Taking Credit

Pick a Card, but Not Just Any Card

Yet interest, fees, credit limits and benefit specifics do vary somewhat by card brand, and, in the case of MasterCard and Visa, by issuing bank--which means business owners need to do their homework. "They should shop around for the program that best suits their needs," advises Craig Card, vice president of small-business products and services for Foster City, California-based Visa USA. "Do they want miles for dollars spent, or are they most interested in a low interest rate or the balance transfer option?"

"You have to read the fine print on some reward programs," adds Steve Abrams, senior vice president of Purchase, New York-based MasterCard Corporate Payment Solutions, pointing out that many free airline ticket offers come with prohibitive blackout periods. "And shopping around by financial institution isn't a bad idea--a lot of programs offer very good discounts on annual percentage rates."

Discounts on business products and services and other offerings can also factor into your card choice. "There's lots of additional content to consider, such as everyday savings offers, general business advice and the availability of things like working capital lines of credit and installment loans," says Richard Tambor, senior vice president and general manager at New York City-based American Express Business Finance.

Ideally, you'll also want a card that will help your business build a credit history. But be forewarned: Unless you've been in business at least two years, McKinley says, issuers will typically want to hang the account on your personal credit, which means you may be liable in the event the account defaults.

Fortunately, thanks to new offerings, business owners who balk at the idea of letting their businesses influence their personal credit ratings now have other options, such as debit cards or secured cards. With Wells Fargo's Business Secured MasterCard, for example, you deposit funds in an FDIC-insured savings account and receive a multiple of the account balance in available credit. "It's a first step toward qualifying for other credit opportunities," says Abrams.

A similar step-up program by Visa offers a charge card with a credit limit that initially must be paid off in full every 30 days. Three months of timely payments wins the business a higher limit and a revolving line of credit.

This careful nurturing comes with a purpose--the card issuers are well aware that businesses, unlike consumers, tend to be loyal to financial institutions once they forge relationships with them. That means it's important to be picky early on. "There's no best business card," says McKinley, "but there is one that's best for you--you just have to take the time to weigh out what best suits you and your company."

Jennifer Pellet is a freelance writer in New York City specializing in business and finance.

Contact Sources

American Express
(800) SUCCESS, www.americanexpress.com

MasterCard International
(800) 727-8825, www.mastercard.com/smallbiz

National Small Business United
(202) 293-8830, www.nsbu.org

Visa USA
visabrc@visa.com, www.visabrc.com

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This article was originally published in the January 2002 print edition of Entrepreneur with the headline: Taking Credit.

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