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We know credit cards are plastic cards that facilitate cashless transactions. These credit cards can also be used to provide small loans, which can be paid back within a period of time. Business credit cards are used by small business organizations that are trying to extend their business or start a new venture. The business credit cards function as a source for monetary assistance.
- These cards have higher credit limits. Hence a businessman can afford to make expensive purchases for his business using these cards which might have not been possible with his personal card.
- Getting a business card and using it judiciously without missing any payments, can actually result in the business improving its credit rating, which will come in handy later when applying for a business loan.
- The business cards help to keep tabs on corporate spending by individual employees and also set limits on their spending according to their seniority or job role.
- Small businesses usually have a difficult time while preparing their tax returns, when they spend a lot of effort in separating their business and personal expenses. A business card can make it easier for the owners to figure out his personal expenses from company expenses when he sits down to prepare his balance sheet at the end of the year.
- Prepare a payment plan in advance. Ensure that even if the business is not as profitable in the beginning, but still you are able to pay the minimum amount and if possible a little more than the minimum amount, every month. This will keep your credit bills under control.
- Make a comparative study of the different business cards available. Be wary of offers like zero annual charges in the first year, because such cards might charge higher annual charges than normal in subsequent years.
- Check the interest rates, late payment fees and repayment time offered with the different cards.
- Many business card companies offer the option of issuing multiple cards to people connected to the business. Make sure you make this list as short as possible, if at all you want to provide cards to more stakeholders or employees of your business.
- You will need to decide the credit limit you need before taking a business card. In order to make the offer sound good, card companies might offer huge credit limits on your business card, but you would do well to start off with as small a limit as possible, so that you can test the waters.