Do you want to try using a credit card for business? Indeed, there are many advantages to using small business credit cards such as being able to separate business and personal finances, building business credit, enjoying great rewards, just to name a few.
However, in order to really maximize the benefits that business credit cards bring, the business owner must know how to manage it effectively. If this is your first time to obtain a credit card for business, here are some tips for you:
Don’t Mix and Match!
Do not mingle personal purchases with your business purchases. Don’t forget that your main purpose for opening a separate business credit card account is to be able to monitor your business spending. If you’re going to charge personal buys to your business credit card, no matter how small the value is, you could lose track of your spending which can endanger your business.
Limit Your Accounts
Using one or two business credit cards should be enough for support and for building business credit. Applying for too many business credit card accounts may increase the risk of overspending. In addition, catching up with monthly payments can become a problem.
Take Advantage of the Grace Period
Find a business credit card that offers at least 21 days of grace period so you can have more time to pay off your charges without the additional rate of interest.
Pay Through the Internet
You can also save yourself time and extra fees by paying off your credit card charges online. Consider setting up automatic payment with your bank to ensure that you will not miss a single due date of payment as well.
Say No to Cash Advances
Although you have the option to use your business credit card to borrow cash advances, it’s best to avoid using this particular feature. Why? Cash advance transactions are not covered by the grace period so you are instantly charged with interest rate the moment you withdraw cash from the ATM. Furthermore, the rate for cash advances is usually higher than the rate applied for purchases or balance transfers.
Don’t Be Late
The same rule applies when it comes to submitting credit card payments. The earlier you can pay off your monthly balance, the safer you will be from bad credit. Do not wait until your due date of payment arrives before submitting your payment. Remember that your business credit history will largely depend on how prompt you are in submitting payments.
Check Your Account Regularly
Take advantage of the online account access feature provided by your business credit card issuer. Make it a habit to monitor your account online especially if you have distributed supplementary credit cards to your employees.
Get Your Payments Reported
To build business credit, see to it that your payments are regularly reported to the major business credit tracker such as Dun & Bradstreet. Take note that not all credit cards for business offer this service. Some business credit cards may not include this provision. When comparing small business credit cards don’t forget to consider this important feature.