Does Your Company Need Business Credit Cards?
It is easy to think that once you get your business started that you won’t have to worry about financing ever again. However, after some time running a business, you will quickly see that is not the case. You will likely find many occasions throughout your business ownership that you need to seek financing. There are many different options in financing, though. One such option is business credit cards.
What to Expect From a Credit Card
A business credit card is just like a personal credit card. It is usually unsecured, and you get a credit limit and can use the card to make purchases up to your credit limit. You then make monthly payments on any balance until it is paid off. If you don’t have a balance, then you don’t make payments. Cards come with interest that is added to outstanding balances, which you must also pay.
A credit card is often mistakenly compared to a line of credit. They really are not the same. With a line of credit, you are essentially getting a loan from a lender. Once you have borrowed the maximum allowed, you must apply for a new line of credit. You may also have to have collateral for a line of credit.
Things to Consider
You should understand that business credit cards are a fairly costly financing option. The interest rates on credit cards are pretty high when compared to other financing options. In addition, even though the card is for your business, it will almost always require you to be personally responsible for any debt occurring from the card. Because credit card fraud is fairly common, you also need to be concerned with security and managing your cards to ensure nobody is using them without permission.
On the other hand, there are some great advantages to getting a credit card. To begin with, of all financing options available to you, a credit card is probably one of the easiest to get. Not only is it easy to find one to qualify for but also it is easy to apply for them and approval is rather quick. They are also easy to use and a great option if you hit a slow period. You can use the card and then pay the balance in full to avoid any interest fees, so it is like an interest-free loan.
Another perk of a credit card is that they usually offer helpful online account management, which makes it easy to track expenses. Many cards also offer rewards, like cash back or the ability to earn prizes and discounts. They are also a great way to build credit for your business because they will report to major credit bureaus.
Business credit cards are only one financing option available for your business, but they are well worth considering. They offer many benefits over other options and can be a simple way to get money when you need it.