If you have decided to get a business credit card to help you with your business financing, you’ll be glad to know that you have many choices. Some business credit cards offer rewards but these are usually offered for businesses with good or impressive business credit. If you have a problem with your business credit, a secured credit card for business is your next option.
What is a Secured Business Credit Card?
Like a personal secured credit card, a secured card for small business requires the submission of cash deposit. The cash deposit will be used as a security for the debts. Thus, in case the cardholder fails to keep up with payments, the issuer of the credit card can tap into the deposit account and use the cash submitted as payment for debts.
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If you run a small business, have you considered getting a business credit card for financing? Some entrepreneurs may feel hesitant to get a business credit card and prefer to use a personal credit card instead. But what are the advantages of using a credit card that is really designed for small business? In this article, we present each advantage to help you decide whether a business credit card is right for you.
Higher credit line. One advantage of using a business credit card is the higher credit line. Since you will be using the credit card for business expenses, you can expect that this would usually involve large purchases. A personal credit card has a limited line of credit compared to a business credit card which can provide you with up to $50,000 of credit line or even higher, depending on your issuer and business credit rating. Such a flexible credit limit is not available in personal credit cards.
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When searching for business credit cards in the market, you can find a lot of zero interest rate offers. These promotions are designed to attract new business owners to sign up for a business credit card. Are these credit cards worth the deal? What is the truth behind a 0% APR credit card for business?
The Naked Truth About 0% Credit Cards
A credit card with zero interest rate can save a great deal of money. However, it’s important to remember that it’s not a lasting deal. Most issuers would provide 6 months of introductory period while other business credit cards may offer up to 12 months of 0% APR. Once the introductory period ends, the regular rate will apply.
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The new credit card law has given consumers more protection in using credit cards. Unfortunately, for business owners, the provisions of the credit card law are not applicable to business credit cards. Hence, despite the advantages and convenience of using business credit cards, certain risks must be avoided as well.
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.
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In order to decide whether business credit cards are suitable for your small business, it’s important to consider the positive side and negative side of using them. In this article, we present both sides of the story:
The Pros Of Business Credit Cards
Ease of application. It is very convenient to apply for a business credit card and not difficult to get approved at all. In fact, even new or start-up businesses can easily qualify as long as the business owner has good credit rating. If not, a secured business credit card is always an option.
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There are business owners who might be a little skeptical about using business credit cards. Some may say that using business credit cards increase the risk of having bad debt. Other entrepreneurs may argue that they are fine using their personal credit cards in financing their business.
Still, the fact cannot be denied that business credit cards offer certain features and provisions that are not offered by personal credit cards. Examples of these special provisions are annual account summary report, employee credit cards, and business credit reporting which can greatly simplify business management tasks. Yes, small business credit cards are beneficial for business.
Do you worry that using a business credit card can lead to bad credit? If yes, then check out the following tips on how you can manage your business credit card successfully:
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