Wondering how business credit cards work and how a business credit card enhances your business operations? If your answer is yes, you are in the right place. Read this article till the end to understand how business credit cards work, how they benefit your company, and how to apply for a business credit card.
To Know How Business Credit Cards Work:
- Understand What A Business Credit Card Is
- Know How Business Credit Cards Work
- Know The Pros and Cons of Business Credit Cards
- Determine If You Qualify for a Business Credit Card
- Understand The Application Process
- Determine Which Credit Card Your Business Require
- Know How to Apply for a Business Credit Card With Bad Credit
Ready? Let’s get into it!
1. Understand What a Business Credit Card Is
To grasp how a business credit card works, first understand what the card is all about. If you own a
business, use a business credit card to purchase everything from equipment and furniture to inventory. Use the card also to pay suppliers as well as other Net-30 vendors who accept credit card payment.
If you’re a new business owner, make purchases from your business profits to build business credit. Good business credit qualifies you for different business credit card options. Use your business credit card primarily for business purposes and make sure you separate your personal and business expenses.
With a business credit card, you can enjoy higher credit limits and other valuable benefits such as
business expense monitoring, employee cost tracking and business tax planning.
>>>MORE: How Business Credit Cards Work
2. Know How Business Credit Cards Work
Business credit cards work similarly to a personal credit card. Charge your business expenses to your business credit card and receive a statement of your expenses after your billing cycle. At the end of each billing cycle, check the total amount outstanding as well as the minimum amount due.
Your interest on each purchase premises on your billing cycle. Pay zero interest on all purchases if you clear your bill each month. You don’t need an employer identification number (EIN) to apply for a business credit card. Understand your business needs to decide which business credit card is best for your business.
3. Know the Pros and Cons of Business Credit Cards
To know how business credit cards work, know how the card enhances your business’s operations.
- Pros of Business Credit Cards
Business credit cards come in handy when your company requires urgent funding to aid operations. Use a business credit card to:
- Monitor business spending. Utilize the business credit card to separate your personal spending from business expenses so you can prepare tax returns and keep comprehensive business financial records.
- Manage employee card. Add employees to your business credit card and grant the access to make business-related expenses on your business credit card. Monitor each employee’s expenses and set restrictions where necessary.
- Enjoy higher credit limits. In contrast to personal credit cards, you can access higher credit limits with business credit cards.
- Access additional interest-free periods. Confirm if your business credit card issuer offers additional interest-free period. If yes, enjoy additional grace period to clear your balance without incurring interest.
- Cons of Business Credit Cards
Business credit cards also have a few cons to consider before you apply for one.
- Personal credit worthiness. Business credit card issuers often require a good or excellent personal credit score from owners.
- Security inconsistencies. Protect your business credit card and limit how often you provide your card details online to avoid fraudulent charges.
- Little or no buying protection. Double check an item before you pay for it with a business credit card. Modifying billing errors, reverting unwarranted charges, or returning an item are difficult with business credit cards.
>>>PRO TIPS: Business Credit Cards: How to Qualify for One
4. Confirm If You Qualify for a Business Credit Card
To understand how business credit cards work, confirm if you qualify for one. Run a business and have a good personal credit score to qualify for a business credit card. Banks or other card issuers check your personal credit score to determine the type of business credit card you qualify for. Get a business credit card to separate your business spending from personal spending and meet all business-related needs.
It doesn’t matter whether you run a small store business with no staff or a medium-sized enterprise with many employees, you can apply for a business credit card. However, make sure your business generates consistent profits and cash flows to boost your business credit card qualification.
Apply for a business credit card if you’re a freelancer, sole proprietor, large or small business owner. Corporations and limited liability companies also qualify for business credit cards.
5. Understand The Application Process
To verify how business credit cards work, understand the application process. To commence a business credit card application process, provide the proof of your business’s longevity and existence in addition to your personal information. To apply, provide additional information such as business name, number of workers, business structure, type of business, annual income, business address and more.
Research different business credit card issuers before you choose one and submit your application. Visit your bank and check the option it requires for business credit card application. Consider bank alternatives if your bank’s offer doesn’t meet your business needs.
Prioritize factors such as annual fees, credit limits, sign-up benefits, interest rate, and rewards in choosing a business credit card issuer. Know how the card works and read through the card’s terms and conditions before you submit your application.
6. Determine Which Card is Best for Your Business
To comprehend how business credit cards work, determine which card is appropriate for your business. Consider the benefits you anticipate, the type of business you run, and the needs to meet before you decide the type of business credit card to choose.
Understand the regular expenses your business incurs to know the primary purpose the business credit card serves.
>>>GET SMARTER: Business Credit Cards: Full Guide to Getting Approved Fast
7. Know How to Apply for a Business Credit Card with Bad Credit
To understand how a business credit cards work and boost your business operations, know how to get a business credit card with bad credit. Don’t think you can’t get a business credit card because of bad credit.
- Build your personal credit score. Visit Annualcreditreport.com to check your personal credit reports from Experian, Equifax, or TransUnion. Study the reports and find out what affects your personal credit score negatively. To build your personal credit score and increase your chances of getting an approval for a business credit card, make on-time payments, limit your credit card debt, and so on.
- Research the best card that meet your enterprise’ needs. As you build your personal credit score, look out for best business credit card alternatives that meet your needs.
- Apply for a business loan. Apply to lenders that check business assets and income instead of creditworthiness to approve business loan application.
Recap
To know how business credit cards work, understand what a business credit card is,
know how business credit cards work and know the pros and cons of business credit cards. Confirm if you qualify for a business credit card, understand the application process, and determine which card your business require. Last, know how to apply for a business credit card with bad credit.
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