5 Important Things to Look for in a Business Credit Card

01 Mar, 2016 / Comments: Comments Off on 5 Important Things to Look for in a Business Credit Card / By

Many small business owners take out a business credit card, as it is can be an easier way to gain access to capital than a business loan. If you are considering this option to obtain capital for your company, then there are several factors you must look at to find the best one. Let’s take a look at five things to look for in a business credit card to get the best deal out there.


1.  The Annual Percentage Rate (APR)

Although it can be easier to take out a business credit card rather than a loan, they come with one significant drawback in that they are typically more expensive than loans. On average, minimum payments for a small business loan is between one and a half and two percent of the loan’s principal. Additionally, the average interest rate is prime plus between 3 and 5 percent. On the other hand, business credit cards typically have higher minimum payments of up to 3 percent of the principal and interest rates may be higher depending on your lender. It is crucial that you compare several business credit cards to find the best APR deal, especially if you plan on having revolving credit.


2.  What Sort of Fees Are Associated with the Card

Besides looking for the best interest rate possible, you should also take into consideration the fees that are associated with business credit cards. Even if you are responsible when using your company credit card, the fees can start to pile on if you are not careful about which card you apply for. Try to find a card that doesn’t come with an annual fee. Be aware that some cards will waive the fee for the first year, but then will tack on a fee for every additional year. If you tend to do a lot of business abroad, then you should also find a card that does not come with a foreign transaction fee.


3.  What Business Perks Come with the Card?

If you are wondering what the difference is between a regular credit card and a business card, then the truth is that the two are not that different. However, one significant difference is that business credit cards usually come with business perks, like cash back on travel expenses, cell phone payments, and office supplies. These differ from regular credit cards, which tend to offer perks for personal expenses like groceries and entertainment. However, keep in mind that not all points and rewards are the same, and you should weigh out your options to find the card that best suits your needs. For instance, if you travel a lot for work, then you likely should seek a card that accumulates travel points.


4.  Easy Access to Authorized Users

If you are a sole proprietor for your business, then you are the only one who needs access to the business credit card. However, as you hire employees and bring business partners on board, you will want easy access to putting them as authorized users on your card. When looking for a business credit card, seek out those that offer multiple cards at no additional fee. Additionally, look for cards from issuers who offer tools to track spending across every card.


5.  Free Accounting Features

It is critical that you maintain separate business and personal finances. Seek those business credit cards that have free accounting tools to aid you in simplifying your finances, which will save you a substantial amount of time during tax season. Look for cards that come with expense reporting, account tracking, and monitoring, year-end summaries, and purchase records. Additionally, if you can find a credit card that has QuickBooks integration, it will make your life a whole lot easier.

William Mahnic
William Mahnic is a Finance Professor at Case Western University and has spent more than 20 years in the finance industry before becoming a professor. Mahnic has appeared as a commentator on both TV and radio talk shows including NPR, Crain's Cleveland Business, WKYC 3 and The Washington Post. He has been interviewed in BusinessWeek, Wall Street Journal and The Los Angeles Times.

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