obtain a business credit card so you can start establishing a creditworthy company.

Marco is founder of the Business Credit Insiders Circle, a step-by-step business credit building system providing fleet credit cards, vendor lines of credit, business credit cards, merchant lines of credit, and funding sources. You may contact Marco directly at: marco@businesscreditblogger.com. Follow Marco on Twitter @MarcoCarbajo and read more of his insights on getting business credit.