Things to Consider When Choosing a Business Credit Card
Choosing a business credit card can be overwhelming, but thinking about your business’s needs and how you want to use the card each month will help narrow your search for the best small business credit card. Before you sign up for a credit card, review the following:
Borrowing – There will likely be an interest-free period on your business credit card. You should think ahead and ask yourself whether you plan to borrow money beyond that period. If so, check the standard APR rates and look for a card with a low standard APR. If you know you will pay your balance in full each month, consider the rewards and discounts that each bank has to offer if you sign up for a business credit card with their company. For this option, APR becomes a little bit less important.
Repayment – Before selecting a card you must know how much your business will approximately spend in one month. If you simply go for the credit card with the highest credit limit, yet do not think you can pay the bank back, you could run into financial issues.
Employee Cards – Think about if you will be giving cards to your employees. If so, check and see if there is an additional fee for extra cards or a limit to how many cards you can obtain.
Credit Card Act – Some banks will extend many Credit Card Act requirements to their business credit cards. If you cannot find a company that offers this feature, you will still be okay; however this is a matter to consider. Below explains some of the risks that may come along if not protected by this Act.
The Credit Card Act
While business credit cards have many benefits, there are downfalls that the business owner should be aware of before selecting card. The biggest downfall to business credit cards is the fact that they are not covered under the Credit Card Act. Before the Credit Card Act of 2009, individual consumer credit cards were susceptible to:
Rates being raised and then put into motion quickly with little to no warning;
Vague due dates;
Higher penalty fees;
Fortunately for personal credit cards, President Barack Obama signed into law the Credit Card Act in 2009; however business cards were less fortunate. This is not something that should deter you from owning a business credit card, but is rather something to keep in mind. For most companies, the benefits of these cards far outweigh the negatives.
Be sure to read all the disclosures closely and ask your banker about the Credit Card Act before signing. If you are aware of these hidden ploys and can keep an eye out for them, you could avoid costly mistakes.
Many business credit cards have additional fees that are only seen when reading the terms and conditions. For example, the Visa ® Ink card has balance transfer fees of $5 or 3% of each transfer, whichever is higher, and cash advance fees of $10 or 3% of each transaction. The card also has a late payment fee of $15 if the balance is less than $100, $29 if the balance is $100-$249, and a $39 fee if the balance is more than $250. It also has an over-the-credit-limit, return payment, and return check fee of $39.
Numbers change slightly from card to card, so it is important to look at the terms and conditions. If you are online looking at cards, there will be a link at the bottom of the page that offers these terms and conditions. Once you click the link, scroll down to a section labeled “Additional Fees” and you should have all your answers.