Choosing the Right Small Business Credit Cards

Small business credit cards are a part of running most small businesses. You may think of "credit cards" as a risky option for paying bills, but many small businesses rely on cards to help them deal with the routine business cycle. Cards can be used to buy raw materials before they can be sold for a profit. Cards can also be used to purchase tools for expansion. Credit cards will come in handy when a business is experiencing a slow cycle and needs a little help to get over the hump; this is particularly true for seasonal businesses. However, these benefits are only captured with the right credit card. Look for these features in order to keep your costs low and benefits high.

Interest & Financing Terms

The first and most important feature to look for with any credit card is a reasonable interest rate. Defining "reasonable" will be different for each company. If your company has a high credit rating, you may seek an interest rate on the lower end, typically around 10 percent for credit cards. If your company has unfavorable credit, interest rates may climb as high as 20 percent and beyond. To know when you have found a good rate, shop around. Remember: interest rates do not exist in a bubble. Always check the financing terms to truly understand the offer. What is your credit limit? How often are bills due? What is the charge for a late payment? Consider all of these terms when deciding which card is best.

Secured vs. Unsecured

You have two main options for credit cards: secured and unsecured. A secured card uses collateral, typically a business asset, in order to protect the lender. Secured cards tend to have lower interest rates because they are less risky for the lender. However, if you default, you will lose whichever asset you placed as collateral. On the other hand, unsecured cards present very little risk to you. Even if you default on the card, you can still protect your assets if the credit card company attempts to collect. Unsecured cards tend to help build your credit faster as well, so this second advantage makes them a good option if you need to establish your business credit.

Bonuses and Rewards

Business credit cards are more apt to provide excellent rewards options than personal cards. Businesses tend to have bigger credit lines than individual borrowers; this makes them profitable clients for banks and lenders. As a reward, those lenders will offer plenty of perks in order to get your business. Those perks can include airline and hotel upgrades, cash back to your business or assistance with shipping your large product orders. Talk to different lenders about their business credit card options, and you may find there is a reward ideally suited to your line of work. For example, if you know your employees will be traveling often, taking a card that rewards you with airline miles and upgrades may be an excellent option.

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