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Business Credit Cards: Importance Of Having One

Jul 27, 2008
As a business owner, you already know that a business credit card is an absolute must for your business. Since not every vendor or supplier, at least not these days will open a revolving account for your company or be willing to extend a line of credit to your firm, a business credit card is an essential piece of equipment for your business. Whether for arranging for business trips (booking hotel rooms and flights, etc.) or simply ordering merchandise or supplies online, a business credit card is an absolute necessity for your company.

How does one go about obtaining a business credit card? There are a few different ways that you can do this - the most common is to get a business credit card through the bank which your company does their banking. In many cases, they will reward your customer loyalty by extending you a favorable interest rate compared to other credit card issuers. You can also look online; there are quite a few websites which let you compare the offerings from different credit card providers in one place. Of course, as a business owner you likely receive many offers in the mail as well - so a business credit card provider could be waiting in your mailbox.

Before applying for a credit card for your business from any provider, you should first check the fees and the interest rates on offer from each company. Some companies will charge you annual rates to use their card - these can be very expensive. Interest rates are equally, if not more important; a lot of providers will charge a low introductory interest rate and then raise it later. You should be aware of the length of this introductory period and know what the rates will be after this introductory rate has expired.

Also check fees like late fees, over the credit limit fees, and if you are an international traveler then check on how much fees will impact your overseas purchases. Another thing you may want to consider is if there are any reward programs with the credit card you are considering. This can be very helpful as many business credit cards offer products that can actually be helpful to your company.

Cash back rewards are a commonly offered incentive. You will have a certain percentage of your purchases made over the year credited back to your account at the end of the year. Airline miles are also a common reward; these can be very useful if you need to travel for your business frequently. Other credit card providers will even allow you to choose from different incentive programs which they offer, which lets you decide which one will best work for your business.

Next thing that you need to know is that as the owner of the business you are going to need to personally guarantee the credit card for your business. This means that along with the company's information you are also going to need to provide your personal information such as annual income and social security number. Guaranteeing a business credit card is simply co-signing for the company and means if for some reason the company cannot meet its financial obligations then you will personal be responsible for the debt. If you have strong credit then it should not be a problem for you to be approved.
About the Author
Steven J. Talrechi is an expert on credit and finance for more than 10 years. He authors various topics on said field, including applying for a credit card, and different credit card offers.
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