There are many good reasons to get a business credit card. Not only can it give you access to funds in case of an emergency (ran out of stock, need to take a business trip, etc.), but it will allow you to start building up good credit in the name of your business. With a good business credit score, you will have an easier time securing a loan or a line of credit in the future.
The good news is that it’s beautifully easy to get a business credit card. In fact, all banks and credit card providers make it as easy as possible to get that credit card because they want to benefit from your business spending. This can make it a bit tough to determine which credit card is best for your business.
Here are our tips to help you make the right choice:
Step #1: Evaluate your needs. How much do you spend each month? How often do you use the business credit card, and what do you use it for? Will you pay off the charges on a month by month basis, or use a payment plan to cover your debt a little bit at a time?
If you intend to use a payment plan (carrying a balance), look at the people/interest rates on the card. The easiest cards to get tend to have higher interest rates. After a year or two of building good credit, you should be able to get a low-interest card. Or, consider a fixed rate card, which will save you money in case the interest rate rises.
If you plan to pay your charges every month, consider a card that has a longer grace period (more time to pay it off in case of emergencies), or which offers better rewards (points, miles, etc.) when you pay in full.
Step #2: Consider how flexible you need the card to be. A charge card is ideal if you need credit for only a short period of time (30 days) and have the cash or discipline to pay it off before the deadline. However, if you need more flexibility, you’ll want to use a credit card—which gives you the option to pay all at once or in monthly installments.
Step #3: Be aware of the costs. Spending on credit can end up costing you a lot in the long run, especially if you carry a balance or don’t pay on time. Make sure to read the fine print on each credit card you’re offered to see what the costs are. Some cards may offer better interest rates on your carried balance, while others have a longer grace period to give you more time to pay off the credit before the high interest rates kick in.
Step #4: Look for the right rewards program. If you tend to travel a lot, look for a card that helps you earn miles. If you spend a lot of time driving, look for cards that offer extra rewards for gas purchases. If you don’t travel much, consider a cash-back card. Always look at the rewards program offered by the card—you’re going to be using it a lot, so make sure it earns for every penny you spend.
