The world of business credit cards is increasingly vast and complex. From adjustable interest rates and finance charges to grace periods and rewards programs, the nuances of even the most basic business credit card can be bewildering.
But it’s important that you understand the details to ensure that your credit card features complement your business circumstances. Here are some important factors to consider when choosing a credit card for your business.
A card with a high interest rate can slowly bleed your business into an anemic condition. So it’s important to find a card with a low interest rate if you can. Interest rates for business credit cards depend on both the lender and on a business’s creditworthiness, and they typically range all the way from 3 percent to 21 percent annually. To keep costs at a minimum, pay as much of your balance as possible every month, or your interest rate could skyrocket.
To search credit cards with the lowest interest rates, go to CreditCards.com. The site provides a regularly updated list of business card offers. It also lists the current interest rate charged by each lender, which makes comparing costs easier. Bankrate.com is another helpful Web site. It allows you to request interest rate quotes from various lenders.
Factor in Fees
Credit card companies may hit you with a range of fees for using their services. These can include membership fees, fees for multiple credit cards on the same account, fees for rewards programs, even fees for redeeming your rewards points. They can add up to as much as $200 a year, depending on the line of credit you receive.
However, by law these companies must provide you with a statement of all potential fees before you apply for a line of credit. Web sites like LowCards.com will allow you to compare usage fees. Annual fees must also be listed for each line of credit you’re considering. The Federal Reserve Board lists all possible business credit card fees and gives an estimated cost for some.
Manage Your Account
Managing your account sensibly can keep it cost-effective and help you build and maintain a positive credit rating. Keep credit card balances as low as possible to avoid over-limit fees or interest rate hikes. Maintain your business’s creditworthiness to guarantee that it will qualify for the cards with the lowest rates possible.
Pay your corporate credit card account on time and pay as much as possible. The Federal Deposit Insurance Corp. provides information on what happens when you don’t effectively maintain credit card lines. While late and over-the-limit fees vary from state to state, they average between $25 and $40 per month per overage. Lenders are legally obligated to provide a list of penalty fees before you apply for any credit card. You can also find this information at Credit.com.
Take Advantage of Rewards Programs
Credit cards that offer rewards can really pay off. For example, if you travel frequently, look for cards that offer airline or hotel rewards. Retail rewards can be used to purchase supplies and equipment.
You can compare interest rates, finance charges, and rewards programs of the leading credit cards at CreditCards.com and CreditCardGuide.com.