All businesses have expenses, whether that business has 100 employees or is owned and operated by a single person. One method of paying for your business expenses and supplies is to use a business credit card. Having one credit card to pay for all of your expenses will also help you monitor your finances closely, and the billing statements give you a nice record of expenses for tax time, too.
When you are ready to choose a small business credit card, you'll want to conduct some research to find a card with an appropriate credit limit, rewards program and interest rate based on how you will most likely use the card.
Charge Card or Credit Card?
Your first choice will be whether you want a charge card that requires you to pay for your purchases at the end of each billing cycle, or a credit card that allows you to carry a balance from one month to the next. Charge cards generally have no maximum credit limit since you are required to pay the balance in full each month, while a credit card usually comes with a spending limit.
Rewards Programs
Most business credit cards offer a rewards program of some kind to their cardholders. There are a wide variety of rewards that can be earned through credit cards, from travel-based rewards like airline tickets, free hotel stays and car rental discounts, to discounts at office supplies stores or cash back on purchases.
If you are a business that needs to buy the same items on a regular basis, it would be in your best interest to look for a rewards program that may reward more points or cash back based on the category of your purchases. If you travel frequently, a good airline or hotel rewards program can save you a fortune on travel expenses. The trick to really getting rewarded through credit card programs is to select a program that works with how you actually use the card and live your life, and make sure that any rewards program fees are going to be less than the value of the rewards you earn.
Interest Rates
If you expect to carry a balance on a business credit card from one month to the next at any time, the interest rate on the credit card should play a large role in your selection process. Many cards offer a 0% APR promotion for new cardholders, but don't forget to look at what the interest rate will change to after the introductory period ends. Often a 0% promotional rate is followed by a high interest rate. It's better to select a card with a lower interest rate than it is to choose a 0% temporary promotional rate.
Annual Fees
Many business credit cards charge an annual fee. As a small business, you may want to look for cards that don't charge annual fees to help save money - but if you must select a card with an annual fee compare the fees among cards. Also take a look at what services and benefits each card offers in comparison to their annual fee to determine whether the fee is worth it. Sometimes cards with annual fees offer better rewards programs or other services useful to business owners that cards without annual fees do not offer.
There are many factors involved with choosing a small business credit card appropriate for your business needs. Don't simply take the first card you see - spend some time comparing various cards to find one that matches how you will spend money and offer you the most benefits.
