Does Your Business Need Credit Cards

Business Credit Cards – Do You Need Them

Once you start you own business it seems that business credit cards are the next stop. One of the reasons that banks and financial institutions want you to get new business credit cards is because there is because there is so much money to be made from them. A business card has different rules to your personal credit card, they will charge you an annual fee and the interest rate you pay will generally be higher.

Since we all have credit cards in our wallet it seems natural that you should get some for your business. Business credit cards don’t look any different to your personal credit card, which is why I always put a letter or some identifier on my business card. But does your business need them? There are two ways of thinking about credit.

Business Credit Cards

If you have cards you are more likely to use them, so having no access to quick credit reduces temptation
Having a credit card that you use sensibly will improve your company (and personal) credit score which will help when you need to take out a company loan.
Both are correct, when you have a credit card it can be tempting to buy items that you would not normally or maybe go out for dinner at a time when you would not if you couldn’t charge it. But having a credit card that you manage correctly, make regular payments and never miss one, will help improve your credit score. Your credit score will greatly affect the interest rate you pay when you take out any loans.

The other thing to consider is that it is much easier to get a business credit card or a business loan when you are not desperate for one. You also do not have to use a card just because you have it, if you can be sure that you will either not use it or pay off the full balance then having a credit card for business trips or emergencies does indeed make sense.

Credit Card Fees
You need to know that having a card from American express, Citibank or bank of America for your business will require you to pay annual fees. The credit card companies will often waive the charges in the first year so that you get used to using the card and then by the time you get to year two you pay the fees without a second thought. Before you sign up for any credit cards you must think about the fees and the interest rates that you will be charged.

Secured Credit Cards Are A Business Option
One option you may want to consider is getting a secured credit card for your business. You do have to deposit money with the bank, so it ties up some of your capital, and that is used as teh credit limit for your card. You get the benefit of helping your credit score without the risk of over spending. You can only spend up to the amount you deposited so there is no fear of a credit card bill that your company can not afford to pay off.

Use Credit To Grow Your Business
While you may not think you need a credit card or any kinds of loan right now, there may well come a time when your business will need credit and you will be able to get it far easier if you already have a credit history. While I do not love the idea of running up credit card bills I do appreciate that I need my credit score to be as high as possible so that when I need to take out a mortgage or loan I can save money on the interest rate. Business credit cards are a neccessity not an option in my business opinion.

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