Businesses large and small employ millions of people in the United States and across the globe – they are one of the biggest consumers of credit cards as well.
A business has to manage their finances similarly to an individual, but must be even more vigilant with things like lines of credit and credit cards because they want to remain liquid and solvent at all times.
Businesses often have mortgages, automobile loans and business specific credit cards. Here are several factors that businesses should be looking for when they are trying to find the best business credit cards.
Often, a business is not able to survive unless they can manage their cash flow effectively through the use of credit, and a high quality credit card helps a business do just that, and can also give a lot more, like rewards and great features.
First, business owners should be looking for a card that fits their business need. Does the business need a credit card to assist with cash flow, and may not be paying it off in full every month?
Will the business simply be using the credit card for convenience, and paying the balance off every month? Answering these questions can help business owners to choose the credit card that is right for them.
Second, business owners should review the terms and conditions of each credit card. While many of the best business credit cards offer the first year of the annual fee for free, the renewal of this fee can make the card worthless.
Individual business owners should know the fee that they must pay before they renew the card. Otherwise, the rewards and benefits they are receiving from the card may not be worth the price.
Third, business owners should understand how the rewards on the best business credit cards work. Businesses should focus on having a credit card that generates rewards their business can use the most. For example, it does not make sense for a business to have a credit card that generates frequent flier airline miles rewards when the business rarely has employees travel by air.
This business may have a large number of employees who drive to customer locations. A business that has a sales force that uses company vehicles should consider assigning business credit cards that award cash back for gasoline purchases. Or the business may simply want cash back for any purchase, if they don’t want to use any rewards for goods or services.
Fourth, business owners may want to assign business credit cards to their employees for travel and money management purposes. Traveling can be a major cost to a business and credit cards can help a business to ensure that they understand their real cost.
Some credit card providers allow businesses to limit the amount of charges that can be authorized to a specific account. This can be a useful feature for businesses that want to limit employees from overspending their travel budget.
These types of business oriented credit cards are very popular with companies that have a lot of expense accounts for their sales or marketing force. Accounts that can individually limit spending and alert the owner of the company to possible infringements could be vital to the success and profitability of the organization.
Finally, many of the best business credit cards are not available to brand new businesses. Individuals often have to guarantee payment for a business account when their business is new or has a small credit history. Typically, secured credit cards carry a higher interest rate because they are taking on a larger risk by allowing these businesses a revolving credit line.
Is the tradeoff worth it for your company? That is a decision that must be weighed very carefully since a high APR can be an expensive burden if the balanceis not paid off every month.
The longer a business has established credit as well as numerous trade lines, businesses will be able to qualify for better credit cards. This means a lower APR, better features, more attentive service, and all around a better deal for the business, so it is well worth establishing an excellent credit history.
Businesses should ensure that they analyze all of the options they have when it comes to choosing a busienss credit card which best fits their business model as well as their spending habits and goals. Carefully read about the card’s features, the APR, any restrictions, awards, and whether the card gives the lender the option to increase rates later.