Many small and medium-sized enterprises or SMEs already use credit cards as a means to finance their operations today. Applying for a business credit card that has a high limit, low annual percentage rate comes with plenty of rewards. It also offers opportunities to build business credit as a financing tool – something that every SME will certainly find useful and beneficial.
Selecting the Right Credit Card for Your Business
For your company to reap the most benefits from a corporate credit card, you need to choose the best one for your business. Here are some tips to help you select the ideal business credit card:
1. Determine your reasons for requiring one
Before applying for a corporate credit card, establish the reasons why your business needs one. Do you need it to ease cash-flow, for purchasing supplies, paying utility bills, or to better monitor and control your business expenses?
A corporate credit card can provide your business with additional flexibility. It is also an effective contingent financing solution. However, it will not solve all the financial problems your business may have or will run into. Also keep in mind that having a business credit card is a big commitment. As the business owner, you will have the important responsibility of being the personal guarantor.
2. Familiarize yourself with the different card types
There are different types of business credit cards. These include:
- Corporate credit cards
- Charge cards
- Special interest credit cards
- Credit repair cards
- Credit rewards cards
Each card comes with its own pros and cons. Without professional guidance, it can certainly be difficult to choose the best one that will suit your needs and business.
Start by talking to an independent advisor or your accountant. In addition to their advice, you can use an online credit card comparison tool or site to get more details about each card available in the market. When you have all the information you need, you will be able to narrow down your choices and, ultimately, select the best one.
Keep in mind that there is no ‘one-size-fits-all’ business credit card. As such, make sure you know the unique needs of your business before selecting the type of credit card you want to apply for.
3. Check your credit score
Doing a credit score check will leave a footprint on your credit report which can, in turn, affect your application. However, this is still something worth doing because some credit cards will only be given to people and businesses with specific credit scores.
If you apply for a particular card and your application is refused, you end up wasting your time and effort. Getting your application rejected will also negatively impact your credit report.
4. Know all relevant fees
Before applying for a business credit card, make sure you know how much it will cost your business. As such, get as many details as you can about all the fees that will accrue once you start using the credit card.
The typical costs that come with a credit card are annual fees and interest rates. However, there are other charges as well such as late payment fees. Make sure you calculate what your annual costs will be, and determine whether the card offers good value for your money.
5. Consider the card’s rewards program
Finally, many credit card issuers offer rewards programs. If you or some of your employees travel a lot, choose a card that offers airline miles rewards. In case travel is not an important consideration, look at cards that offer cash back options. Most credit card establishments offer from 1% to 5% cash back. But pay attention to the fine print since such offers may only apply to certain types of purchases such as business supplies, equipment or fuel.
Look for other incentives as well. Some banks provide rewards to clients for simply using the card. They can be in the form of discounts at certain retail shops or restaurants, or services such as complimentary limousine service and access to airport lounges.
Before choosing a card, consider your business activities and identify which credit cards offer rewards that may be of added value to you, your employees, and your company.
When applying for a business credit card, devote the same time and effort as you would in opening a business account. With the right business credit card, you can have access to a reliable additional source of funds. You will also be privy to a lot of exciting and valuable rewards.