How to pick a business credit card that actually works for you

Representative image

Business owners tend to apply for the first credit card that promises reward programs or fast approvals. This may be fine for a while, but a bad credit card can end up costing a business plenty. Knowing how your business spends money is one way to make a qualified decision about a business credit card.

Each business will have its own pattern of spending. Perhaps your business spends a lot on travel, internet ads, or office supplies. The last thing you need is a card where the benefits are mostly in categories that have little relevance to your expenses. This way, points or cash back are actually accumulating.

Cards with high reward rates seem tempting, yet are sometimes associated with restrictions, rewards, or annual fees. It is worth evaluating the mechanism of reward points or commissions to be received or redeemed. The simplest cashback card may turn out more gratifying than the complex points card which calls for constant monitoring. Simplicity trumps excitement when it comes to accounting for business expenses.

The credit limit on the card should be sufficient to cover the running of the business without constant demands for repayment. This can be disrupted if the credit limit is low. Offering easier repayment terms is appropriate. Some credit cards even have an interest-free period that could be useful for working capital.

Annual fees, renewal fees, and rates of interest might decrease the benefits associated with the card. Having an annual fee that is lower and providing limited benefits may still turn out to be more economical. Fees associated with a card ought to be measured against the real value that is going to be utilized.

One of the greatest benefits of a business credit card is the ease of expense tracking. Business credit cards that have features such as statement analysis, category spending reports, and the facility to download the data are very helpful when it comes to accounting and tax filing.

Control functions become imperative if you are issuing cards to your employees. Limiting expenditures, prohibited merchants, and real-time notifications are useful in preventing misuse. Tracking card expenditures on an individual card basis helps in making transactions transparent.

Transactions may also have issues such as disputes, chargebacks, and billing errors. Customer support and dispute resolution are therefore important when it comes to dealing with the issuer of a business card, as these aspects help prevent downtime.

Keeping all business spending with a business credit card is much more organized and helps with money management. It will also contribute to an improved business credit rating, should financing become an issue in the future.

A business credit card should make you feel like it’s an aid to you, not a burden. A well-considered business credit card will help improve the flow of cash and make it easier to manage and will not quietly siphon money out of your business.