A business credit card is a must-have resource for any business owner. Aside from being a convenient source of capital, business credit cards can also help you build business credit and rack up valuable rewards.
The message? If you’ve been carrying the same business credit card for years, it’s time to consider whether that piece of plastic is still the best fit for you. Here are a few telltale signs you need a new business credit card:
1. You’re getting slammed with high interest rates.
In today’s business world, the phrase “It takes money to make money” is all too true. Whether the purchases they make are for new inventory, seasonal hires or equipment, many businesses rely on their access to capital. Many business owners turn to credit cards for these types of cash infusions, but if the particular card you have has a high interest rate, nearly any purchase can be a costly proposition.
If you find yourself paying a steep interest rate on your credit card balance, then, transfer your balance to a card like the Ink Cash Business Credit Card from Chase. This cash-back business card comes with a 0 percent introductory APR for 12 months, no annual fee and a generous rewards program. Furthermore, the ongoing interest rate is 13.24 percent variable, which is pretty good for a cash-back business card!
2. You’re not earning enough rewards for your purchases.
Since businesses typically make more purchases than the average consumer, a rewards credit card for your business purchases is a great way to rack up credit card rewards. So, if you’re still writing checks from your business bank account, now is the time to apply for a business rewards card and begin racking up the points.
As an added bonus, rewards earned on employee-issued credit cards will all go toward the business.
One of the most popular rewards cards for business owners is the Capital One® Spark® Cash for Business. This card offers unlimited 2 percent cash back on every purchase, every day. Plus, new cardholders can earn a whopping $500 cash bonus after spending $4,500 with the card in the first three months.
3. You credit limit is too low.
If you frequently find yourself maxing-out your current business credit card, it may be time to apply for another card with a higher line of credit. Spending up to the limit on your credit card can have a negative impact on your credit score because it means that you will have a very high debt-to-credit ratio, also known as your credit-utilization ratio.
You should first speak with a representative to see whether the credit card issuer you're interested in will extend your credit line. If not, you may need to apply for a new business credit card. By opening a new line of credit, you’ll not only have access to more capital to help grow your business, but will also be able to decrease your credit-utilization ratio.
4. You have no established business credit.
Even if you’ve had the luxury of self-financing your business and have never needed to take out a business loan, it’s always a good idea to establish good business credit. If you find yourself in a place where you need to take out a loan for your business, having years of positive credit history with your business will help ensure an approval at the lowest interest rates available.
The quickest and easiest way to begin building business credit is with a business credit card.
Any business credit card that is opened with your tax identification number will help you do that. However, the application will also likely be based on your personal credit, which may present a challenge to business owners who don’t have great personal credit. One card that would be a good choice for consumers in this situation is the Capital One Spark Classic for Business. This card has no annual fee and earns 1 percent cash back on all purchases; applicants are also often approved even with limited credit, or fair credit.
The first step? There are various ways to establish business credit. But a good first step is to open a DBA (doing business as) bank account and apply for a DUNS (data universal numbering system) number, to get the ball rolling.