Using business credit cards

Business owners have found that obtaining a business credit card is easier than obtaining a business line of credit and they have lower interest rates. Business credit cards carry several advantages like online bill-pay, zero-percent interest for 12 months, rewards, and the ability to purchase equipment and supplies without the hassle of applying for a loan and waiting for approval.

About 65 of businesses have at least one business credit card. Business owners can use them to grow their business and manage their cash-flow shortages. However, many business owners treat a business credit card like a personal one and they start spending beyond their means. Credit cards must be used solely for the purpose of business purchases if you wish to avoid a lot of confusion and debt. Credit cards must also be treated like a loan. You should only use what you need with the intent to re-pay it as soon as possible.

Most business credit cards carry a low annual fee. Depending upon the creditor you use, the annual fee will be charged quarterly or it may be charged yearly. If you do obtain a business credit card with an annual fee, make sure you receive rewards or other incentives to make up for the additional cost.

Business credit cards offer excellent advantages over personal credit cards. Most business credit cards have a starting limit of $20,000 and they just go up from there. This makes it much easier to make large business purchases that you may not have been able to make with a personal credit card or a business line of credit. You also have access to the entire credit limit once you are approved so you don't need to wait to pull out $10,000 now for a large equipment purchase and then wait another 6 months to a year to pull out more money. This makes it much easier for businesses to handle cash-flow problems and handle emergency equipment failures.

Proper use of a business credit card will significantly boost your credit rating. A credit card automatically establishes credit with the credit bureaus and this information will be used to help lenders see how well you are able to manage your credit. This will improve your chances for future loans when you need to expand your company. To boost your credit score, you must review your credit report to make sure all your vendors are reporting timely information. You also need to check with the credit card company to see how often they report information to the credit bureaus. Some credit card companies like Capital One are known for slow reporting procedures. This can make it appear like you are using too much of your total available credit and this will cause your credit score to drop.

Business credit cards help employers track their employees spending habits. This makes it much easier to set limits on their spending and control where they spend their money. Another feature of business credit cards is the ability to receive discounts on travel. Since each purchase you make will accumulate points, you will start to accumulate a large amount of points that can be cashed in when you reach a certain level.

When you apply for a business credit card and you use it properly, you are demonstrating business growth. It is also a great way to advertise your business because each time you use the card; the company name is on it. Business owners have stated that they feel like they have more credibility when they use a business credit card. Always read the fine print of your credit card agreement before you start charging up every business purchase. Some agreements have shorter grace periods while others have flexible payment terms.