Business Credit Cards

Business credit cards are set up for businesses rather than personal use. Typically when you obtain a business credit card you do so under the name of your registered business with you as the primary user. The front of the card will therefore list your business name and your name. Business credit cards can work a lot like personal credit cards, but often there are definite differences.

Depending on how your business is tied to you the credit card issuer may or may not run your credit report. Small business credit cards are usually tied to your personal life, which means your credit is important. A larger business will most likely not see your credit report run for a credit card. This is because your company has a large enough revenue and no one person to run the credit check on.

Let’s take a look at the advantages of the business credit cards. First, most issuers will provide a lower interest rate on your business credit card. They know they have more collateral on a business than they do on a personal account. Usually a business will be around for years, and even in bankruptcy a business has to ante up on their debts.

Having a business credit card can also help you obtain a business loan for a better interest rate. The credit card shows your solvency in a business as well as your risk factor to the lender.

Business credit cards also mean you do not have to carry around petty cash for company dinners, impressing clients, and for other purchases. A business credit card typically shows a client that you are serious.

Disadvantages of business credit cards exist. When you have an open line of credit it is near impossible not to have disadvantages. A major disadvantage to many business credit cards is the annual fee. It is true that in recent years business credit cards have done away with annual fees, but not all of them have. American Express is one credit card company that still has an annual fee. However, they work a little differently. Their annual fee replaces interest rates. In other words you pay 95 pounds a year, but nothing in interest. That’s a pretty good advantage within a disadvantage.

Of course there is the annual fee that you have to pay on the credit cards. There is a way around this disadvantage also. If your business pays off the credit card each month, leaving no running balance, then you like the personal credit cards will not be charged interest.

The last downside to business credit cards are the introductory deals. Business credit cards often do not offer introductory rates on purchases or balance transfers. In fact many credit cards for businesses will not allow balance transfers.

Not everyone should have a business credit card. If you have a small business you might find advantages in personal credit cards that you need to run your business. On the other hand business credit cards do have the better interest rates in most cases.