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How to find the best credit card for your business

How to find the best credit card for your business

June 26th, 2019

Applying for a business credit card is sometimes last on the list for many entrepreneurs and that’s a mistake. Corporate cards enable commerce in today’s competitive market and benefit small business owners in myriad ways. Here are some examples:  

Separate business and personal: Corporate cards separate business and personal expenses, enabling businesses to maintain separate records without needing to back out charges in bookkeeping.   

Provide enhanced reporting:  It provides enhanced reporting that breaks out charges into categories, simplifying budgeting, planning and filing taxes.  

Helps establish credit: New companies can use their corporate credit cards to create a credit profile and establish creditworthiness, which helps them qualify for financing, if needed. 

Optimize cash flow: Start-up companies use credit cards to buy the things they need today and pay for them later. In addition to the standard 30-day float offered by many card products, some cards provide extended terms of up to 90 days for business owners, extending the billing cycle and protecting their credit scores.   

Points and Miles: Many corporate cards offer loyalty and rewards programs that business owners can use to accumulate points and miles for gifts, travel, cash and upgrades.   

Exclusive Corporate Discounts: Corporate cards offer exclusive offers and discounts to their cardholders and lucrative incentives for gift-giving and wholesale purchases.  

How to choose?  

With so many different cards and incentives, how do you find the best fit?  

Here are some things to consider: 

Cash vs. Points: Would you rather get cash back at the end of a billing cycle or accrue points and miles? Have your preferences in mind when you shop for a credit cards. Some corporate cards give cash back on a monthly or quarterly basis. Others allow cardholders to earn points and miles that can be converted into cash. If you consider yourself more of a hybrid type, who sometimes likes points but occasionally needs cash, a points card will give you more flexibility. American Express offers cards that just give cash back and other card products that earn Membership Miles, which can be used to buy merchandise, pay a balance or convert to cash.  

Great vs. Subpar Credit Score: Establishing credit takes time; credit cards can help a small business startup create a business credit profile. When you received your first credit card, it probably had a low limit that gradually increased over time. Your timely payments, debt balances, new account openings, frequency of inquiries and declines, all impact your credit score. For these reasons, try to target card companies that are likely to approve your application, and limit yourself, initially, to one or two account openings.   

APRs: Low introductory rates can be appealing, but it’s critical to pay down your balance before the trial period ends. Make sure the permanent APR is manageable if you plan to carry a balance. It’s also advisable to review the cardholder agreement and fee schedule, even if you never looked at consumer card details. Your knowledge of late fees, grace periods and billing cycles will be critical to your credit management strategy.  

Balance Transfers: Finally, you know those printed checks you get all the time from your consumer credit card? They won’t go away when you get a corporate card. But you may want to consider all options before you use one. The small print on the back of these checks indicates they are cash advances, and many come with additional fees and high percentage rates. If you need a short-term business loan, betterpay can recommend a small business working capital loan.  

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