Building Credit For Your Business: 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.