Prepaid Business Credit Card: Understand How They Work

A prepaid business credit card is a specialized funding tool that gives a company the spending convenience of a credit card without the financial burdens. This type of card will not increase a company’s buying power or credit rating, but can also deliver a number of benefits.

Getting A Prepaid Business Credit Card

Prepaid business credit card offers are generally provided by most major credit card companies that cater to businesses. These cards come with a simple application process that does not involve a denial. Since the money on a card is “loaded” in advance by the business, there is no credit check involved. In many cases, there is also no security deposit required.

Why Consider A Prepaid Business Credit Card

A prepaid business credit card offers some advantages to a company, which include:

  • Facilitating purchases – Prepaid business credit cards are ideal to use for large purchases. Rather than carry large amounts of cash or use unavailable business checking, business cards can be a good replacement and help avoid fees.  The security features offered by most prepaid credit card companies that cater to businesses can also lend peace of mind.
  • Keeping budgets balanced – A prepaid business credit card offers an excellent way to ensure that important purchases are made, but that monthly bills will not exceed a specified amount.  They can help a company make the purchases they need without the riski of going over budgeted amounts.
  • Giving employees buying power – It is possible to issue employees prepaid business credit cards. This frees them up to make necessary purchases without having to rely on their own funds for an expense account.

Other Features

Business credit cards features can vary.  Additional features include:

  • Free direct deposit for easier loading of cards
  • Free online bill pay options
  • Global access to cash with certain cards
  • Purchase protection
  • Low monthly rates
  • Lack of overdraft fees

The Credit Building Factor

Although a prepaid business credit card will not impact credit directly, the way a standard card would, some cards offer features that can help companies boost their ratings. For example, they may report all bill pay transactions to a designated reporting bureau. Reporting practices can help a business improve its standing or build credit if no record has been established.

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