As with personal credit cards, when used correctly business credit cards can be highly beneficial. They can help you streamline your finances or to be able to organize your expenses better. Whether you are a small-medium company owner, a freelancer or you have a startup, you might benefit from having a business credit card. But if you are new in the field, or you never thought of getting one, then you might have some questions about the whole deal.
How can you get a business card? Is it the right decision for you? What are the pros and cons? If you need answers to such questions, keep reading this essential guide in business credit cards.
How To Get Business Credit Cards?
If you already own a personal credit card, then you should know that the process of applying for a business credit card is quite similar, apart from a few differences.
Here are the steps you’ll go through when applying for your business credit card.
Firstly, you’ll have to check your personal and business credit. Banks might be looking at your business revenues, the expenses, and your income. Once you have such information on hand, it will be easier to know which credits you are eligible to apply for. In case your business does not have an income yet, you must prove your creditworthiness based on your personal credit history and income.
Now, it comes the part of the research. Investigate the options available to you and find a few that are in line with your needs. The idea is that you find a credit card for which you can maximize your rewards but that does not go out of your budget in terms of payables. Some credit cards offer you side rewards, such as travel rewards, which might be helpful if you tend to travel a lot for work. Remember that you should try to keep at a minimum the number of credit cards you apply for as it will have an impact on your credit score. That’s why you should investigate as well as you can before applying.
Once you find something that fits your needs, you just have to apply for it. Nowadays, you can easily apply online and you’ll know about the borrower’s decision either immediately or in a few days. During your application you’ll have to provide the credit card company with personal and business information, so be ready for that.
That’s all about it for the application process. If you receive the credit card, you’ll get it by post most likely within 14 days. Before you start using your business credit card, keep in mind that you should never mix personal and business-related expenses. You should also have very clear the terms of possible rewards and the conditions of your card.
Why Should You Get One
Having a business credit card does provide you with some great benefits. You’ll be able to increase the financial flexibility of your business and you’ll have an easier time separating your personal and business expenses (which is good especially for tax purposes). Also, business credit cards won’t appear in your credit report.
Furthermore, you’ll be able to earn business rewards and possibly save on other types of expenses such as travel.
Some of the best perks of business credit cards you should look for are reward multipliers, cell phone insurance, travel miles, no annual fees, and car rental insurance. Always go for the one for which you’ll get the most out of rewards. Remember to check the interest rate and to make sure is competitive and that the company you are subscribing to has reputable customer service.
What Are The Cons of Business Credit Cards?
For sure, one of the biggest negative points of such credit cards is that they come with different consumer protections compared to personal credit cards.
You should always be aware of hidden fees which might include balance transfer fees, foreign transaction fees or inactivity fees, among others.
All in all business credit cards have lower credit limits compared to loans or VC capital. Of course, depending on your situation, you might benefit more from one or the other.
Additionally, if you are not able to pay back your debt before the appealing rates expire, you might get stuck paying high-interest rates. Always be wise with how you use your business credit cards.
That’s everything you need to know about the topic, make your research and make an informed decision on what’s best for you!