If you need credit, a business credit card can get you just that, and fast. Unfortunately it might also charge you high interest rates or leave you with lingering debt. And with lenders tightening their lines of credit, it may seem like your chances of getting a card are slim. Consider these issues when deciding if a business credit card is the right tool to take your business to the next level.
How’s Your Credit?
Many companies are now issuing business credit cards only to those with a solid credit history and high credit score. If you’re not sure where your credit stands, you’ll want to check before you apply for a card. If it’s less than excellent, you may want to take some steps to rebuild it before getting a credit card. Focus on making all of your payments on time, for starters. Also check to make sure you’re not maxing out any other lines of credit.
Do You Know How Business Credit Cards Work?
In many ways business credit cards function like personal credit cards. But there are differences. Some business cards offer incentives for paying off the balance early, such as discounts on the amount due. Others offer an extended grace period, giving you more time to pay off the balance before interest kicks in. Advanta, which specializes in credit cards for small businesses, offers a card that includes 90 interest-free days after you make a purchase.
Do You Need Help Keeping Track of Your Expenses?
Many business credit cards keep careful track of your spending. You can expect to see detailed reports that show exactly where your money goes. This can be helpful not only for tax purposes but also for managing your finances. It can even help you set up a budget for future spending.
Do You Want to Separate Business and Personal Spending?
If you’re having trouble with business and personal accounts getting muddled together, a business credit card can help clarify things. Use the business card for all of your company’s expenses. Read through every statement to see exactly how much money your business spends during the month.
Do You Want a Card That Earns Rewards?
The majority of business credit cards come with extra perks attached. Since businesses often have higher expenses than households, the rewards can add up fast. Consider signing up for a program that will be valuable for your business. If you travel frequently, look for one that offers an airline rewards program. If you want to make the most of your cash flow, look for a card that offers cash back when you make purchases.
To get the most out of your rewards program, read through the fine print before you sign up for the card. Then track your points or miles as you use the card. Pay off the balance each month, and cash in the rewards when they have accumulated substantially. Solid management can lead to healthy finances now and fun rewards in the future.