Getting the most out of a business credit card

Just as they do for consumers, business credit cards allow users to stretch their dollar just a little further. Both types of cards have similar terms and offer rewards for their use, but business cards come with their own unique quirks. Before applying for one, learn the basics of business credit cards and how to get the most bang for your corporate dollar.

Business card basics

Business credit cards are generally marketed toward small-business owners, sole proprietors and for use with corporate expense accounts. However, restrictions vary on who can apply for a corporate card. Some issuers require only a Social Security number to apply, although others may ask for a Federal Tax ID in lieu of or in addition, which only registered businesses will have. In any case, applicants will typically have to agree that they will use the card only for business expenses, and the credit issuer may reject any application that appears to be for personal use only. Applicants should not submit false information for the purpose of obtaining a business credit account.

If you meet these basic qualifications, you will be faced with a multitude of choices for a business credit card. Similar to consumer cards, they usually fall into one of these categories based on rewards and conditions:

  • Flat rate rewards: These are generally cash-back cards that offer a fixed percentage of each statement balance as a reward. This amount can usually be exchanged for cash and put toward payments, or might be traded for additional discounts at certain retailers.
  • Interest-free period: This type of card will not charge any interest on revolving balances for a certain time period, usually the first 12 months. This allows users to make a large purchase and pay it off in installments at no extra cost, as long as they make the minimum required payment on time, and pay off the full balance by the end of the interest-free period.
  • Travel rewards: These accounts confer discounts and benefits with certain airlines. Purchases accrue points that can be exchanged for discounts on airfare, hotel stays and more. They might also give users access to members-only airport lounges and other perks.
  • Fair-credit cards: Business owners with limited credit history may find it more difficult to apply for the above cards, but could have better chances with a card intended for fair credit. These cards are available to applicants with only average credit scores, but usually offer less valuable rewards and higher interest rates.

How to make the most of a business card

So you've applied and received approval for your ideal business credit card - now what? The good news is that you've just gained use of a valuable tool for growing and managing your organization, but only if you can leverage it correctly.

Credit cardWhen looking to apply for a business credit card, consider how rewards and restrictions would affect you.

The primary benefit of any type of credit card is that it helps smooth out financial gaps if your cash flow is irregular. Ideally, your business credit card will be a first step toward rectifying that situation. This is important because most credit cards charge higher interest rates on debt than the average business loan. That's why it's crucial to make sure you don't overspend and can always pay off the full statement balance on time.

Getting approved for a business card also helps build a credit history for your company, which will pay off in the future by making it easier to apply for other forms of credit. Having a good credit score will also make your business more trustworthy in the eyes of lenders, landlords or anyone else you partner with.

The perks offered by credit companies in the form of rewards are certainly attractive, but they must also be used responsibly. You may feel tempted to make unnecessary purchases just to earn some cash back, but remember that these benefits are only truly worthwhile when earned from a purchase you would've made anyway. Also, the value of rewards is almost always negated by the cost of interest or late-payment penalties, if you incur any of those.

Finally, take care to monitor your finances through credit account management services online. Adding recurring bills to one credit card makes it easy to pay them off each month. Online tools can help card users track their spending from a central location. It's also possible to add coworkers to one credit account, but make sure they understand the basics of responsible credit use. 

Having a business credit card can be its own responsibility, but it is often a very useful tool. Talk to a financial professional for more information on smart credit use.

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