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Small businesses are the backbone of the United States’ economy. They hire, produce, and stimulate the economy in a number of ways. Obviously it is tough for many small businesses to buy supplies, equipment, and pay for other expenses with cash upfront so small business credit cards is a segment of the credit card industry that has been booming lately with 44% of small business’s using credit cards in the past 12 months. There are hundreds of different credit cards marketed towards small businesses in particular; this guide will tell you what attributes you should look out for in a small business credit card and which cards may be for you.
The first thing you should look for in a small business credit card is the APR they charge. In an ideal world small business and consumers would pay off their monthly balance immediately after receiving their statement so they could avoid paying interest on their purchases and they could build up their credit score, unfortunately that is not always possible, especially when talking about a small business in a volatile economic climate. The lower the APR you have on your credit card the less interest you will have to pay, the less interest you pay to the credit card company the more money you keep for yourself and your business. This is all common sense, but people get too caught up in the rewards and cash back a credit card can give you from their purchases while forgetting how important a credit card’s APR is.
There are several other important attributes you should consider when looking for the right small business card. Of course you do not want to pay high fees, but if a credit card has a reasonable annual fee and you think it may be right for you that should not be a deal breaker. You should look for a card that has a monthly balance limit of 3 times more than you expect your monthly purchases to total. For example, if you think you will make 3 thousand dollars in purchases in a month you should look for a card that has a monthly balance limit of at least 9-10 thousand dollars. You never want to exceed 30-35% of your monthly credit limit in order to keep your personal credit and business credit in good terms.
Card 1: American Express Open business platinum card: This is a very interesting credit card. It has no APR whatsoever because all of your charges are due the following month, for example if you bought supplies with your card in January you would be required to pay it back at a certain date in February. It is tough to beat a no interest card, even if there is an obligation to pay back all of your purchases within a short time period. This card will give you perks such as airport club access and complimentary membership to certain rental car programs. The only real downside to this card is that the annual fee totals $450, which is a good amount of money. If you think you can handle the annual fee and you do not mind having to pay back all of your purchases the following month you will love this card!
Card 2: Discover Credit Business card: Another small business credit card that might be right for you is Discover’s credit business card. You pay no APR whatsoever in the first 12 months of owning the card and after that you pay a reasonable 14%. This card will give you a 5% cash reward on office supplies and large cash back bonuses at select online retailers. The best part about this card is that there is no annual fee!
Whether you choose one of the two cards I listed above or a completely different card make sure it is right for you and your business!