Business credit cards are not only convenient, they are a great way to monitor your spending. They also make bookkeeping and accounting easier because there are fewer cash transactions to wade through and record.
However, no matter why you choose to have a business credit card, there are still some things you need to know. For example, annual fees for business credit cards are generally higher than those for personal credit cards.
Annual fees can easily reach $150 per year, plus extras. If you only need a credit card to make simple purchases, pick a card with an introductory “interest free” time period.
This actually means that you will pay no interest whatsoever for a given period and this can be anything up to twelve months or so. This is super news for new businesses when all manner of setting up expenses are incurred ? it could almost be looked upon as an interest free loan!
When a payment is due, your statement will show it. The date on the statement is the last day your payment can be received by the credit card company. Cards such as American Express require that you pay your entire balance every month. Take a very close look at any terms of credit cards before you sign up for one. If you miss the card’s payment due date, you’ll be charged a late fee in addition to your existing balance. In addition, if your card is not an interest free or fixed rate card, you’ll also probably be given an increased APR because of your late payment.
Your annual percentage rate (APR) is the annual amount of interest you are charged on your outstanding balance. Because of the risk of rising interest rates generally, and increased interest charges as a result of late payments, it is best to choose a fixed rate card if at all possible. Fixed rate interest may initially be a little higher, however in the long run it can actually save you a lot of money. If you already have a credit card which you realize is costing you too much, there is nothing stopping you looking for a better deal and transferring your balance to a better offer. Doing nothing when you could make a change for the better can end up costing you a lot of money.
Business credit cards can also be used to obtain emergency cash for your business. However, the interest charges for cash advances tend to be higher than for purchases and you will be charged this high rate for as long as the equivalent amount of your advance remains on your statement. This can end up being quite expensive so it is a good idea to minimize your use of the cash advance option to genuine emergencies.Your business credit card can contribute to the smooth running of your business, so when things go wrong they need to be dealt with quickly. It is a good idea to have the contact numbers of your credit card provider on hand so that you can solve problems without delay. You may also be able to find answers to any questions on your provider’s website. Look for a ‘Frequently Asked Questions (FAQ)’ page and scan the questions to see if your concern is listed. You may also be able to directly contact the company with your concerns via their website. However, as long as your credit card company has a reasonably quick telephone response time, it may be easier to simply contact them by phone. It is a good idea to test out a company’s customer service before actually applying for a card with them.
If you need to apply for business credit card, be smart. If you have a small DBA business, it’s likely that you don’t need a credit card at all. However, make sure you manage your credit card effectively so that you don’t negatively impact your credit score by poorly managing your business credit card charges.