credit cards for small business

Credit Cards for Small Business

There are several options when looking at credit cards for small business. Trying to work out what the best business credit cards are for your company can save you a lot of money over the years.

Business credit card offers seem to cover just about every option, The first thing to consider is the purpose of the card itself. Let’s take a tour of some choices:

Travel Incentive Credit Cards for Small Business

A Travel Incentive card can transmute your business expenses into beneficial travel rewards. These kinds of credit cards for small business are offered by a plethora of card companies and local banks, which can make choosing one a rather daunting task. The best way to make an informed decision is to find out the relative dollar value of the points themselves when redeemed in the way you will most commonly spend them.

Credit Cards for Small BusinessThe value of travel incentive points is not a set constant, this point can not be stressed enough. Many loyalty points can be used in a variety of ways and can have a vastly contrasting point/dollars ratio. Spending 100 points on, say, a coffee gift card may net you a per point value of 20 cents per point; whereas spending the same hundred points on a flight to Denmark might give you an entirely different value. Ask the representative to break down the best use of points for you, or better yet, read the details yourself.

Insured Credit Cards for Small Business

An insured card is a solid choice for a card you intend to put in the hands of your field employees. The degree and type of insurance protection varies wildly and should be discussed with your issuer. More common insured cards offer protection against fraud and identity theft. Some are even insured against intentional employee theft. Insured cards will typically have a higher interest rate than other cards.

Specialized Loyalty Credit Cards for Small Business

Some companies, building supply chains for example, are now offering rewards credit cards for their customers and can offer some of the best small business rewards possible. Generally these cards are handled by major providers, such as Visa or MasterCard; however, some in house cards do exist. Rewards for using store specific loyalty cards tend to have the higher point/dollar conversion value and can even go so far as to offer percentage discounts on goods.

Cards Linked to an Existing Line of Credit

Linking your card to an existing line of credit can make tracking overall expenses far easier, particularly in the case of multiple cardholders where invoicing and repayments would have to be handled separately. Quick access and ease of use are the key selling points, especially with regard to automatic renewal which is commonly offered. Other types of business cards can require more lengthy reapplications for renewals.

Credit Cards for Small Business

Potential Pitfalls

Credit cards for small business, while a major convenience, are usually offered at a higher rate of interest due to the more risky nature of the entrepreneur’s business, as opposed to that of the larger corporations. Operating with a month to month balance remaining on the card can hurt your profits. Try to pay your balances on time to avoid a raised interest rate and other penalty fees.

If you must carry a balance then consider linking your card to a more economical line of credit.Credit cards for small business are not always the answer but it is certainly worth investigating.

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Secured Business Credit Card

A secured business credit card gives a high degree of assurance for the issuer, making them easy to obtain. The service is offered in situations where the business wants to prevent spending beyond its means; this also means it is an ideal product for a business with poor credit who would otherwise be excluded from card holding.

This credit service can be provided by institutions other than banks, such as specialized card companies and other financial firms and is therefore easily obtained. What does all this mean, you might ask?  Well, among other things it means healthy competition and a wide variety of offers across the market with widely assorted interest rates.

Secured Business Credit CardOn the flip side of the coin, a secured business credit card is helpful for building up a positive credit score, and brings a great deal of convenience into your company’s day to day dealings. A word of caution however: make sure your business has a clear policy in place with regard to handling its funds.

Secured Business Credit Card

How it works:

Depending on the specifics of the secured business credit card you pick, there may be discounts or reward programs available, so do your shopping around. The chief difference is that, with a secured service, you decide how much money you anticipate you will use and then deposit that amount as security towards the card.

Example:  $10,000 towards the secured pledge would give you a spending limit of $10,000.

If for whatever reason your organization is unable to pay the balance promptly, the amount owing will then be taken from the security pledge.

Using a secured business credit card has a number of benefits including:-

Reduces paperwork.
A secured business credit card is a great way to keep tabs on company spending habits and limit paper work, particularly the paper work associated with unnecessary cash handling, invoices, and expense reports.

Prevents expense account abuses.
Secured business credit card  are an ideal means by which  employee overspending can  be limited, reducing the company’s associated risk and preventing losses that might otherwise go unnoticed.

The possibility of interest on your security pledge.
Some institutions place the security pledge funds in a high interest savings account to provide better value to the consumer. These gems are rare though and might require some hunting and  negotiating.

There are however some drawbacks to think about when looking at getting a secured business credit card, such as having to pay the security pledge up front.

If it is not feasible to spend a large quantity of money for activation, then paying down debts beforehand and saving for implementation of the new system is advisable.

High rates of interest.
Given their popularity in groups with high rates of defaulting, the interest rates tend to be less than competitive. Avoid this potential pitfall entirely by ensuring the account is paid in full in a timely manner.

Additional Fees.
Know all the details before you sign on the line, some cards can accumulate lengthy lists of transaction and other fees depending on the specifics of your agreement.

Whatever the credit product is, always read the fine print and know what you are signing up for.A secured business credit card has less risk than most credit cards for small business but it still requires thought.

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