While it is safe to say that most folks who start their own business have a good mind for money, even the most advanced scholar might have a hard time understanding all of the different types of small business credit cards that are available. Not only do you have to juggle things like credit limits, interest rates and annual fees, but you also need to look out for things like which rewards work best for your fledgling business and if you want a regular business card, a gold business card or a shiny new platinum business card. It is enough to make your head spin, as if you weren’t experiencing enough sleepless nights starting up your own business. Let’s take a look at how you can help to clear the field of pretenders and get down to the cards that qualify as contenders for your small business.
First, every small business owner should have a good idea what they need from their business credit card. You can significantly help your search by sitting down and making a complete list of priorities that you want out of your card. Start with the credit limit you need. Some cards, like the American Express business card and even a few Visa and MasterCard cards actually come with no limit at all. The only catch is that you have to pay off the entire balance every single month. Other cards have high credit limits but they might have annual fees or high interest rates. Still others have lower credit limits for business owners who only use the card once in a while. If having a high credit limit for maximum flexibility is your top priority, you might have to make sacrifices in other areas.
Second, you should decide what a reasonable interest rate is for you. Remember, you will likely be dealing with balances significantly higher than what you deal with on your personal cards. While a 12 percent interest rate may be great when your credit limit is only five thousand dollars, once your credit limit is $50,000, you might want to have a single digit interest rate to go with it, otherwise, the interest alone might sweep you away.
While most people might choose the card’s reward as the last priority, card companies occasionally offer perks that are too good to pass up. You may have one business card for small purchases and then another card that offers great cash back deals or double air miles and only use that card for large purchases, so you get free flights faster or more cash back quicker. Most small businesses today have multiple credit cards, which is great since it shows you are responsible with your money, but don’t abuse the privilege since it can send your business into a tail spin quicker than almost anything else.
As you can see, there are many important decisions you will need to make before you can accept and start using your small business credit card. Choose wisely or you might be in for a world of hurt.
