5 Advantages of Having a Business Credit Card

Listen in! Pick up some expert advice to a reader's question that we selected from CyberSchmooz.

Do you own a business or freelance? Then having a business credit card can be beneficial for you than a personal one.

As a small business owner, you need to handle many responsibilities, such as finance management and employee payroll. Hence, a small business credit card can be a blessing if used wisely. A study shows that till now, 65% of small businesses have a business credit card.

Additionally, like a personal card, a business credit card promotes a sign-up bonus, earns rewards, provides purchase protection etc. Due to coronavirus, many small business owners like manufacturers, restaurants, sales, catering etc., have struggled to survive because social distancing majorly affects revenue. Maybe they are wondering if it’s the right time to open a business credit card.

With this intention, if you can maintain good or excellent credit and want to add perks for everyday business expenses, apply for your business credit card.

However, it’s important to know when a business needs to use it. Excess use can max out your credit card without having any more funds resources. Consequently, it results in a poor free credit score if not paid in time.

Despite having high interest and late fees, there are main 5 advantages of having a business credit card to ensure a regular cash flow. Let’s have a look.

5 Advantages of Having a Business Credit Card To Add Benefits

When you run a business, it’s better to keep your business and personal credit card purchases separate. Even without a business, you can get a business credit card for certain reasons, like handling money as a non-profit.

Furthermore, when it comes to a large expenditure or loan from the bank, you may face high-interest rates. Though you can recover it by paying timely, still don’t draw yourself into debts. So, check for your free credit score regularly to keep track.

To apply before, learn about the five advantages of having a business credit card.

High Credit Limits To Maintain Cash Flow

To run a small business, you need to purchase supplies, equipment, furniture etc. But it’s hard to draw out a large amount of cash from your pocket. Hence, you may use a business credit card to purchase anything.

Most credit cards offer credit limits up to $50,000 or more. To maintain a necessary cash flow, the line of credit helps you fulfill the business purpose. Furthermore, you can apply for credit cards that offer interest-free financing. So, you can pay off the full balance for purchases over time.

Control Employee Expenses

Do you need to set spending limits for employees? Then, having a business card is an advantage for you.

Employees tend to spend expenditure using personal cards for business reasons. Hence, they may submit random bills to get repaid. So to control employee expenses, make them use the business card. Thus, you’ll receive a single bill montly containing your spending along with employees’.

Further, as the business owner, you can set a limit for them or freeze the card if required.

Earn Rewards For Every Business Purchase

Earning rewards on every business-related purchase is the biggest perk of a business credit card. The reward card allows you to earn cash back, miles or points depending on how you used the card. Additionally, you may receive bonus rewards or discounts for some categories like groceries, restaurants or shopping from business outlets.

For example, the American Express® Business Gold Card earn 4X Membership Reward points in the two categories when the business spends on the first $150,000 combined purchases each year.

However, the reward redemption options vary in different ways, such as:

Gift card
Merchandise
Business travel
Pay with points on selected online shopping sites
Statement credit

Boost Credit Score Fast

Proper usage of business credit cards and paying the amount at each billing cycle helps boost your credit score fast. However, there can be a rise or drop at it if you check for a free credit score. It may take some time as you can’t improve it overnight.

Therefore, maintaining a good credit habit is essential to avoid bankruptcy or other damages. You can follow the instructions below for this.

Check for the credit report to find out any unpaid bills.
Pay down the balance.
Try to increase the credit limit.
Maintain credit utilization ratio.
Keep a long-term credit history.

Provide Purchase Protection

Many credit cards offer you the ability to avoid improper charges on purchases. So you don’t have to pay until it’s solved. Such purchase protection includes mobile phone protection, trip cancellation or insurance protection, other accidental damages etc.

However, to take advantage, first check for your reimbursement eligibility for any damaged product on the card’s benefit statement. These benefits may vary with the card issuer.

For example, Capital One business cards offer auto rental damage collision protection, extended warranty protection, travel assistance service and many more.

Conclusion

It’s better to have a business credit card than piles of cash in your pocket. Moreover, to go cashless, a credit card is convenient, especially for online purchases.

Additionally, it helps to purchase when you’re out of funds. Thus, you can avoid short-term and long-term ups and downs in the business. Not to mention, it’s easier to get a business credit card than a small business loan.

Furthermore, you can start with e secured credit card that offers a small credit limit to avoid a shortage of funds. Once you gain profit from the business, apply for a new card with higher credit limits. So, in the long run, you may increase your savings and manage business expenses easier.

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