Credit cards are an integral part of our daily lives. A convenient way to pay for essentials (and sprays) with just a tap or swipe. Similarly, if you own a business, a business credit card can help you pay the costs needed to purchase supplies and carry out your daily operations. Just like personal credit cards, business credit cards are Earn points, miles, or cashback Large purchases about your spending and funding.
If used responsibly, a business credit card is a convenient addition to your overall financial planning. Find out what you need to know about this unique type of credit card, such as how business cards work and how to apply for one.
What is a business credit card?
Business credit cards are aimed at entrepreneurs and business owners and offer unique perks tailored to businesses of all sizes. Business credit cards help you pay fixed costs such as rent and utilities. It can also provide ways to cover cash flow and cyclical needs fluctuations, such as snow removal supplies and other seasonal demands.
There are two types of business credit cards, usually made for entrepreneurs, sole owners, small business owners, and corporate credit cards. Corporate cards are exclusively available to companies that meet certain revenue thresholds and other requirements, so the focus of this article is on small business credit cards.
Business Credit Card vs Personal Credit Card
Personal Card And business credit cards can vary in more ways than you would expect. Check out this breakdown of small business and personal credit cards:
| Business Credit Card | Personal credit card | |
| Application requirements | You must own the business (you can only become the owner)
Issuer requirements must be met Usually you need to give a personal guarantee |
Issuer requirements must be met |
| Main features | Higher spending limits
Possibility to earn business-related rewards Access to employee cards and bookkeeping tools |
You don’t need to own a business
Possibility to earn rewards in many different spending categories Card Law Protection |
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Credit score Impact |
If used irresponsibly, it could potentially harm your personal credit score
Helps you build business credits |
Helps you build personal credits
It does not affect your business credit score |
How business cards work
Business credit cards work in the same way as personal cards. This allows you to request purchases to cards withdrawn from the credit line. At the end of each billing cycle, you will receive a credit card statement containing an itemized list of purchases, total outstanding balances and minimum amounts.
If you pay your bills in full each month, you will not normally charge interest on those purchases. If you have a balance Please pass your blessing periodand will start to gain interest in that balance based on the interest rate on your card. In general, the more trustworthy your business, the more likely you will receive something that is advantageous Annual Rate (APR) If approved by the card.
Just like personal credit cards, you can find a variety of business credit cards with no annual fees. If you’re just starting your business, these might be great options. However, premium cards with annual fees tend to offer more powerful sign-up bonuses, reward rates and perks.
That being said, some business cards – something like a chase InkBusinessPremier® Credit Card and Capital One Spark Cash Plus – It’s actually a charge card. This means that you usually need to pay in full each month. However, charging cards usually do not have credit limits.
Benefits of business credit cards
A business card credit line helps with normal costs and the fluctuating period of cash flow that comes with running your business. This is because many business credit cards offer it.
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High credit restrictions. Business cards are suitable for your business needs and typically offer a higher credit line than consumer credit cards.
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Tracking business expenses. These cards allow you to separate business spending from personal spending. Keep your account and prepare your tax return.
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Interest-free period extended. Some cards offer referrals to APR promotions that last longer than the typical duration of a personal credit card. This is often a form 0% Introductory APR Offer.
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Extra rewards. The best card for business expenses offers better compensation for spending than personal cards. For example, if the industry needs regular travel, you can make money Cashback or points Flights, rentals, stays – for both you and the employees of your account.
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Business-related perks. You can score Benefits specific to your businessfree access to accounting software and discounts for business services.
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Generous sign-up bonus. These cards are usually more powerful Sign Up Bonus Or, in many cases there is an annual fee, but a welcome offer over a consumer card.
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Category spending caps are high. Also, many premium business cards offer a higher category spending cap than you would find on consumer cards, which increases monthly cashback bonuses and allows you to reinvest in your business.
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Employee card. Business cards allow you to add employees to your account with customized restrictions on where and how to purchase business items for your specific role. You can view employee spending activities and create points, cash, or miles when employees make purchases.
Cons of business credit cards
The advantages of business cards often outweigh the drawbacks, but you want to know the potential drawbacks Personal and business cards Too much.
There are several factors to consider.
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The publisher may need personal guarantees. Many business card issuers need to sign a guarantee that they are personally liable for credit card liabilities that they cannot pay to their business.
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Your card may come with a high annual fee. Even if strong rewards and perks could offset the annual fee, it can still feel like a big price to pay. The most expensive business cards charge an annual fee of over $500.
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Cards do not have card law protection. Business cards do not qualify for the same protections that consumer cards do under the 2009 Credit Card Accountability and Disclosure Act (more commonly referred to as the Card Act), including the requirement that consumers warn of planned increases in interest rates. Read the fine print of your cards to learn about issuer protection that covers your business.
How business cards affect your credits
To qualify for a business card, the issuer will check your credit history and Personal Credit Score To determine your creditworthiness and the likelihood of a timely repayment of fees incurred.
The issuer should ensure that someone is liable if your business is difficult to pay off debts, or worse still goes out of business. So you may need to sign Personal guarantee It shows the issuer that you are personally liable for debts that your business cannot pay.
Most business card issuers report your debts and credit card usage to the Business Credit Reporting Service. Dan & Brad Street. Some of these issuers report business credit card activity to the major consumer credit departments, so irresponsibly processing business cards can harm your personal credit score. Check your credit card agreement to see when and when you report your debts and payments.
If you use your business credit card responsibly, you will be rewarded with stronger Business Credit Score It can unlock bigger credit lines and other business loans to grow your business, even if your personal credit is poor.
Apply for a business credit card
When you apply for a business credit card, the issuer will ask you for information about you and your business. You probably need the following information:
You may also need to provide information about the company’s financial situation, such as sales and profit figures, as well as information about when and where the company was founded.
Conclusion
Best SME Credit Cards It will meet a variety of business needs and provide the flexibility to manage expenses while still earning favorable compensation for both expenditures and employee spending. These cards often offer a higher line of credit than consumer cards, and include tools that help you track your accounting and simplify the process of filing business taxes. Plus, they can help you Build business creditsmay be necessary if you want to explore other fundraising opportunities in the future.
Start by shrinking the options Credit cards that match your type of businessand compare the best sign-up offers and reward structures for your industry and business needs.
