What type of credit card should you use?

A small business credit card is best for business financing.  A business credit card is especially designed as a business tool so it comes with features and services that can you can use to your advantage as a business owner.

For instance, a business credit card can help you build business credit.  From the day you launch your business, you should establish and continue to build business credit history.  Issuers of business credit cards report to business credit trackers like Dun & Bradstreet so you can be sure that as your credit activities will be recorded.  As you use this credit card for business expenses, you are also strengthening your business credit standing.

Another significant service that you can only enjoy from a business credit card is the provision of annual or quarterly account summary reports.  A business owner can actually use this summary as a reference when conducting yearly inventory or in preparing business tax files.  Thus, it will be easy to determine where the budget was spent and which of your expenses are eligible for tax deductions and tax credit.

How should you use your business credit card?

Credit cards for business are designed for short-term business financing.  However, these plastic business cards are not meant to replace the traditional methods of business financing such as a bank loan or a business loan.  Acquiring a business loan is still recommended for long-term business goals.

Where can you use your business credit card?  For instance, a start-up business owner may use it to purchase equipment which might be difficult to pay upfront.  By using a business credit card, payments can be made in small monthly instalments, instead of cash. A business credit card may also come in handy when you need to purchase additional stocks or supplies, yet funds are insufficient.  Whenever a business credit card is used, the owner must make sure that payments will be made on time.

Nevertheless, business credit cards should not be the only resource of financing a business.  If you charge all your expenses to your business credit card, keeping with payments can be a burden.  Remember that failing to pay your debts on time can result to bad debt due to interest rate charges and late fees.

Should you apply for a credit card for business?

If you own a business, then a business credit card is definitely recommended.  A business credit card will provide you the financial cushion for times when cash flow becomes tight.  Needless to say, owning a business credit card is not a pass for overspending.

On the contrary, a business credit cardholder must only use the account exclusively for important business purchases.  When managed correctly, business credit cards serve as flexible credit lines that help you build solid credit history.

About the Author

Pamela Williams is a Loan Consultant, Internet Marketer and Writer. For years she had helped consumers and business owners especially regarding business credit cards. This resource is dedicated particularly on business credit card reviews, articles, tips and advice, and online application so that consumers and business owners may compare which is the best business credit card for their business. Copyright 2011

Did you know that there are a number of factors which can affect the interest rate of your business credit card?  In this article, let us talk about how you can get a business credit card with a low rate and how you can maintain a good rate for a long time.

Build Excellent Credit

Good business credit rating is fine but if you can make it stronger, you will be in a much better position to demand for the best business credit card deal.  Strive to build an excellent business credit rating by making all your creditors happy.  Be it with your business loan payments, utility bills payments, or payments to your suppliers- the important thing is for you to submit payments on time.

Of course, if you own a business credit card, you should be particularly conscious about your due dates.  Pay off your charges as early as you can instead of waiting for the deadline of payment to arrive.  Plan your purchases and plan your repayment as well.

Monitor your business credit report and make sure that all your account activities are properly recorded.  Don’t let a bad credit score rob you of the opportunity to pay less on interest rates and to enjoy the best offers from creditors.

Stay Within Your Credit Limit

The range of your business credit card limit will often depend on your business credit history.  If you have yet to build business credit, a business credit card issuer may offer you a low credit line.  This is also true for new business owners and start-up business owners.

Without proof of your capability to manage business debt and credit, a creditor will most likely to restrict your privileges as a cardholder.  As you use your business credit card regularly and as you manage your account well, you should be able to ask for a higher credit line after at least 6 to 12 months.

Use Your Business Credit Card Regularly

Acquiring a business credit card will not be of much help if you do not use it at all.  A business credit card is a great tool for building business credit if you can use it at least once a month.  This doesn’t mean you should charge unnecessary expenses or non-business purchases to your account just to keep it active.  Instead, you can charge small business purchases to your business credit card and pay the balance in full on your due date.  This way you are building good credit and showing your creditor that you are a customer worth keeping.

Ask for a Low Rate

If you’ve been using your business credit card for quite some time and you have an impressive payment history, don’t be afraid to request your issuer for a lower rate.  If you deserve it, many business credit card issuers will give in to your request just to keep a trusted customer you on their side.

Pamela Williams is a Loan Consultant, Internet Marketer and Writer. For years she had helped consumers and business owners especially regarding business credit cards. This resource is dedicated particularly on business credit card reviews, articles, tips and advice, and online application so that consumers and business owners may compare which is the best business credit card for their business. Copyright 2011

For example, there is the issue of liability. Business credit cards are great tools to keep your personal and business accounts separate from each. This prevents confusion in managing debts which is very important especially as the business grows and expenses increase. Nevertheless, the business credit card owner is not exempted from liabilities.

When you signed your business credit card agreement, you might have read of the Liability Clause. This makes the owner of the account or the owner of business personally accountable to pay all debts incurred using the business credit card. If you have distributed supplementary cards to your employees and your account has been used without your consent, you will still be accountable to pay all debts.

For this reason, business credit cards must be used carefully. It’s important to keep track of your employee’s spending if you plan to distribute employee cards. A business credit card needs to be aware of payment schedules and plan repayment ahead of time to avoid penalty charges and minimize the risk of bad debt.

Business credit cardholders must also take advantage of certain features that are not available with personal credit cards such as having a higher credit line, the yearly account summary reports, bigger rewards and incentives, business credit reporting, just to name a few.

A higher credit line strengthens the cardholder’s buying power and keeps the credit-to-debt ratio at a low level. The yearly summary of account presents a detailed review of all purchases and transactions made for the previous year.

Business credit cards also offer more attractive rewards compared to personal credit cards. This gives the business credit cardholder the opportunity to save significantly from purchases and enjoy exclusive perks and privileges.

Another essential feature is the credit reporting provision. A business credit card is an efficient tool in building business credit especially for new and start-up businesses. As you use your business credit card to cover for business expenses and pay your debts on time, you are also building a solid business credit history for your company.

Your Paydex Score Helps Your Business Financing
The Paydex score is used calculate business credit rating in figures. If you have registered your company with a business credit bureau like Dun & Bradstreet, you can start building your business credit by applying for a new business credit card or business loan. Just make sure that your chosen lender will report your payments to D&B.

The Paydex Score is included in your business credit report. A Paydex score ranges from a low score of 80 to a high score of 90 to 100. A Paydex score of 70 or below is considered as poor. Obviously, if you have low score, it would be very difficult to convince lenders to approve your credit application.

The calculation of the score is largely based on your payment history. Frequent late payments to your lenders and credit cards issuers can definitely pull down your Paydex score. On the contrary, consistent and timely payment will give you a higher Paydex score.

Your Paydex Score – Why You Should Be Concerned
Does it really matter whether or not you have an impressive Paydex Score? Of course it does. When applying for new credit, a prospective lender will evaluate your application based on how you managed your previous accounts.

Aside from easy approval, an impressive score gives you the opportunity to enjoy lower interest rates and higher credit limit from lenders. The ideal Paydex Score is from 90 to 100 so if your present score falls below that range, you should definitely work for improvement.

Generally, the best business credit cards are reserved to customers with good to excellent credit. If you do not have business credit, your personal credit score will be considered. If you have bad credit, a secured business credit card can be a great tool for rebuilding your business credit.

Secured credit cards for business require the submission of cash deposit which will also serve as your credit limit. After a year of timely payment, you may request for an upgrade to an unsecured business credit card account.

Be sure to register with D&B as soon as you get approved for your first business credit card. This way, you can start building your Paydex score and business credit history.

Managing Finances Made Easy

Business credit cards are primarily advantageous because it enables a business owner to draw the line between business and personal expenses. A business credit card can be exclusively used for business expenses only while all other personal expenses can be charged to a personal credit card. Why is this important?

Some entrepreneurs may say that it really makes no difference whether you use a business or a personal credit card. Nevertheless, as you incur larger expenses and as your business grows, having a business credit card to handle your business bills can prove to be indispensable.

Business credit card issuers send monthly and yearly account summary reports to help their cardholders keep track of their spending. Most issuers also provide account reports that can be downloaded from the internet and used alongside accounting software like Quickbooks. This way, a business owner can simply use the reports as reference when doing accounting and bookkeeping tasks.

This is especially true when tax season arrives and you need to file your business taxes. Keep in mind that as a small business, you are entitled to certain tax privileges or deductions. By having separate personal and business accounts, identifying which of your purchases or bills are tax deductible becomes automatic and keeping certainly makes the job a much easier task.

Business Credit Cards and Rewards

Another great thing about business credit cards are the different reward programs that are exclusively offered to business owners. The programs may vary from Cash Back to Gas Rebates to Frequent Flyer Miles and other special types of rewards. Thus, by using your business credit card to purchase stocks or to pay bills, an entrepreneur also gets the opportunity to earn bonuses and special privileges.

Last but not the least, credit cards for small businesses are great tools in establishing and building business credit. Once approved for business credit card, you can begin building corporate credit history as a preparation for your future plans. By using your business credit card regularly and submitting payments on time, building excellent business credit should be uncomplicated.

Business Credit Card Benefits

Indispensable for emergency expenses. When budget is tight and you need to make a purchase or pay a bill in a hurry, a business credit card can come in handy. Charging expenses to your credit card account will gives you the chance to get the cash you need on time without compromising the project at hand.

Build up your business credit. You can build up a solid business credit history by using your credit card regularly and being consistent with your payments. As your company grows, an impressive business credit score will surely win you easy approval and the best deals from lenders.

Track your expenses more easily. Monitoring your company’s expenses will be easier by using your credit card bills and yearly account summary. Most Issuers also provide an online account access feature and downloadable reports so you can use them along with your accounting software.

Access to online banking. Make purchases or pay your bills on time through online banking. For entrepreneurs with a hectic schedule, such an option is truly indispensable.

Make the Right Credit Card Choice

How do you decided which business credit card is right for you? Remember that business owners have varying needs so there is not one credit card that will suit all types of businesses. As the owner of a small business, determine your priorities and find a credit card that matches with your spending style.

There are credit cards for business that offer a variety of reward programs. There are also business credit cards for business owners who need to rebuild or establish their credit. A secured credit card is great tool to establish corporate.

Check out credit card review websites so you can see the different kinds of business credit cards available in the market. Compare the rates and the costs. Examine each card more closely by reading the complete Terms and Conditions. By doing these steps, you can surely find a credit card that is best suited for your type of business.

One example of a specific business credit card is the Chase Contractor Visa business card. This business credit card specifically rewards entrepreneurs who are yet to build a structure for their business. Hence, the Chase Contractor Visa business card holder has the opportunity to earn incentives by spending at least $1,000 or more on construction material purchases. And since there is no pre-determined spending limit, you can use your card according to the financial demands of your construction project.

This particular reward credit card for business is ideal for contractors and business owners in the construction industry. However, before signing up, consider the possible drawbacks of owning this type of credit card.

Possible Drawbacks of Contractors’ Credit Cards

Different issuers have specific rules and regulations when it comes to implementing reward programs. Business credit cards that are designed for contractors were made to match the business owner’s spending style. However, you still need to make sure that you can get the most benefit by choosing a card that has partnerships with your preferred merchants or suppliers.

It is crucial to understand the exact rules of the program. For instance, what kinds of purchases are eligible for points? Take note that some reward credit cards will only award you with point if the purchase you made was from a participating merchant.

What about limits or restrictions with the use of your card? Is there a maximum value of rewards that you can earn? The Chase Contractor Visa Business credit card offers a maximum limit of 20,000 points per month. This means, you will not be getting more than 20,000 points even if your purchases exceed that amount for the month.

Other important factors that you should be aware of are the penalties and fees associated with your card. Is there an annual fee that you need to pay to keep your account active? Will you lose your points and get penalized if you exceed your credit line? What happens if you fail to submit your payment on time? Will you be disqualified from redeeming the points you earned?

The only way to be sure about the conditions of a business credit card is to analyze your contract. Consider each and every statement stipulated in the Agreement and make sure that the terms complement your needs and spending style as a business owner.

Business Credit Cards – The Snares to Avoid

Overspending. Even personal credit card holders are warned against the uncontrolled use of credit cards. If you are an entrepreneur, you can also fall into the trap of overspending if you will not pay close attention to how your credit card is used.

For instance, a lot of business owners use their business credit cards for personal expenses without thinking about the consequences. Charging your personal purchases to your business credit card puts you at a greater risk of bad debt. As your charges build up, it may become difficult for you to pay off your full balance. You may have to carry over some unpaid charges for the next billing period. Consequently, that means paying the additional interest rate fees and losing control over your business finances.

Maximizing your business credit. Just as it is important to keep your credit usage low with your personal credit card, the same principle applies with the use of small business credit cards. Ideally, you want to keep at least 50% to 60% of your credit line free from charges.

There have been instances when a new business owner maxes out on his/her credit card for business financing. The purchase of equipment and supplies were all charge to the business credit card. However, the real problem appears when it’s time for repayment. For a newly established business, it could at least a few months before profits can really be utilized for debt repayment. Maximizing credit poses the risk of bad debt.

You may find it extremely difficult to pay off your outstanding balances on your business credit card accounts due to insufficient budget. Your initial profit may not be enough to cover for all your bills and debt repayment. You may be forced to carry over your balances from one month to the next, submitting only the minimum due payment, as your debts accumulate due to the high interest rate fees.

Even worse, using your credit line to the fullest sends a negative impression to lenders who may inquire about your report. Your personal credit score and your business credit score can also be badly affected. Clearly, to avoid such complications, business credit cards must be used with more caution.

Choose a credit card that matches your business. Credit cards for business come in all varieties so you should choose the one that perfectly complements the demands of your business. If you prefer to get a business credit card with rewards, show around first to explore your options.

How do you intend to pay off your balances? Another important factor to consider when choosing a business credit card is how you plan to mange repayment. If you intend to use the card for larger purchases and pay in installments, then you should look for a card with the lowest possible APR. On the other hand, if you want a rewards business card, you should make sure that you can pay off your balances in full each month.

Practice timely payment. Paying on time isn’t just for personal cardholders but for everyone, including business owners. Avoid the late penalty charges by submitting your payments before or on your exact due date.

Don’t use your business credit card for cash advances. Most credit cards for small business have the cash advance feature which means you can use it to borrow cash from an ATM. Nevertheless, keep in mind that cash advances are charged with high interest rates and transaction fees which can easily put you in debt.

Check your account regularly. Aside from your monthly billing statement, another way to monitor your business expenses is to access your account online. If you have distributed supplementary cards to your employees, make sure that all the charges in your account are officially made for business. Last but not least, avoid using your business credit card for your personal costs to avoid bad debt.

Business Credit Cards for Home Based Businesses

What is the advantage of using a credit card for business rather than a personal credit card? First, an entrepreneur can separate business finances from his/her personal money. There is no need to use the same credit card in buying your groceries and your inventory for your shop. Initially, combining personal and business spending may not create a problem, but as you gain more customers and your inventory increases, you’ll see that having two separate accounts is invaluable.

By using your business credit card in buying stocks or paying your suppliers, official business expenses are automatically reflected in your business account. Whenever you need to do your inventory or auditing, you can simple refer to your business credit card account or your monthly billing statements. Add to this, issuers of business credit cards provide yearly summary reports of all your costs for the entire year. By the time you need to file your taxes, it’s easy to see which purchases are eligible for home business tax privileges.

Having a business credit card is a wonderful financial support especially when unexpected costs arise. For example, if you received a large order from one of your long time customers and yet you don’t have sufficient cash resource, you can use your business credit card to pay for the things you need to deliver your customer’s order. This way, you can accept unexpected orders and pay off your credit card balances after you receive your customer’s payment.

Rewarding credit cards for Business

It is worth mentioning that credit cards for business come with bigger and more exciting rewards programs. Needless to say, business owners tend to spend more and by using your business credit card, you can easily earn points and qualify for rewards.

Business credit cards with cash back rewards are particularly in demand among entrepreneurs especially those who are in the buy and sell business. As they charge their spending to their card, these entrepreneurs get more cash back in return. Enjoying cash back privileges means you get to enjoy savings from your purchases.

The other two popular types of reward credit cards for small businesses are the Travel Rewards Cards and the Gas Rebates Credit Cards. For business owners who travel a few times a year for business purposes, a Frequent Flier Miles business card is a great choice. On the other hand, for those who use delivery vans, truck or other vehicles for business, a credit card with gas rebates is a practical choice to save from gasoline purchases.

Indeed, credit cards have come a long way since they were first introduced as a mode payment. If you are an entrepreneur yourself, you should certainly consider getting a business credit card to enjoy the benefits.