Frequently Asked Questions about Business Credit Cards

A business credit card is both a convenience and an effective way to track expenses. Cash transactions burden your accountant, the one responsible for making all of your entries work for tax purposes.

Whether a business credit card appeals to you for simplicity and convenience or because it provides good record-keeping, there is still so much more you need to know. for example, the annual fee for business credit cards can be higher than for personal credit cards.

You may have to pay as much as $150 a year for cards with more “benefits.” Perhaps you do not need additional benefits, however, so but just need to get credit for basic purchases. In this case, you should look for a card with an “introductory 0% APR [annual percentage rate].”

That means you pay no interest for a stated period, which can be from six months up to a year, or even more. This is great for a new business when so many expenses occur naturally in the first year. This is just like an interest-free loan.

The due date on your billing cycle is the absolute last day your payment must be received by the company. This is completely inflexible. Late fees can run as high as $35 or more for each late payment.

If you have a variable rate APR, you will find that the credit card company will increase your interest rate as a further penalty for chronic late payments. Some cards, like American Express, expect that you will pay the balance each month – in full. Know the terms before you choose a credit card -- meaning, read the fine print in their disclosure -- in order to find the right card to fit your particular situation.

The Annual Percentage Rate is the amount of interest you pay on the outstanding, or unpaid, credit card balance. Choose a fixed rate - not a variable rate. Not only can the company raise the rate for late payments, but a variable rate can be changed at any time, without warning or permission. That can be extremely tough on your company budgeting.

If you did end up with a variable or high rate card that may be getting painfully expensive, look for a new card with a free introductory transfer of balance offer. Moving your debt to the lower rate card can save you tons of money.

Late-paying clients put every business in a bind. If you need cash to tide the business over, you can get cash advances immediately from some credit cards. Be careful not to overuse this, however. Save it for real emergencies. The interest rate on cash advances is usually much higher than it is for purchases.

If you have a problem or need information fast, how can you get it? Is your credit card’s help system limited to web page FAQs, or can you connect with a live person? In shopping for a business credit card, contact the customer service number and see what kind of response you get. You want a credit card company that makes it easy for you to get support online or by telephone - for at least a major portion of the business day.

Do not go overboard applying for a business credit card if you are operating as a small business entity such as a DBA (doing business as). The credit will be built under your personal social security number, so you want to make sure you are really able to effectively manage the debt.

For more information on small business credit and even the best options for personal credit, no matter what your credit rating, please visit http://www.squidoo.com/yourcreditcards or http://www.zimbio.com/Credit+and+Debt.