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As a small business owner, you need a credit card that is appropriate for your venture. But as your business grows and your needs change, you will likely find that you want multiple cards. Having multiple cards will allow you to enjoy the perks and rewards that come with these specialist products, while ensuring the financial security of your business. Each business credit card has its own attributes, so it’s important to see what they offer and only apply for cards that will help you achieve your goals.
Here’s how to determine whether adding an account to your credit portfolio makes sense and what the benefits of doing so are:
Do I need to own multiple business credit cards?
Just as consumers may need multiple personal credit cards to pay what they need and build good credit, small business owners usually have multiple business credit cards to take advantage of the same strategy.
The main reason you need a more robust SME credit card portfolio is to provide immediate borrowed electricity through your credit line. Although some business cards have high credit limits, especially when compared to personal cards, a single business card’s credit line may not meet your business needs. If you run a business, you may need adequate access to capital for everything from startup costs and operational management to emergency coverage.
Bankrate Credit Card Management Editor, Saraguage offers valuable flexibility by leveraging multiple cards as a business owner, helping you manage months at unexpected costs and provide a buffer while waiting for clients to pay.
The more business credit cards you have, the higher the credits you can use. The more credits you have, the easier it is to maintain a lower credit utilization rate. This will help you build business credits.
When to add another business credit card to your portfolio
If you’ve just started a business, you’ll want to start with a single business credit card. To get your first business credit card, you need to define your business. These definitions of business structures can include things like LLC and S-CORP, but can also include sole owners, freelancers and contractors. In any case, you usually need to submit your business name along with the business structure.
When comparing business credit cards, focus on options that suit your business needs and credit rating. When you apply, you will enter information about both your business and your personal credit information. In fact, almost all business credit cards require a personal guarantee. This means that even if all liabilities are the result of business expenses, they are still liable for payments.
Once you have established a history of using that business credit card responsibly, you can begin exploring other business credit card options. Identify card features you don’t have yet and look for options that will help you boost your portfolio.
For example, if your first business credit card offers cashback rewards and is hoping to travel in the future, look for a business travel credit card that offers points or miles for travel-related expenses. Do you want to be rewarded for taking your clients into town? Look for cards that offer high rewards for food and entertainment. Also, look out for credit revenue opportunities for statements related to services and products that you use regularly, from cloud storage to global entry or TSA pre-check credits.
Benefits of owning multiple business credit cards
Unlike small business loans, business credit cards often come with special perks and rewards. You probably won’t get all the perks you need from a single card, but you can enjoy the many benefits by layering them.
Find cards that offer the kinds of perks that will help you and your business succeed. These include:
- 0% Intro APR offers: There’s nothing like borrowing money from a bank without paying a funding fee. If you have a business card that offers a 0% intro APR, you can purchase what you need without adding additional interest, at least until the intro period is over.
- Reward Program: Various cards offer different reward programs. Some offer bonus rewards on phone bills, office supplies, or advertising, while others offer a flat cashback on all purchases.
- Unique perks: Some small business credit cards feature access to accounting systems, which helps maintain organisation and maximize tax credits. We may also provide Quarterized Quarterly or Year-end Reports with Expense Categories. Others may not have such a robust system.
- Free employee cards: Want to give certain employees the opportunity to bill them on your account? Not all corporate credit cards offer free employee cards. You need to customize their access so that you can protect them from unauthorized fees.
- Ability to build business credits: Not all business cards report their activities to business credit departments such as Dun & Bradstreet or Equifax. In fact, they may only send negative information to those institutions. Please contact the issuer and ask about their reporting practices before applying.
- Access to additional capital: While not a perk in itself, having multiple business credit cards gives businesses access to additional capital without applying for a loan. This is useful if you have temporary cash flow issues or if you need to access more credits at a specific time in other cash flows.
Bankrate Staff Experience
Bankrate credit card writer Ryan Flanigan says that using multiple business cards strategically can offer SMEs with a variety of benefits. Separating costs from different ventures not only helps the organization, but also offers the opportunity to maximize rewards and benefits by effectively pairing cards, as demonstrated in your own experience.
Potential disadvantages of owning multiple business credit cards
Having several business credit cards can provide flexibility and rewards, but there are important drawbacks to consider before expanding your wallet.
- More Interest and Fees: Most business cards come with an annual fee. If this is the top layer card, it can be a few hundred dollars. Also, if you maintain a balance, you may face high interest rates once your introductory offer expires. These costs will be out of control if you are not closely tracking each account.
- Increased risk of missing payments: Juggling multiple billing cycles and due dates increases the chances of forgetting to pay. One or missed payments can cause late fees and can damage your business’s credit.
- Cash flow management can be complicated:More cards means more credit lines and statements to monitor. Failure to adjust all transactions accurately can lead to budget monitoring and stacking expensive balances, making it much more difficult to manage cash flow effectively.
- Potential impact on individual credit scores: Each new card application triggers a strict inquiry. This can draw a small amount of personal credit and can accumulate multiple enquiries in a short period of time.
- Concerns about personal liability: Most sheds require personal warranty. If your company gets into trouble with any card, you are personally responsible for repayment, so adding a card will increase your financial exposure.
An alternative to business credit cards
The best business credit cards usually require excellent credit to excellent credit. It could leave many small business owners without access to much needed capital. Business credit cards are also perfect for short-term expenses that can be repaid each month to avoid interest charges. Having at least one business credit card in your hand is a sure option, but here are a few options to consider.
Conclusion
Business credit cards can help you have access to the cash you need in an emergency. It also helps you manage operational costs without seeking alternative forms of capital. Many business cards also offer the kinds of benefits that are particularly useful for small business owners, such as employee cards, travel rewards.
To find the best business credit cards to add to your portfolio, keep in mind the types of cards you already have and what will help you achieve your latest business goals. Make sure you only apply for cards you know you are eligible and timing the application instead of applying for multiple cards at once. It’s best to wait 3-6 months between applications.
