Businesses are greatly dependent upon credit and in order to obtain credit for your business, business credit cards are the best option available. These cards are specifically designed for using in business. Having them, business owners can keep their personal as well as business related finances separate.
Busniness credit cards
Obtaining this card requires you to understand the different between personal as well as business credit. Many of the cards simply include the name of your business on your personal card as well as on your personal credit report. If you want to find t whether your business credit cards are simply your personal credit cards, determine as to which credit rating agency the issuing authority reports to. You can always ask the credit agencies for obtaining this card as in this way you can create your business credit history.
In addition to this, business credit cards can help you keep your business finances separate. You can easily track purchases and can obtain detailed information about every transaction made through your monthly statements. The greatest benefit of these cards will be experienced when you will calculate your tax payment as you will not have to work out to determine your business expenses.
Cardholders are provided and easy access to a revolving credit line within a pre-set credit limit through which they can withdraw cash as well as make purchases. Similar to other general purpose credit cards, business credit cards also holds an interest rate on the balance which is not paid within the specified time period. These cards can either be obtained from a bank or financial institution or you can apply for it online after comparing its features and terms.
Pros and cons of business credit cards
-Convenience: This is the greatest advantage of these cards. Business owners have access to funds through which they can make purchases along with the facility of withdrawing money whenever required.
-Easier qualification: Even if you do not have a good credit history, you can qualify for these cards as the terms and regulations are somewhat lenient.
-Financial cushion: Business credit cards serves as a financial cushion to business owners when the accounts receivable conditions are below, sales are slow and the cash condition I the business is weak.
-Incentives and rewards: Many card issuing companies offer different types of discounts as well as travelling miles to their customers. Moreover, there are others that are offering cash back incentives which involves repaying the cardholder a certain percentage of their total purchases made.
-A tool to build your credit record: If you use business credit cards responsibly which means paying the bills on time and regularly and not crossing the credit limit, then these cards can be very helpful in developing a good credit record.
-Expensive: The interest rate charged on these cards is relatively higher as compared to other cards. Moreover, if the balance is not settled on time, the interest rate accumulation will add up very quickly.
-Security issues: Business owners should be careful that the card or card details should not be stolen by vendors, employees, contractors and other related parties as it can result in huge losses.
-Fluctuating rate of interest: Unlike consumer credit cards, business credit cards experiences fluctuations within interest rates depending upon how the card is being used.