How to Use a Small Business Credit Card Effectively

Now that you have decided to get a business credit card, you’re on your way to enjoying the benefits and building solid business credit history.

Indeed, using a business credit card has many advantages but ultimately, reaping the benefits will depend on how well you manage your account. On this post, we present tips on how you can use you or small business credit card more effectively:

1. Limit your cards. How many business credit cards should you acquire? For a small business, one or two credit cards should be enough. Having two business credit lines should provide that cushion you need to cover for expenses. Managing too many business credit card accounts can lead to overspending or mismanagement, especially if you run up charges in all your accounts.

2. Use it exclusively for business spending. A business owner needs to be very cautious in spending with a business credit card. This account should be use for official business expenses only. Fight the urge to charge personal purchases, no matter how small the amount is, to your business credit card. Always keep your personal and business finances separate from each other.

3. Keep your charges minimal. Avoid using your credit line to the full as this increases the risk of bad credit. Make it a habit to keep your monthly charges as low as possible so you can have an easier time submitting your payments.

4. Enjoy the rewards you deserve. If you have chosen a business credit card with rewards, familiarize yourself with the rules of the program. This way, you can take advantage of your privileges, earn points more easily and enjoy the benefits of the reward program. Keep in mind that the best way to maximize your earnings is to spend with your reward credit card and to pay your bills on time.

5. Pay your bills within the grace period. Make use of the grace period to pay off your balances without paying the additional interest rate fee. You don’t have to wait until the due date arrives before posting your payment. Make it a goal to pay off your charges as early as you possibly can.

6. Check your account regularly. Access your online account regularly to make sure that you are not being charged for debts you did not owe. As a business credit cardholder, certain consumer rights may not apply such as disputing unauthorized charges. However, if you can monitor your account closely, you can call your issuer immediately and request for corrections. If you have distributed supplementary credit cards to your employees, monitor your account to make sure that your credit cards have not been used for unofficial expenses.

7. Do not take cash advances. Since cash advance transactions are not covered by the grace period, you will be charged with the interest rate instantly. Even worse, the rate is often higher than the APR applicable to purchases and balance transfers. If you have a business credit card, don’t use it for taking cash advances.

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Things to Consider When Looking For a Small Business Credit Card

Despite all the hype about business credit cards, not all of them give the best deals. What they tell you in the advertisements may not be the exact terms included in the credit card contract. Therefore, every business owner must be cautious when it comes to choosing a credit card for business. In this article, we will discuss the things you should consider to get the right business credit card.

A credit card that matches your company’s needs. Make sure that the business credit card is suited for the size, type and needs of your business. These are just some of the questions you should ask about a business credit card:

• Do you need a business credit card with a rewards program?
• Do you want a business credit card that enables you to distribute multiple employee credit cards for free?
• What particular feature of the business credit card can help you in managing your business?
• Do you have the option to access your account online?
• Will you be given yearly summary reports aside from the monthly billing statements?
• Does the business credit card provide you with a fraud liability protection?
• Is it a business credit card that particularly caters to small businesses
• Is it designed for medium-sized or larger business?

A business credit card with low or fair interest rate. Although your goal should be to pay off your balances in full each month, you can’t really guarantee that your submission of payments will be perfect at all times. There may be instances where you need to carry over your balance and if your credit card has high interest rate, it will definitely make a big difference. Naturally, you’ll want to go with a business credit card that has a low or reasonable APR.

Choose your rewards. If you want a business credit card with reward, what type of rewards program best matches your company? There are a couple of reward programs you can choose from such as Travel Rewards, Gas Rewards or Cash Back Rewards business credit card. Aside from these basic reward programs, what other privileges and perks does the business credit card offer?

Credit Requirements. Does the business credit card require excellent credit history? If you haven’t started building your business’s credit history, your personal credit history will be used instead. Therefore, have you checked the status of your personal credit? Is your credit score good enough to get you approved or do you need to improve it before applying for a business credit card?

If you want, you can also apply for a secured business credit card. A secured business credit card requires the submission of cash deposit in your account. The amount of your security deposit will often determine your credit limit. Although it guarantees approval, secured business credit cards usually have a higher rate of interest compared to business credit cards that require good or excellent credit. Nevertheless, they can be used for rebuilding or improving bad credit.

Building Credit for BUsiness through Business Credit Cards

Establish your business credit right away by getting a business credit card is smart choice and other way of building financial strategy for the future.

Whether you are running a big business or have just started up with your own small business, building credit for your company is probably one of your main concerns. Business credit cards

offer entrepreneurs the chance to establish a separate credit history for their business.

By establishing good business credit, a business owner is also building a strong foundation for the company. When the time for expansion comes, it will not be difficult to secure a loan approval from lenders and other business financing providers. In this article, let’s talk about how business credit cards can help you grow your business and build credit.

Enhance your credibility. Using business credit cards to make your payments builds up a more respectable image for your company. Having the name of your company printed on your business cards surely adds up to your reputation. Some business credit card issuers today offer the option to use checks through a business credit card account. That means, the entrepreneur can send checks to pay suppliers or vendors who do not accept credit card payments. This is a great feature that some business credit cards offer.

Ease of use. Business credit cards provide a convenient solution when emergency expenses arise. For example, if one of your equipment broke and has to be replaced, you do not have to stop your production just because you don’t have the cash on hand to fix or replace a broken device.

If you receive an exceptionally large order from one of your best customers, you don’t have to refuse because you lack the resources needed to produce such a large demand. A business credit card allows you to make purchases easily and pay them at a later time.

Convenient accounting and bookkeeping. Keeping financial records of the business is one of the most important steps in maintaining good credit. Your business credit card helps you keep track of all your business expenditures without having to do it manually. Most business credit cards come with a free online access where you can personally check your account, download your accounts summary and use it in your accounting.

Safer means of payment. Business credit cards are safer to carry around than cash. This is invaluable since most of the time businesses need to make large amounts of purchases and it’s not practical to carry a bulk of cash. In case the business credit card gets misplaced or lost, one can call the bank right away and freeze the account to prevent unauthorized transactions.

Incentives and rewards. Businesses can also take advantage of the incentives and rewards that business credit cards offer. Because entrepreneurs usually charge large expenses in their accounts, they can easily gather enough points to earn more rewards.

A separate business account. Even for home based business owners, having a business credit card is advised because it helps them separate their personal funds from their business finances. This is an indispensable feature especially as the business begins to expand and acquire more customers.

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Avoiding the Snares of Business Credit Cards

Business credit cards are often advertised as great tools in managing small businesses. Today, more many entrepreneurs opt to get a business credit card and are optimistic about the benefits these cards can bring for their business. Although it is true that using credit cards for business have advantages, you should also be aware of the possible dangers that await those who misuse these business tools.

In this article, we’ll talk about the snares that are associated with the incorrect use of business credit cards. Being aware of these dangers does not mean to discourage business owners from using business credit cards. On the contrary, it aims to help business owners to use their business credit cards more effectively.

Business Credit Cards- The Snares to Avoid

Overspending. Business owners are not the only ones who are warned against this snare. Even personal credit card holders can easily fall victim to this trap. Because credit cards are so easy to use, it is too tempting to use them carelessly, without considering the consequence it could bring.

If you’re a business owner, see to it that your business credit card is only used for official business expenses. Some entrepreneurs make the mistake of charging even their personal expenses to their business credit card. For instance, if you’re dining out with your family or friends, or buying some groceries, you may be tempted to charge these bills to your business credit card. But such a habit poses a great risk.

Before you’ll know it, you may have already incurred huge bills in your business account. You could have a difficult time paying off those charges in full and you may be forced to carry over your balance instead. Sooner or later, this habit can cause you serious debt problems.

Maximizing your business credit. Another risk that you must be aware of is the tendency to use your credit limit to the fullest. Experts recommend not using more than 30% to 40% of your credit limit to avoid the risk of bad debt.

However, some entrepreneurs bravely max out on their credit cards especially when starting up the business, without realizing that they have already fallen into the debt trap. It isn’t realistic to expect that the business would be profitable within the first few months. Most successful businesses needed to wait at least three months before getting profits.

During the initial stage, you may find it impossible to pay off the charges on your business credit card. And because you’ve already maxed out on your credit limit, it wouldn’t be possible to use your card for new purchases. Aside from this you’ll automatically be charged with the interest rate from month to month plus possible penalty charges for exceeding your credit limit.

Such a move can also have a negative effect on their credit history. If your credit history shows that you often use your credit limit in full, lenders could have a negative impression about your company. On the other hand, leaving at least 50% of your credit limit free makes you an ideal candidate for lenders.


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Possible Disadvantages of Contractors Business Credit Cards

Construction Business grows bigger nowadays but applying a contractors' business credit Card really a good choice? First, consider the possible drawbacks of owning this type of credit card.

Credit card companies know the potential of business credit card clients. This is why they come up with more specific and better features that are especially created to meet different types of businesses. For instance, the group small constructors and construction companies is a niche market with great potential.

To attract contractors and business construction owners, credit card companies offer specific features that are designed to meet their spending style and needs. According to recent surveys in the credit card industry, most businesses spend only less than 5% on their business credit cards. Thus, credit card issuers are currently introducing offers to entice business credit card holders to use their cards more often.

One example is the Chase Contractor Visa Business credit card. This card offers promotional financial and a attractive reward package for those who will spend at least $1,000 or more on their construction material purchases. This card also doesn’t have a pre-determined spending limit so its holders can use it for as much purchases as they need.

If you’re a contractor or is in the construction business, taking a look at business credit cards for contractors are definitely worth considering. Nevertheless, here are the possible drawbacks that you should be aware of.

Possible Drawbacks of Contractors’ Credit Cards

It’s important to remember that each business credit card has its own set of rules and conditions that you need to know. The same thing applies to business credit cards with rewards programs for contractors. If you’re not clear about the rules, you may find yourself stuck with a card that doesn’t reward you at all.

What types of purchases are eligible to earn you points? You need to be very sure about the exact type of purchases or from which merchants you should purchase from in order to earn points. Otherwise, you could be using your business credit card in the wrong way. Even if you charge your purchases to your credit card, if those purchases do not count, you won’t be earning points at all.

Is there a limit to the amount or value of reward points your can earn? Some credit cards would only allow you to earn a maximum number of points each month. The Chase Contractor Visa Business credit card has a limit of 20,000 points per month which means you can’t exceed the 20,000 points even if you made more than $20,000 worth of purchases for the whole month.

Does the card impose a pre-determined limit on spending? In case you exceed your credit limit, would this mean you’re disqualified to earn points? Or would you be allowed to earn points for the amount that falls below your credit limit? Is there a penalty fee for exceeding your credit limit?

These are important terms and conditions that you should be clear about before signing up for a contractor’s business credit card. To learn about the exact terms and conditions, you need to take the time to read the contract before filling-out and submitting your credit card application.

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Possible Drawbacks of a Business Credit Cards

When there's an advantages, surely there's disadvantages too. In this article, we'll discuss the possible disadvantages of credit card misuse and how to avoid them.

Many business owners today are encouraged to apply for a business credit card as one way to finance their business. Experts recommend the use business credit cards as a way to build a separate credit history for your company.

Business credit cards are known for providing business owners an easier way of tracking their expenses, monitoring their employees’ spending, building business credit and enhancing the company’s reputation. But apart from these benefits, there are also drawbacks to using business credit cards that you should know about. What are these disadvantages?

Your Personal Credit History Is at Stake!

It is true that applying for a business credit card is so easy and convenient. You can submit your application online and get approved instantly, especially if you have excellent credit. Nevertheless, you should be aware that when you sign up your business credit card contract, included in it is the personal liability agreement.

Since your personal credit history would be used to approve your credit card application, you are also personally held responsible for all debts that may be acquired in your business credit card account. This means in case of credit problems or if your company fails to keep up with credit card payments, you would be accountable to take over the repayments of all charges.

The personal liability clause implies that all transactions made in your business account can directly affect your personal credit history. This statement is still applicable even if you’ve already applied for a corporate credit. Usually, a business owner wait at least two years before lenders begin to recognize their corporate credit history as separate from their personal credit history. Thus, a single late payment with your business credit card account or your business loan can significantly pull down your own credit score.

With this in mind, you need to be particularly aware of how you use your business credit card and how well you keep up with your repayments. Keep in mind that how you handle your account will also reflect on your personal credit report.

Mismanagement of Your Business Credit

Having a business credit card account gives you the option to distribute extension credit cards or supplementary credit cards to your employees. However, this flexibility comes with the risk of employees abusing or misusing your account for their personal benefits.

Therefore, if you do decide to distribute supplementary cards to your staff, you should only choose a few of your most trusted employees. Add to this, make it a habit to check your monthly billing statements and pay attention to each of the purchases incurred by employees who own a supplementary card. This way, if unnecessary expenses were incurred, you can take appropriate action immediately.

Remember that having a business credit card gives you the chance to either make or break your business credit. If you handle your business credit wisely, you can be assured that you’ll be building a solid and excellent credit history for your company. On the contrary, failing to manage your business credit efficiently can lead to trouble and complications.

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Maintaining a Good Credit for your Business

Do you have a good business credit history? This article is about the basic points of a business credit and why it is important to maintain a good standing.

You may already be aware on how to keep your personal credit history in good standing. But if you’ve just started a business, do you know the steps you should do to maintain your business’s good credit? Before we answer this question, let us first talk about what business credit is and why it is important for all businesses.

What is Business Credit

Your business credit profile contains all credit information about your business. It reflects transactions between your company and your creditors, your suppliers, and other business organizations that you deal with. Business credit reporting companies like Duns & Bradstreet and Experian collect your credit information from these sources. Business credit bureaus also conduct their own credit investigations from time to time.

Why is it important to take care of your business credit? Banks, insurers and lenders use a business’s credit history in determining whether they qualify for business loans or not. The status of your business credit can also make a difference with the rates and the credit limit that will be given to you by your creditors and insurers. Business investors may also check on your business credit history before deciding to support your business. Just like your personal credit, your business credit history directly affects the opportunities extended to your business.

Building Your Business Credit

So what can you do to keep your business credit history in excellent standing? Although some steps are similar in maintaining your personal credit and business credit, there are some additional steps you need to take if you’re a business owner. Consider the following advice from business and financial experts:

Pay attention to your payments. How you submit your payments to your suppliers and lenders affect your business credit rating. Make it a point to pay your suppliers and your lenders on or before the exact schedule of payment. Nothing impresses potential lenders more than a company with a straight record of payments.

Obtain or renew your business licenses on time. Abiding by the licensing rules of your State is part of maintaining an excellent business credit. Don’t overlook or neglect the legal procedures required for businesses. If you fail to do so, this will be reported to the business credit bureaus and can badly damage your credibility.

Do not submit too many applications to creditors at once. Too many inquiries in your business credit profile may send out the wrong impression to future lenders. This is especially true if your application is declined. Before submitting an application to any lender, make sure that it is absolutely necessary and that you’re really serious about applying for new credit.

Limit your business credit cards. Compared to getting a business loan, getting approved for a business credit card is easier. Although having one or two business credit cards is recommended, owning too many is strongly discouraged. Not only does too many business credit cards damage your business credit, they also put you at great risk of getting stuck in debt.


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