Credit Cards for Small Business Owners

Owning and operating a small business can be very stressful, especially with an ever-increasing budget and mounds of debt accumulating with each passing month. Having a good credit card with an extensive credit limit can let a business owner purchase items and property needed for the business without breaking the budget or going further into debt.

Having access to necessary resources with a minimal investment can help create a consistent cash flow for any business. Consider some of the following information when applying and searching for a small business credit card.

Interest Rates

Perhaps the most important factor to consider when applying for a small business credit card is the interest rate, which will ultimately determine the amount of debt that accumulates on the monthly balance. Even a few interest points can make a significant difference at the end of the year. A higher interest rate, in essence, means more debt in the long run, so it is important to find a card that offers lower interest rates. Fortunately, one of the appealing aspects of a small business credit card is the extended 0% APR introductory period. However, be sure to note the true interest rate after the introductory period expires. It is also important to check whether the interest rate is fixed or variable. A fixed interest rate of 7% to 12% is ideal.

Fees

One should also consider the annual fees associated with the card. Annual fees can vary greatly, with some cards having no fees and some having fees of $100 or more. In some cases it is possible to find a card that will waive the fee for the first year. Late fees are also a factor, as they can be as high as $40 in some cases. Even though small business credit cards usually have generous credit limits, there are fees associated with going over the limit. Before applying for any credit card it is best to consider all of the fees associated with the card first.

Rewards

Many small business credit cards offer rewards on purchases at the end of each month. Some cards offer cash rebates as well, which may be more beneficial to certain business owners. Finding a card that offers gas rewards, cash rebates and possibly even frequent flier miles will make it possible to save hundreds of dollars each year on business expenses.

Conclusion

An ideal small business credit card will have a low fixed interest rate, an extended introductory period, a high credit limit, minimal fees, and plenty of reward options available. It is best to shop around thoroughly before applying for any cards, as some cards may require a minimal balance in order for the account to stay open. Thus, having several cards at the same time may not only be pointless, but financially detrimental as well, since closed credit accounts and denied applications can negatively affect an individual’s credit score.