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Small Business CardsSummary: Most businesses come to a point where a business credit card would be an asset, whether it is for making certain purchases or for helping with cash flow. As with any major financial decision, you shouldn't rush head first into the first credit card you are offered. This article will provide a series of business credit card tips that will ensure you make the best possible decision and find the right credit card for your business.
Understanding Business Credit Cards
One of the most important business credit card tips to help you choose the best business card for your company is to ensure you understand what a business credit card is. While business and personal credit cards do not differ from each other too much (both used to purchase goods or services), there are some differences.
Issued for business - A business credit card will be issued in the name of the business rather than an individual. The company is responsible for the debts and not the person using the card. Additionally, some business credit cards come with certain limitations in terms of the purchases that can be made using the card and also some restrictions in terms of ATM withdraws.
Increased financial responsibilities - These terms could negatively affect you if you hand the card to irresponsible staff. Make sure you understand your responsibilities before you apply for a business card that could end up costing you (the business) a lot of money.
CitiBusiness Gold Credit Card
Earn 1.25 reward points that never expire for every dollar you spend with the Citibusiness Gold Credit Card. Managing your business have never been so rewarding.
- 0% p.a. for 4 months (reverts to 20.74%p.a.) on purchases
- 0% p.a. for 4 months on balance transfers
- $74 (half price annual fee for the first year thereafter $149) annual fee
- 21.49% p.a. on cash advances
| Interest Rate (p.a.) | Balance Transfer Rate (p.a.) | Annual Fee | Cash Advance Rate (p.a.) | |||
|---|---|---|---|---|---|---|
 Citibank CitiBusiness Gold | Earn 1.25 reward points that never expire for every dollar you spend and enjoy complimentary international travel insurance with this card. | 0% for 4 months (reverts to 20.74%) | 0% for 4 months | $74 (half price annual fee for the first year thereafter $149) | 21.49% |   |
 American Express Platinum Business Card | What some calls the ultimate business card. The AMEX Platinum Business Card does not come with a credit limit and thus allows you to better manage your cashflow during tight times. | $1200 | | |||
 American Express Gold Business Card | Earn a whopping 2 points for every dollar you spend on selected Qantas products and services. Also comes with no credit limit. | $169 | | |||
 American Express Qantas Business Card | $0 annual fee for the first year makes this card great for start-ups that want access to reward programs and the cashflow a credit card provides. | $299 | |
Better account keeping - Business credit cards come with plenty of other features and bonuses, including things like insurance, discounts on banking fees and detailed expense reports, making it easier for you to track your expenditure.
Why Use a Business Credit Card?
It is critical for you to understand the benefits of using a business credit card as these cards can make your life much easier.
Personal protection - First of all, there is an advantage to not mixing your personal and business credit cards spending. If anything does go wrong with the company you are not personally liable for any outstanding debt. Having said this, that depends how your company is legally structured. If you are not sure about the legalities of owning a business card you should seek professional advice.
Simplified bookkeeping - Business cards are generally easier to reconcile for GST and tax purposes. Thanks to separated expense accounts you can simplify bookkeeping.
Better security - With a business credit card you can enjoy better security by not having to carry around large amounts of cash, which is extremely risky.
Convenience - Using a business credit card will also allow you to save money by shopping online, which is often much cheaper than making your purchases at a brick-and-mortar shop. It will make the lives of your employees easier because they can use the card to make business purchases without having to use their own cash. Most lenders give you access to additional cards free of charge.
More flexibility - Many business cards come with a decent credit limit. Provided you can pay back the money in full within a reasonable timeframe this gives you increased flexibility. Forget short-term loans, or pesky waiting times to have a loan approved. Use your business credit card instead to make the necessary purchases.
Most business credit cards come with some type of rewards programme. This allows you to earn rewards with the normal use of your card. For example, if you do a lot of business trips you could opt for a business credit card that comes with a travel rewards programme, earning you free air tickets, accommodation and even significant discounts on other travel related products and services.
Types of Cards
There are two types of business credit cards available, namely a charge card and a regular credit card. The difference between the two is that with a charge card you have to clear the balance at the end of every month or you will incur hefty fees and penalties. With a credit card you can simply make the minimum payment at the end of the month, but will be charged interest for the outstanding balance.
One of the most important business credit card tips to keep in mind is that a charge card is usually better suited to larger companies that have consistent cash flow. This will allow them to pay off the balance in full at the end of each month. If you opt for a charge card, there is little flexibility and you don't have the choice of paying off the minimum like with a credit card. If you are late for a payment you will get stung when the fees and penalties kick in. If you are uncertain about your cash flow you are better off getting a regular credit card.
Managing Your Card
First of all, when applying for a new business credit card, consider speaking to your current bank. If you have a good relationship with them, more often than not, the approval process will be simpler. They will also be more open to negotiating terms and conditions if you have a good history with them.
Choosing the wrong business credit card can cost you serious dough.
Business credit cards offer an interest free period on your purchases which can be as much as 45 days, if you pay off your balance in full every month. Try and take advantage of this grace period to improve your cash flow.
Another important component to effective credit card management is to avoid making late payments. Paying late fees and penalties is not a good strategy when you are watching every penny. The more interest and penalties you accrue, the fewer advantages there are to using a business credit card.
You should try to avoid cash advances as much as possible due to high interest rates and a lack of grace period. Only resort to cash advances when there is absolutely no other option and use them only for emergencies.
If used properly, a business credit card can be an incredible asset to any company and will make life much easier, especially in terms of managing cash flow. Hopefully, the aforementioned business credit card tips will help you better understand these credit cards and how to properly manage them.
