How to Choose the Right Business Credit Card
Business credit cards can be a great way to manage your business’s cash flow, access needed capital for growth and provide an emergency backup plan for when money is tight. But what does a Smart Hustler need to know to choose the right business credit card?
- Never use a personal credit card for business. Mingling your business expenses on your personal credit card causes a raft of problems, including the risk of hurting your personal credit rating, the fact that you aren’t building a business credit rating and the inability to write off the purchases as a business expense.
- Look for a business credit card that doesn’t report to your personal credit report. If it does, any financial bumps in your business will hurt your personal credit.
- Understand the annual percentage rate (APR). Business credit cards typically either have a low APR, or a higher APR with rewards. If you’ll maintain a balance on your card (for example, you’re using it to finance your startup), look for the lowest possible APR. Or get multiple cards and use them for different purposes—it’s a good way to make sure you always have the $100,000 in available credit that experts recommend.
- Consider fees. Annual fees or penalty fees can add up fast, so make sure any fee you’re paying is reasonable and that it’s clear how to avoid penalties.
- Consider perks. Business credit cards often offer perks like airline rewards points or discounts on office supplies. Look for rewards that are easy to earn and that you’ll actually use.
- Assess reporting options. Business credit cards generally track and categorize your spending, but reporting options can vary. Make sure a card offers what you need, whether that’s customized reports or the ability to download reports into your accounting software.
Rieva Lesonsky is CEO of GrowBiz Media, a media and custom content company focusing on small business and entrepreneurship. Email Rieva at firstname.lastname@example.org, follow her on Google+ andTwitter.com/Rieva, and visit her website, SmallBizDaily.com, to get the scoop on business trends and sign up for Rieva’s free TrendCast reports.