Small Business Tax Center
Small Business Ideas, Grants &
Plans to Start & Run a Business:

Small Business Grants
Network in Cyberschmooz Community Ask Questions Questions and Answers Share Tips Small Business Ideas List Your Business Business Advice from Idea Cafe Experts Coffee Talk with Experts Starting A Business Business Plan Biz Planning | Sample Plans Small Business Ideas Idea Name Your Biz Name Plan Your Biz Plan Financing $ Starting a Business Do It! Running your Business Marketing Tips Promotional Merchandise Marketing Tips Marketing | Sales | Customers Human Resources HR | Employees | Contractors Legal Forms & Tax Information Legal | Biz Forms Managing a Business Managing | Operations
Financing Resources Financing Your Business E Commerce & Webhosting eCommerce Take Out Info Trade Publications FREE Trade Publications Business Books Biz Books Your Own Business Small Business News Small Biz News Gen X Biz Gen X Biz Work at Home Work @ Home Business Information The Fridge - Biz Info on Ice Destress Send Awards Send Awards & Greetings Yoga At Your Desk Yoga @ Your Desk Fun Guide Guide to Find FUN Online About Idea Cafe Press Idea Cafe has received Idea Cafe in the News Idea Cafe's Kudos Kudos for Idea Cafe Advertise on Idea Cafe Advertise on Idea Cafe Privacy Policy Privacy Policy Contact Idea Cafe Contact Idea Cafe Link to Idea Cafe Link to/from Idea Cafe Join Idea Cafe
Search Idea Cafe Site Directory Site Map Online directory to business resources Biz Web Guide

Expert Answers to Biz Questions

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

color business bar

How to Tell Which Credit Cards Are Best for Your Business Needs

Business credit cards are more than a luxury, they are a necessity. With so much variety on the market, it’s often a little disconcerting choosing between them. There are many benefits and drawbacks to credit cards, but careful selection can mitigate the negatives and provide you with a service that is largely beneficial to your business. Establishing a business line of credit can be an arduous undertaking for a newly formed company.

Credit cards typically feature as the easiest way of borrowing money from a lender. Besides, an estimated 9 million US businesses accept credit cards as payments options, and this number is growing all the time. In terms of their utility value in a business operation, credit cards offer many unique benefits to their owners. A caveat is in order however: careful financial management is essential with credit cards. Overspending comes with high costs in the form of late charges, and interest-related fees.

What factors should you consider when using credit cards for your business?

If possible, it is always best to go with a credit card that offers 0% APR. Small businesses benefit immeasurably from these cards. 0% APR also means that it is possible to purchase equipment, vehicles and machinery – interest-free – for a period of time. Of course, credit cards with $0 annual fees are preferred to cards that charge hundreds of dollars to keep the accounts active. It is preferable to pick a credit card with cashback rewards of between 1% and 3%, 0% APR, and $0 in annual fees.

Businesses that rely on partners and employees traveling domestically or internationally will benefit from credit cards with frequent flyer miles, premium travel perks and no foreign transactions fees. Some business credit cards offer uncapped expenditure to their clients, particularly American Express cards. Companies can also manage the spending limits on company credit cards by allocating a fixed budget to each employee vis-à-vis the company credit card.

What fees are typically involved with credit cards?

The obvious fees are the interest-related charges on outstanding balances. These will vary from one provider to the next, but they typically increase if the country’s interest rate increases, and decrease if the country’s interest rate decreases. From the moment your company applies for a line of credit, you may start incurring fees, depending on the individual credit card in question. It is best to opt for a credit card that does not levy an application fee.

In terms of annual fees, these can range from $25-$300, depending on the card in question and the benefits you receive. Sometimes, businesses find it useful to pay the higher annual fees to receive the many perks associated with those cards. For example, higher cashback percentages, birthday bonuses, discounts, exclusive offers and the like typically make up for the high annual fees that are paid.

Making and receiving instant payments worldwide

Besides late repayment penalties, over the limit fees, and balance transfer fees, there are also cash advance fees to take into consideration. It is best not to use credit cards to withdraw cash since users can pay set fees and a percentage of the cash amount that is withdrawn. If you are required to withdraw $500 from your credit card, with a 4% cash advance fee, that amounts to $20 on top of the fixed fee which may be $5. In total, this decreases your available balance by $525.

While costs and fees are important considerations for credit cards, there are many benefits too. These include 100% protection against theft, fraud or hacking, maximum traction from rewards programs, and an internationally accepted payment method – irrespective of the country or currency. Businesses are already set up to accept credit cards from customers, suppliers, and fellow businesses – it simply makes sense to manage this financial resource as effectively as possible.



Small Business Tax CenterIdea Cafe HomeSign UpBiz Grant CenterCyberSchmoozCoffee Talk with ExpertsPeople in Biz ProfilesStarting Your BizBiz PlanningRunning Your BizFREE Trade PublicationsMarketingFinancing Your BizHuman ResourcesLegal & Biz FormsManaging Your BizeCommerceYou and Your BizGen XWork@HomeThe FridgeDe-StressSend an AwardSend an eGreetingYoga @ Your DeskWeb GuideIdea Cafe in the NewsAbout Idea CafeAdvertise on Idea CafeContact UsPrivacy PolicySite MapSmall Biz News

Copyright 1995-2024, Idea Cafe Inc. Downloads are for personal use only, not for resale to others, and may not be reprinted in any form without written permission from Idea Cafe Inc.

DISCLAIMER: We hope whatever you find on this site is helpful, but be cautioned that it may not apply to your own situation, or be totally current at any given time. Idea Cafe Inc. and all of its current and past experts, sponsors, advertisers, agents, contractors and advisors disclaim all warranties with regard to anything found anywhere on this family of websites, quoted from, or sent from Idea Cafe. and its related sites, publications and companies. We also take no responsibility for comments published by others on these pages.

TRADEMARKS: The following are Registered Trademarks or Servicemarks of DevStart, Inc.: Idea Cafe®, Online Coffee Break®, The Small Business Gathering Place®, Take out Info®, Biz Bar & Grill®, Complaint-O-Meter®, A Fun Approach to Serious Business™, CyberSchmooz™, and BizCafe™.