However, the company that charges an annual fee may offer more opportunities to earn rewards points. If one credit card issuer charges an annual fee but another doesn’t, you may be swayed to choose the card without the annual fee. “Be sure to compare different, and to understand the interest rates and other financing terms they carry,” he said. If a small business owner decides to use a business credit card, they should know what they’re getting into, said Tyson. However, missing a payment due date or not paying off the total before the promotional period ends can result in hefty interest fees on the whole balance in some cases, not just the remainder of what you owe. No-interest credit cards give you a limited-time opportunity to finance your business without paying a penny of interest. Interest ratesĬredit card companies often offer low or 0% interest rates on new cards. Many business credit cards come with specific benefits that accrue as users make purchases, such as cash back, airline miles, gas rebates, rewards points and savings on business supplies. Here are some of the options you may come across as you research your business credit card options: Cash back, airline miles and other benefits Business credit card optionsĬredit card issuers such as Chase, Visa, Discover, MasterCard and the Open network at American Express offer cards for small businesses. Key takeaway: Just like a personal credit card, a small business credit card can be a great tool when used strategically and with restraint.
In that case, I would not recommend a credit card, and you would not be likely to get a reputable one.” “If you are using them for purchases that you will pay off in one to three months, they are fine. If you are taking on debt that requires you to carry balances for longer, you probably have other business issues. “Even the best credit cards have high interest rates,” said Brian Cairns, founder of ProStrategix Consulting. A card can help with short-term debts, but it shouldn’t be used for long-term needs, like financing a business or making massive purchases, that you won’t be able to repay in a few months. It’s also important that you understand how to use a business credit card. These statements break down your expenses into categories and can be very helpful when you’re creating budgets and tracking expenses. Keeping business and personal cards separate also allows you to take advantage of quarterly and annual statements provided by your credit card company. Mixing personal and business credit purchases makes it difficult to organize your business expenses at tax time or if you get audited by the IRS. Personal finance author Eric Tyson doesn’t recommend that small business owners use credit cards, but if you get a business card, it should remain separate from your personal credit cards, he advised. Are small business credit cards a good idea? There are pros and cons of using a small business credit card, and it’s important to consider both before deciding whether getting one is the right move for your business.Įditor’s note: Looking for a small business loan? Fill out the questionnaire below to have our vendor partners contact you about your needs. One way to purchase the essential goods or services your business needs without delaying critical payments for other vendors is to get a small business credit card. Small business owners need to closely monitor their finances and manage cash flow, especially in the first few years of operation. This article is for small business owners considering opening a credit card for their company.If you elect to get a small business credit card, find a credit card issuer that offers rewards that benefit your business.