Considerations for Getting Business Credit Cards

When you own a business, you’re going to need a business credit card at some point. You’ll find numerous types of business credit cards, each of which has some advantages and disadvantages. To decide which card is best for you, think about how you plan to use it and what perks would make a difference for your business.

Carrying a Balance vs. Paying in Full

If you pay your balance in full each month, you’ll never have to pay interest. So, if you plan to use your card for small purchases, you don’t need to be too concerned about the interest rate. However, if you plan to use your credit card for major purchases and pay off your balance over time, you will be paying interest, and that can significantly increase the actual amount you end up paying for purchases.

Some business credit cards offer a 0% APR for the first 12 months. Those cards may be ideal for entrepreneurs needing to make a major purchase, if they can pay off the balance within a year.

Perks

Credit cards typically offer perks, and those may be quite specific, such as fuel-purchase points when you use your card at gas stations or cash-back rewards when you charge your shipping and advertising costs. Look at the fine print, though – some perks apply only when you shop at specific establishments, and points may not roll over to the next calendar year.

To maximize the benefits of your rewards program, you could set up your recurring monthly expenses (such as utility bills) to be charged to your card.

Fees

Cards may or may not have annual fees. While business owners may be disinclined to consider cards with annual fees, those cards may also offer perks like a one-time cash bonus that offsets annual fees. Annual credit card fees are also tax-deductible.

If you plan to add employees to your account as authorized users, determine which cards charge fees for additional users and which don’t.

About Business Credit

Using your business credit cards wisely can help you build your business credit score – but there’s a catch: Not all credit card providers report to business credit bureaus. So, if you have a card from an issuer that doesn’t report to credit bureaus, you may not see your credit score improve.

Using a credit card comparison website may help you find the cards that would be the best for your business credit score. You can also ask the issuer for that information, if it’s not easy to find, or ask other business owners you know for recommendations.

Understanding Obligations

When you get a credit card, you’re entering into a contract with the issuer. The details of credit card agreements are sometimes misunderstood or unclear, which can lead to unwelcome surprises down the road.

At Lusk Law, LLC, we’ve reviewed credit card agreements and other contracts for our business clients, to ensure those agreements are best for their interests. Our experienced attorneys have provided legal counsel and representation to entrepreneurs in Frederick County, Howard County, Baltimore County, Baltimore City, Carroll County, Washington County, Montgomery County, Anne Arundel County, and other counties in Maryland. Please call us at 443-535-9715 or fill out our contact form if you have any questions about this topic.

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