Choosing a Credit Card for Your Business
Credit cards can offer tremendous advantages to small businesses and is generally a smart idea. By using a card specifically opened to handle business expenses, your personal finances will be protected.
Many owners make the mistake of using their personal credit cards for their business needs, which can spell disaster to your personal finances, if the business fails. The two most obvious reasons why a small business may want to consider a business credit card are the ability to conveniently make large purchases and to effectively manage and oversee expenses. Plus, the rewards that are offered with some cards are sweeter than those for personal credit cards. Here’s a look at things to consider when selecting a business credit card:
The APR Matters the Most
The annual percentage rate (APR) of any credit card, whether business or personal, has the biggest impact on how well a card meets your needs. Analyze how you will use the card, including how much you will spend and whether you will have the ability to pay the balance off each month. If you expect to carry a balance, the lowest monthly APR should be your focus. The difference in interest paid on a $10,000 balance between a 7% APR card and a 12% APR card is approximately $3,500 (making 2.5% payments over the life of the balance) - a significant savings, if you use the lower APR card.
Some newer cards offer innovative payment terms to appeal to companies likely that need more flexibility. Introductory offers can serve up a great deal of savings and should be considered only if you’re sure you can pay off the balance before the APR returns to the standard rate.
Maximum Your Business Card Rewards
If you’ll pay the balance off each month, a bit higher APR is acceptable and you may want to consider the benefits of a business rewards card. Reward programs offered to businesses is often more lucrative because they spend so much. Rewards range from 1% to 5% cash back to frequent-flier miles and even more creative perks like free gasoline and retailer gift certificates.
But picking the right rewards program can be tricky. You will have to project how much you expect to spend with the card and do the math to see what rewards you would earn. Factoring potential rewards get a bit murky when a program offers a tiered rewards program that provides a higher percentage reward on certain types of purchases. In cases like this, be sure the higher reward is paid on the items you purchase the most, such as office supplies or gasoline. Generally speaking, the best rewards cards are those with rewards you know you’ll actually use on a regular basis.
Rewards program have variables that should be taken into consideration when choosing a card. Reward cards that limit the amount you can earn each year will reduce the payback, especially if your business spends tens of thousands of dollars, which would earn a bigger reward without a cap. Some programs offer discounts at specific merchants and travel benefits that are particularly beneficial to small businesses
Check-Out the Online Account Management Services
Business owners understand the importance of keeping on top of their finances. With online account services, personal and business accounts can be maintained separately. Businesses can have cards issued to individual employees with set spending limits. Their account activity may be available for review and monitoring online. Some cards also make it easy for companies to automatically transfer their credit-card usage data into accounting software such as Intuit’s QuickBooks.
Business owners should be sure that the card they choose reports their activity to a business credit agency like Dun & Bradstreet or Experian Business Bureau as opposed to a personal credit reporting agency. The last thing a business owner wants is any financial woes reflected on their personal credit rating. Also, by reporting to the business credit agencies, a business’ credit history will help in securing financing and the best loan terms down the road.
For more information on choosing the best credit card, visit WOWCreditCards.com. See a complete list of secured, unsecured, and prepaid credit cards and apply for a business credit card online. Article Source:http://www.articlesbase.com/credit-articles/choosing-a-credit-card-for-your-business-997775.html
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