Big and Small Business Credit Cards

A business credit card is something that you can use to make business life a little easier, regardless of the size of your business. Not only does it protect your account from fraud, give you rewards, better your business credit score, but it also allows you to have a complete record of all your spending in one place. The only real difference between a big and small business credit card, is the starting size of the allowable credit.

Applying For a New Business Credit Card

Like most credit cards, you can go to the bank and apply for one. However, to apply for a business credit card you must have a legal business entity. If you are a sole proprietorship, you may have to create a D.B.A. (Doing Business As - A name to do business in that is different from your legal name) in order to apply, but most will allow you to use your name as long as you have a registered business, are current with your tax information, and have a business banking account.

Having good personal and business credit will increase the chances of you obtaining a card. One difference that can help you get a card is by keeping current in all of your licensing and insurance policies. This helps the bank and credit card lender to understand that you are a serious business and that you keep on top of your finances. Nobody wants to lend money if they don’t think they will get it back.

4 Benefits of a Business Credit Card

1. Having a single business credit card also allows you to create more cards under the same account with set spending limits on each card. This allows you to give your employees a card without worrying about them maxing out the entire account.

2. Keeping track of all your bills can be a hassle. If you use your credit card for all of your spending, you will have all of your spending information on a monthly statement. This is extremely useful for tax audits and for your book keeper, or accountant, to keep track of everything in one place.

3. Choosing a business reward card is a great option. Business expenses add up quick and the points will to. But before deciding on a card, be sure to check out the types of rewards that can be redeemed. Some cards offer cash rebates and others may offer discounts to items that you frequently purchase. You may even be able to negotiate some special terms in your favor. Sometimes you can negotiate the reward terms before you apply for the car, but often you will have to negotiate the reward terms after you have proven to be a model business that uses their card often and makes payments on time.

4. Business credit cards are usually given higher spending limits compared to personal credit cards. This makes it even more risky in terms of spending more than you can pay back. However, you business should already a money management system in place if it is to be successful in the long run.

Bad Business Credit Cards?

In North America, we are blessed to have some great credit card companies. None here are really all that bad compared to ones you might find overseas. So let’s focus on the best business credit cards, which in my opinion, are by MasterCard, Visa, American Express, and Discover. They are big reputable brands but each one has its own pros and cons so it is important to take some time to learn about them when choosing one. Some will offer lower interest, some will have a yearly fee for points programs, and others may have perks at certain stores, hotels, and airlines. And all of those things change regularly so you might want to wait until something better or more suitable for your business needs comes along.

Credit cards should never be treated as loans. The high interest rates, usually between 17% and 23%, make it nearly impossible to pay back large balances if they are not paid in full by the end of the monthly payment deadline. Getting a business credit card is just as dangerous as a personal credit card. It is extremely convenient to pay with plastic, but at the same time it can turn in to financial disaster. Always have a limit that you can afford to pay off each month and never let your card get in to the wrong hands.

The next time you’re at the bank, ask to make an appointment to obtain a business credit card. When you have your appointment, make sure that you have a variety of choices and only make a decision after you have had time to figure out what suits your business’s needs best.