Business credit cards have been a popular financing tool for small and large businesses alike for many years.
These credit cards are designed specifically for businesses and offer a wide range of benefits, from cashback rewards to improved cash flow.
For those unaware, a business credit card is specifically designed for businesses to use for their expenses. It is a way of unifying the business expenses in one system so they can easily be tracked.
Like personal credit cards, business credit cards provide a revolving line of credit that businesses can use to make purchases, pay bills, and manage their cash flow.
- Advertisem*nt -
Business credit cards are offered by various financial institutions, including banks and credit card companies, and come with a range of features and benefits tailored to businesses.
These features can include rewards programs, expense-tracking tools, and online account management.
What is it Used For?
The answer can vary. However, as a business, money is king and the flow of it is very important. If you’re in control of the flow of cash in your small business, it can be easier for you to scale and operate without burning through your cash reserve.
This will certainly make you and your employees happy in the long run. As stated above, there are several reasons why any small business should incorporate business credit cards into their operations in order to easily manage their expenses in one single account that can be easily tracked apart from the perks that come with it.
Business credit cards can be used for a variety of purposes depending on the needs and want of the company that is obtaining it some of which include the following:
Purchasing Supplies and Inventory
One of the most common uses for a business credit card is to purchase supplies and inventory. Whether you need office supplies, raw materials, or products to sell, a business credit card can provide you with the funds to make these purchases.
This can be very useful as it helps you to easily track all of the expenses in a data-driven manner. Business credit card providers also give incentives that encourage the usage of their services which can in turn be a win-win for both the issuer and the holder, in this case, the small business.
Paying Bills
Business credit cards can also be used to pay bills, such as utility bills, rent, and insurance premiums.
This can help improve cash flow by allowing businesses to pay bills on time without having to immediately use their cash reserves.
Travel Expenses
If your business requires travel, a business credit card can be used to cover expenses such as airfare, hotel accommodations, and rental cars.
Many business credit cards offer rewards programs that provide travel-related benefits, such as airline miles and hotel points that can be redeemed for future purposes.
Additionally, some business credit cards offer perks such as free airport lounge access, concierge services, and purchase protection.
Managing Cash Flow
Business credit cards can also be used to manage cash flow. By using a credit card, businesses can delay payment for expenses, giving them more time to manage their cash flow and ensuring that they have enough money to cover their obligations.
As mentioned earlier, business credit cards can help improve cash flow by allowing businesses to delay payment for expenses. This can be particularly useful for small businesses that may not have a lot of cash on hand.
Instead of constantly burning through your cash reserve, you can reliably turn to your credit cards to complete some business operations and manage some at-the-moment problems with ease.
Easy Access to Financing
Business credit cards can also provide easy access to financing when businesses need it. If you need to make a large purchase or need to pay for unexpected expenses, you can use your business credit card to do so.
Additionally, many credit card companies offer balance transfer options that allow you to transfer balances from other cards or loans, providing a quick and easy source of financing.
Build Credit
Using a business credit card responsibly can also help you build credit for your business. By making timely payments and keeping your balances low, you can improve your credit score and increase your chances of being approved for other financing options in the future.
It’s almost the same as paying back your loan on time. The advantage of business credit cards are relative to loans is the perks that go along with it.
Expense Tracking
Business credit cards also offer an easy way to track business expenses. Most credit card companies provide detailed statements that show all transactions, making it easy to monitor spending and identify any fraudulent activity with ease.
In conclusion, a business credit card is a credit card specifically designed for businesses to use for their expenses.
It can be used for a variety of purposes, including purchasing supplies and inventory, paying bills, and managing cash flow.
Your business may need a business credit card to improve cash flow, provide easy access to financing, and take advantage of rewards and perks.
When considering a business credit card, it is important to choose a card that fits the specific needs of your business and to
Drawbacks of Using Business Credit Cards
While there seems to be an unending list of perks and benefits to using business credit cards in 2023, there are certainly some drawbacks that might not be suitable for your business growth and financial situation. Below are some of which we’ve seen based on problems faced b companies that have incorporated them into their business operations.
High-Interest Rates
One of the main drawbacks of using a business credit card is the high-interest rates that can come with them.
Interest rates for business credit cards can be significantly higher than those for personal credit cards, making it important to pay off balances as soon as possible.
The inability to make a timely payment can hurt your credit score which can affect your future access. You get the chain reaction now.
Risk of Debt
Using a business credit card can also increase the risk of debt for your business.
If you are not careful with your spending, you may end up with a significant amount of debt that can be difficult to pay off, especially as a small business owner that is trying to bootstrap.
This can lead to financial problems for your business and damage to your credit score as mentioned above.
Fees
Business credit cards can also come with a range of fees, including annual fees, late payment fees, and balance transfer fees.
These fees can add up quickly, making it important to read the fine print and understand the terms and conditions of your card before dabbling into it.
Even though there are some perks that come with it, the fact that you can easily accrue a lot of underlying charges without your knowledge can b daunting.
Fraudulent Activity
Like personal credit cards, business credit cards are also at risk of fraudulent activity. It is important to monitor your card regularly and report any suspicious activity immediately to your credit card company to avoid any potential financial losses.
In fact, small and naive businesses are often susceptible to credit card fraud which can lead you to pay up for what you did not spend.
Limited Rewards
While business credit cards do offer rewards and perks, the rewards may be limited compared to personal credit cards.
Additionally, some rewards may only be applicable to specific business expenses, limiting their usefulness.
Business credit cards offer a range of benefits, from improved cash flow to rewards and perks.
However, they also come with drawbacks such as high-interest rates, fees, and the risk of debt.
When considering using a business credit card, it is important to weigh the pros and cons carefully and choose a card that fits the specific needs of your business.
Additionally, it is important to use the card responsibly and make timely payments to avoid any negative impact it can have on your small business’s financial situation in the long run.
Small business Credit Card Providers
Obtaining a business credit card will surely require some input on our own end. While there are some institutions online that offer this service, financial institutions are often the go-to when anyone needs to obtain a small business credit card and those are mentioned below in this post.
These credit card providers offer various types of business credit cards with different features, fees, and rewards.
Some cards may offer cashback or travel rewards, while others may offer low-interest rates or no annual fees.
It’s important to compare and consider the pros and cons of each card before choosing the one that’s best for your business.
Additionally, small business owners should consider their credit history, business needs, and spending habits before applying for a business credit card.
But without any further ado, below are a few business credit card providers you can apply with to grab yours for your small business.
American Express
American Express offers a range of business credit cards, including the American Express Business Gold Card, which offers rewards points for eligible purchases and a $295 annual fee.
The Blue Business Cash Card offers a 0% introductory APR for the first 12 months and 2% cashback on all eligible purchases up to $50,000 per year, with no annual fee.
Other benefits may include travel perks, purchase protection, and expense management tool
Bank of America
Bank of America offers several business credit cards, including the Business Advantage Cash Rewards Mastercard, which offers cashback on purchases, a $300 statement credit for eligible purchases, and no annual fee.
The Business Advantage Travel Rewards World Mastercard offers travel rewards, no annual fee, and no foreign transaction fees.
Other benefits may include overdraft protection, expense tracking tools, and mobile banking.
Capital One
Capital One offers a range of business credit cards, including the Spark Cash Card, which offers unlimited 2% cash back on all purchases and a $95 annual fee.
The Spark Miles Card offers unlimited 2X miles on every purchase and a $95 annual fee. Other benefits may include travel perks, purchase protection, and fraud coverage.
Chase
Chase offers several business credit cards, including the Ink Business Cash Card, which offers cashback rewards on eligible purchases, a $750 bonus cashback offer, and no annual fee.
The Ink Business Preferred Card offers travel rewards, cell phone protection, and a $95 annual fee. Other benefits may include travel perks, purchase protection, and expense management tools.
Citibank
Citibank offers several business credit cards, including the CitiBusiness / AAdvantage Platinum Select World Mastercard, which offers travel rewards, a $99 annual fee (waived for the first year), and a signup bonus.
The CitiBusiness Cash Card offers cashback rewards on eligible purchases, no annual fee, and an introductory APR offer.
Other benefits may include travel perks, purchase protection, and expense management tools.
Discover
Discover offers a range of business credit cards, including the Discover it Business Card, which offers cashback rewards on eligible purchases, no annual fee, and an introductory APR offer.
The Discover it Miles Card offers travel rewards, no annual fee, and no foreign transaction fees.
Other benefits may include purchase protection, fraud monitoring, and free FICO credit score monitoring.
PNC Bank
PNC Bank offers several business credit cards, including the PNC Cash Rewards Visa Business Credit Card, which offers cashback rewards on eligible purchases, no annual fee, and an introductory APR offer.
The PNC Travel Rewards Visa Business Credit Card offers travel rewards, no annual fee, and no foreign transaction fees.
Other benefits may include expense management tools, overdraft protection, and online account management.
US Bank
US Bank offers several business credit cards, including the U.S. Bank Business Cash Rewards World Elite Mastercard, which offers cashback rewards on eligible purchases, no annual fee, and a signup bonus.
The U.S. Bank Business Leverage Visa Card offers a low introductory APR, no annual fee, and no foreign transaction fees. Other benefits may include travel perks, purchase protection, and online account management.
Wells Fargo
Wells Fargo offers several business credit cards, including the Wells Fargo Business Platinum Credit Card, which offers a low introductory APR, no annual fee, and expense management tools.
In conclusion, business credit cards can be a valuable tool for small business owners. They offer a variety of benefits, including rewards, travel perks, purchase protection, and expense management tools.
However, it’s important for business owners to carefully compare and research each credit card provider to find the one that best fits their needs.
This includes considering factors such as fees, interest rates, rewards programs, and credit limits.
Small business owners should also take the time to evaluate their credit history and spending habits before applying for a business credit card.
By making an informed decision and using their credit card responsibly, small business owners can take advantage of the benefits of business credit cards while avoiding potential drawbacks such as high fees and interest rates.
Overall, business credit cards can be a powerful tool for small businesses looking to manage expenses, build credit, and earn rewards.
