Business credit cards are an essential tool for business owners and entrepreneurs. They allow the business owner to have more flexibility in their payment method, as well as offer them a solution for having credit to expand their business.
While free capital is always best, it is essential to have a line of credit if you have a business because you need to be able to establish and maintain a good credit rating as a business owner.
When you decide to get a business credit card, it’s important to do your research to find the right one. Interest rates can eat up some of your profit if you are not careful, so you need to maintain a low balance when possible. This will improve your credit rating and allow you to have even more credit later.
Remember that, when you have a business credit card, there are some factors the credit bureaus look at that improve your rating. Some of the most important factors are listed below.
- Total debt– One factor that affects your credit rating is your total debt that you owe. Transunion and the other credit monitoring agencies take note of your total debt to see what kind of risk you pose. The higher your debt and your debt-to-income ratio, the more risky lending agencies consider you. So the goal is to get and maintain good credit and keep it good for a long time.
- Oldest debt– Credit agencies also look at your oldest debt. The older your debt that is either paid off or discharged, the better your credit score will be. It is only one factor, but it is important. In other words, any old debts you have that were delinquent should have either been paid off or discharged. If these debts were a long time ago, the general view is that you will handle your debt better now than you did 10 or 20 years ago. So older delinquent debt is less damaging than current delinquent debt.
- Recent payment history– The better you do at making your recent payments, the better your credit rating will be. Paying the minimum is good, but it’s better to pay slightly more per month if you can afford it. This will allow you to stay ahead of the finance charges that add to your total debt.
- Delinquent accounts– As we said above, older debt is not as bad as current delinquent debt. Try to get all of your credit cards up-to-date and pay off debt as soon as possible if it is delinquent. In general, 60 days is the magic number that can severely damage your credit rating if you wait that long to pay it. You will also pay finance charges and late fees if you are 30 days late.
- Total available credit– Keep your total available credit availability high and use only what you need. To establish and maintain your credit rating, you need to use it some. But keeping your balance as low as possible will help you to have more available credit and improve your rating.
Which Business Card to Choose
When it comes to business credit cards, which one should you choose? It pays to do your research, so start with a search on some portal sites. In the meantime, we take a look at three popular business cards below to get you started.
Chase United Mileage Plus Business Card
One card you may want to look into is the Chase United Mileage Plus business card. This business card allows you to get up to 40,000 bonus miles on United Airlines once you spend $2,000 on purchases. You have to spend this in the first three months after opening your account, but for business owners who travel a lot and fly to various locations, you could benefit from this card.
There are some other ways you can earn extra flying miles for spending more on your card, and there is no limit to the number of miles you can collect over time. There are other types of savings you can enjoy with this card as well.
Your credit limit will be based on your credit rating and other factors at the time you apply. If you have a good credit rating, you should be able to get this card for your business.
American Express Starwood Preferred Business Card
American Express SPG Travel Card allows you to use your card for airline discounts all over the world as well as other perks like earning up to 9 free nights, elite status, and premium on-property internet access. There is no annual fee if you join this plan now but it is $95 per year after that. Check out the link above that we have provided, and you’ll learn more about this great deal.
American Express Platinum Business Card
The American Express Platinum Business card is another great option for a business owner who is looking for a business card to meet their needs. This card offers some great perks including:
- Membership Reward Points
- Global Lounge Collection
- $200 free airline credits
- Premium Global Assist
- Global Dining Collection
These are just a few of the extra perks you get when you join the American Express Platinum card. If you enter this card plan, you’ll be able to get discounts on various amenities around the world, including dining privileges in some of the most beautiful restaurants and free airline credits. Check it out.
Why a business credit card?
The question you may ask as you read this and check out these deals is whether you need a business card. While it’s true that you need to use free capital as much as possible, it’s good to have a working line of credit; it’s also important to work on your credit rating by obtaining and maintaining a good line of credit.
You should get a moderate amount of credit that you can use, then only use what you need. To help your credit rating, you should use it some but also keep about 2/3 of your credit line available. This means making timely payments that are more than the minimum each month so that you can stay ahead of the finance charges and potential late fees.
If you focus on building your credit rating with one of these card offers, you will be able to cash in on some great airline savings which are perfect for a business owner, public speaker, or other entrepreneurs who travel a lot.
By using your card frequently for small purchases, you can gain a lot of leverage in flying miles which will save you a lot of money, plus have access to many other perks.
It is advisable to look at the primary rules of a credit card before joining. Know what the fees are and read the fine print. Then think about how much you could benefit from the perks and extras that you get with your card.
Having a business line of credit is essential to get and maintain a credit rating for your business and increase your limit over time. With good payment habits and regular use of your card, it can pay off for you in the long run.
How a Business Credit Line Can Help Your Business
If you are still debating on how a business credit card or line of credit can help your business, think about the following things:
- It will help you to establish much-needed credit that will help you expand and grow your business.
- It will help to maintain a healthy credit line that will provide you with needed items to offer your customers such as increased inventory and other items.
- It can help you to afford to hire more people by letting you use your credit card for business expenses, freeing up more capital to pay employees or independent contractors.
- It establishes you as a credible business owner who carries a line of credit to operate your business on a higher level.
- Many of these business credit cards offer great ways to save money on flights and other travel expenses that can cost money. When you save money on these reward programs, you’ll be able to afford other things for your business.
If these advantages are not enough, think about what the goals are for your business and where you want to see your business going over the next five years or so. If your goal is to grow your staff, your inventory, or your facilities, if you want to travel more and save money while doing it, and if you need to expand your line of credit in order to obtain things that you could not afford otherwise, then a business credit card is probably a good idea for you to look into.
Take a look at the three business credit card offers we provided you with this post and choose the one that interests you most.
- Chase United Mileage Plus Business Card
- American Express SPG Travel Card
- American Express Platinum Business Card
Managing Your Credit Accounts
One final reason people often give for not getting a business credit card is that it will cost you too much interest or you will be stuck with high late fees or finance charges. But, while these are valid arguments in some cases, they are only true if you fail to meet your financial obligations with the cards.
Make a list of the expenses you have every month and make sure you include your lines of credit as one of your normal expenses and then put it in your phone as a reminder to remind you to pay it each and every month. If you make it a high priority to stay on task and pay your debts each month, you will be more likely to stick to it and afford the costly late fees and finance charges that you might experience if you fail to make these payments.
Entrepreneurs and business owners are highly disciplined people who understand the importance of sticking to a budget. If you follow these concepts, there’s no reason why you should not get a business credit card. It’s an investment in your business and a chance to prove to the world that you can handle your financial responsibilities.
Go to the sites via the links we provided to check out the requirements of each one and start your business line of credit today, and if you haven’t started your blog yet, click here to follow our guide.