Learning the Basics of Business Credit Cards
Entrepreneurs have the option to use business credit cards because the features are specifically made to benefit any types of businesses. Business cards work similarly like conventional individual cards because they allow cardholders to purchase goods and services including through phone or the internet.
But how are they different from personal cards? They are different in the following ways:
o Unlike personal cards, business credit cards are issued using the name of the company. All debts make using this card are under the responsibility of the company and not the individual
o Certain spending controls are fixed on the card. Some limitations in terms of spending and restrictions on ATM withdrawals will apply.
o Each cardholder has management reports where purchases are itemized. This is to ensure the company can keep track of each cardholder's expenditures using their own cards.
o Most business cards come with complimentary features such as discounts and insurance
However, before you apply for business card, it is best to identify types you can choose as well as the different features each one offers. Generally, they offer unique features such as:
o Better security compared with carrying larger amounts of money to make purchases
o Using business credit card is much cheaper as compared with using cheques
o Better spending controls
o It allows entrepreneurs to separate business and personal expenses
o A great benefit for employees who do not have to use their own funds to make certain business purchases
What are the different types of business card?
Each card is different depending on the card company. However, there are two types of business cards and they are charge and credit.
Charge Cards
This require cardholders to pay their balances in full when the bill is due or else they will pay higher fees and charges. These cards are ideal for larger companies where cash flow is high enough for all debts to be cleared by the end of the month.
Credit Card
This allows you to make minimum payments on a bill but interest charges will apply on any outstanding balances. It is best for small or medium-sized businesses where cash flow may be unpredictable.
Credit Card Act Does Not Cover Business Credit Cards
The current unemployment rate is still much higher than many would like. According to the U.S. Labor of Statistics, 8.2% of women are unemployed. The same report goes on to say approximately 9.2 million Americans are only employed part time, due to employers not being able to afford employees full time. These statistics have compelled people to become entrepreneurs to gain employment. The Credit Card Act of 2009 could give relief to these unemployed entrepreneurs, but only on their personal credit cards.
The Credit Card Act of 2009 was signed by President Obama last May. With some provisions already started this act will be in full swing Feb. 22, 2010.
What are the benefits of this act?
- Cardholders will be able to avoid interest rate increases on their existing card balances and have more time to pay their monthly bills.
- Before the bill passed, many card companies could change their due dates without notice, giving you less time to pay your bill. Now credit card companies will have to give you no less than 21 days to pay your bill, and will not be able to raise interest rates without notice.
According to the National Small Business Association as of 2008, credit cards were the most common source of financing for small business owners. The New York Times reported in September of 2009 that a study from Monmouth University said, "every $1,000 increase in credit card debt increases the probability a firm will close by 2.2 percent." And with this increase in debt, lead companies are now able to buy debt leads from these card companies and make a profit.
This new act will benefit many Americans, however, it does NOT cover business/corporate card holders. This is an important thing to keep in mind when starting your business. We could see credit card companies being harsher to business owners since they will be forced to ease up on customers with personal accounts.
Banks are a lot harsher these days when it comes to giving out loans. They are looking at personal debt as a factor for small business loans. Because of this, it is important to first look at your credit card debt before going into business. If you have acquired some debt, debt consolidation or credit card counseling may be options to consider.
These types of programs can streamline your personal debt and make it easier to get out of debt. This will help you get your finances in order which should help your chances of getting a loan for your business. If your business is already up and running, however, take a look at your current debt levels. If it is a significant amount, decide if you can manage the debt or if you need to take advantage of a debt management program.
For now we will just have to wait and see if credit card companies will be harsher towards their business/corporate card holders in the upcoming months. Until then, take a look at your personal credit cards and see if you can utilize the act to help you get a business loan to start your business.
How Do I Get a Business Credit Card If I Have Bad Credit?
If you have a relatively low credit score, then you are probably consistently seeking ways to rebuild your credit. "Bad Credit" business credit cards can help you achieve just that. Here's a look at a few of these cards and how you can use one for the purpose of slowly but surely building a brighter and stronger financial future.
"Bad Credit" business credit cards are available to just about everyone - in some cases even when a company has recently declared bankruptcy. The first step to securing one of these cards is simply to choose one from the wide variety of different options available. For example, some credit cards designed for people with bad credit require that you make a cash deposit before you begin using the credit card. When you do use the card, the amount that you spend is deducted from the deposit. When you make a payment on this type of account, you are simply refueling the amount that you initially placed on the card. This system serves as a safety net for the credit card company and for you as well.
Before you apply for any "Bad Credit" business credit cards, you should make sure to read through all of the fine print in the credit card application. Some credit cards marketed to people with bad credit charge higher annual fees and sign up fees than others types of cards. While you should expect to pay some types of fees, the benefits should still greatly outweigh the costs.
Once you find a "Bad Credit" business credit card that you want, you should fill out an online application if it's available. Online applications are submitted instantly and the response time is minimal. Remember, when you submit an application, the credit card company will be requesting your credit report. Too many of these types of requests will further damage your credit report so only submit one application at a time! Once approved, your business credit card should arrive relatively quickly. Once you receive it, you can begin using it right away but you should consider using it prudently at first, making small purchases that you will be capable of quickly repaying. You can use this period of time to learn more about building healthy credit. In addition, you should be keeping track of all of your purchases and your payments every single month.
You should also plan carefully so that you can pay off your balances completely every month, which is the true key to properly rebuilding your credit score. Many "Bad Credit" business credit cards report to all the major credit bureaus, so if you make your payments in full every single month, your business credit reports will reflect it and you will be able to rebuild your credit over time.
"Bad Credit" business credit cards can serve as an excellent first step toward building a much brighter credit future. Don't make the mistake of overlooking them as an option if your credit is less than perfect.
Business Credit Cards With No Credit
When you're ready to start up your business, you're probably looking for many ways to fund your business. One of those ways that you have come across today is probably a business credit card. But how does one get one if you don't have the greatest credit, or no credit at all? Well, there's no need to worry, because I'm going to give you some tips on how you can get a card without any credit.
The answer is a prepaid card.
Yes, when you're looking for business credit, did you know that you can get a card that doesn't look for credit? This type of card is a prepaid card. With this card, you're going to be able to place a certain amount on it, and that will be your spending limit. If you spend more than what you put on it, you will be rejected.
The reason that many business owners like this is because you're able to build credit, and buy things in your business name all at once. Since many of these cards are available, make sure that you look at a few things before you do apply. The first thing you want to do is to make sure that the card has a major logo, as well as next to no fees. If the prepaid card is loaded with fees, it may not be worth it for your business.
Be sure to check out all of the prepaid cards on the market when it comes to business, and see which one works best for you.