Why Business Credit Cards Can Be a Smart Financial Decision

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Business credit cards have become extremely popular. They offer many of the same incentives as consumer cards do, but are slightly more tailored towards business needs. For instance, credit card issuers often target their cards at businessmen and corporate companies by offering incentives to frequent fliers, whereby points are awarded per every mile flown. These points can then be redeemed against future purchases of airline tickets, when made through the business card. Other common perks include discounts for hotels, restaurants and gas stations.

One of the reasons business cards have gained popularity it that being able to separate business and personal purchases certainly makes life a lot easier. Having all your business transactions on one statement makes it straightforward to keep detailed records of your company expenses. This is particularly useful when it comes to the end of the tax year and you (or your accountant) do not have the laborious task of separating business and personal records. This distinction between purchases is also beneficial for corporate companies, as it negates the need for its employees to go through the hassle of having to reclaim their expenses back from the company each month, as they would do if they only had a personal card at their disposal.

Possessing a business credit card is also especially beneficial for building up a good credit rating for your company. If you ever require a business loan or want to apply for a merchant account a good credit score is essential, and a business credit card can have a large bearing on this. However, the same rules apply as to your personal credit score. Meeting payment dates is essential otherwise it will have an adverse effect on your credit rating. But for the small business owner, separating business and personal credit cards means that should you get into financial difficulties on either credit card, your personal problems will not effect your business’s credit rating and vice versa.

When choosing a business credit card, the criteria is much the same as they are when you are when you choose a personal credit card. Think about the way in which you will be using the card. For example, if you will be making a lot of purchases on it consider a business card which offers rewards for spending, such as air miles, especially if you make frequent business trips. Other important factors are the yearly fee for the credit card and the interest rate, particularly if you are unlikely to be paying off the balance in full each month.

The credit limit on your business card, should your company’s application be approved by the card issuer, is determined right from the start. This will be designated according to your companies financial situation, credit rating, number of employees who will have access to a credit card on the account and the typical business activities of your company, (i.e, what purpose you would generally expect to use the card for). Should you require an increase in this credit limit at a later date your card issuer will need to review your credit rating before granting it.