No matter the size of your organization, whether you run a solo operation, are a contractor, or lead a team of people who are based around the world, there are many reasons to think about using a credit card for your business. Cards can help alleviate some cashflow restrictions when things are tight by giving you more time to pay off bills, they can make it easier for you to manage your business expenses since they’re kept separate from your personal ones, and they can help you build up useful credit for your venture.
In addition, as you can see when you have just a cursory glance at some of the best rewards credit cards around, there are plenty of perks to be found when using credit cards to pay for business costs. You’ll find cards that help you save money on your next business trip; obtain cash back into your account; or that reward you with free goods and/or services.
However, as there are so many different credit cards available these days, it can be really tough working out which particular options will best suit your needs. After all, should you opt for a card that doesn’t charge any annual fee, or that has a low interest rate? Or perhaps you’d be better off with a card that provides extra interest-free days to pay off balances, or lots of rewards for traveling regularly?
There’s no one right answer to these questions, as each entrepreneur needs to analyze their business and their particular needs first. If you’re keen to secure the right credit card for your organization in 2016 but don’t know where to start, read on for some tips to help you clearly see what will work best for you.
Understand How You Will Use the Card
One of the first things you need to do to work out which credit card to apply for is examine how you will actually use a card. The best business credit cards for another company might not be the same for your company. This can vary quite significantly from person to person and company to company, so is definitely worth some thought.
Take a look at your firm’s spending habits to get an idea of patterns of usage. See if you typically have lots of regular charges each month that are roughly the same, or if instead your costs ebb and flow, with lots of large expenses at particular times of the year. This will help you work out if you will use the credit card for small expenses that can be paid in full each month, or if you will need time to pay off larger, infrequent bills.
By analyzing your typical expenditure patterns you will be able to decide if you should opt for a card that provides good rewards points for frequent spending, or if you would be better off selecting a credit card with a low interest rate so that you don’t rack up lots of interest while trying to pay off debts.
Know Your Goals First
Another thing to be clear of before you choose a credit card for your business is what your goals actually are in getting a new card. For instance, some entrepreneurs are keen to put all of their monthly expenses on a card so that they can accrue rewards points and then redeem them for travel bookings, office products, or cash back. If this is the case, the best way to know which card will work most effectively is to do some calculations on your likely annual spending, as well as the potential value of bonus points received for signing up to a card.
Many business people automatically seek out a travel-based credit card because they assume this will provide them with the most “bang for their buck” when it comes to paying for work-related trips throughout the year. However, this is not necessarily the case. In fact, some cash-back cards will end up putting more money in your pocket that you can use on travel than specific airline or hotel cards can ever match.
On the other hand, perhaps you wish to apply for a business credit card so that you can free up cashflow and have more time each month to pay off bills. If this is the case, you would be much better off selecting a card that has an extended interest-free period, the lowest interest rate possible, and no annual fee.
Compare Options Carefully
No matter what your goals and spending habits are, it’s vital that you research the different credit cards on the market carefully to find the best option for your needs. When examining offers, don’t forget to factor in all elements of a card, such as the annual fee, the interest rate, the interest-free period, the rewards (including any caps on how many can be accumulated annually), sign-up bonuses, and eligibility criteria.
