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Which Small Business Credit Card is Right For You And How To Tell

Apr 11, 2008
Once upon a time, credit card companies weren't particularly interested in small businesses, preferring to focus their attentions on courting larger organisations. But times have changed and the lenders have realised that, with the enormous boom in small businesses, there is a niche in the market waiting to be filled. Nowadays there is an absolutely huge range of credit cards and deals designed to entice entrepreneurs into becoming clients.

Firstly, the income and outgoings of your small business; as the owner/manager, you need to have a good idea of your company's turnover. Once you've worked that out, you'll have a better idea of the type of and amount of credit that you feel you need to apply for. Next: what's the card going to be used for? If it's for other employees to use, then how are they going to use it? Will it be for petrol, hotel bills or stationery? Having a serious think along these lines will help you cut through the mountains of offers that are out there and highlight those that are relevant to your company. When it comes to any type of borrowing, there's also the issue of repayments and a reasonably thorough look at your company's finances should be able to tell you just how much your company can sensibly afford to borrow.

The key to a 'wisely managed small business credit card' is summed up in the third point. Regardless of how much credit you decide you need, once that has been agreed it is prudent to stay within the parameters of that agreement. Often it is thoughtlessness and careless spending that incurs penalties that can easily be avoided.

Loyalty reward schemes are there to reward responsible customers. If you have planned ahead and worked out how much your business can reasonably afford to borrow and will be able to pay off your balance in full and on time, then you can certainly take advantage of the rewards and perks that are available. Depending on your business, you might want to look at deals on mobile phones, hotel discounts, car rental, internet services or discounts on certain office products. The list is almost endless and, by using your card responsibly, these rewards can be extremely beneficial.

Most banks - and some of the newer supermarket-based credit card issuers - offer a 'grace period'. The standard 21 days allows you to manage your cash flow more effectively, rather than relying on cash or cheques with which the clearance period is either immediate or within 3 working days. Using the grace period you can ensure that enough money is coming in at the right time to cover the outgoings that your small business is required to pay.

All financial institutions want your custom and are fiercely competitive for it. There are new products and deals surfacing every day that are designed to make the running of a small business easier and more effective; they want to help you succeed. But it is wise to look upon a small business credit card as a privilege, rather than as something that you automatically receive as part of being a small business owner. Remember, there are those that are refused credit in the outset and there will be those who will be refused it in the future as the result of misuse; using the card as a direct substitute for cash, not managing their funds effectively and not paying off their business credit in time or at all. Credit card companies want your custom and are there to help you - as long the custom you have to offer is responsible.
About the Author
If you are looking for additional advice to help you choose, from the multitude of small business credit cards, the one which truely matches your corporate requirements, Simon Maxwell will help guide you there. Watch out for future articles from this author.
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