A business credit card is used for business use and not for an individual’s personal use. Business credit cards come in all shapes and sizes, with the interest rates, annual fees, and other features varying from company to company. Business credit cards also come in all colors and logo designs. Some credit companies even offer incentives and rewards programs for business owners who use their card. Business credit cards are issued by all banks and credit unions, but there are also some out-of-the-world corporate credit cards that come with ultra luxurious perks such as cruise vacations and private jets.
For small businesses on a tight budget, small business credit cards may be their only option. While these business credit cards may not provide extravagant amenities like cruise vacations or exotic hotels, small business credit cards may still offer plenty of perks. These perks may include discounts on the products and services provided by your business (if the card is connected to your store) or on professional services you use regularly. Some credit companies may even provide you with a personal guarantee or a line of personal support if you need help or information.
When applying for your business credit card, you will probably need to supply your social security number, date of birth, address, and probably a recent pay stub from your last paycheque. The information you provide will probably be cross-checked with the company’s database of account applicants to ensure that you’re not an imposter or a fraud. Once the credit company has verified that you’re who you say you are, you’ll usually be asked to supply your name, address, telephone number, social security number, driver’s license number, and maybe your e-mail address, and agree to provide any additional information deemed relevant by the company. You may be required to go through a short application process, such as giving your social security number, and then answer questions regarding your work history and past salary data. You’ll likely have to complete additional forms or answer questions concerning your assets, debts, business expenses, personal finances, and your lifestyle.
In some cases, a business card may be issued after you’ve completed the application process by providing a copy of either your most recent credit report, your most recent tax return, or a statement from your bank. In some cases, you can be approved for a business card without having to go through a credit check, but you’ll probably incur higher interest rates and fewer features than those offered to customers with perfect credit. If you do get approved for a business card, you may also be asked to pay an annual fee to register, although many business credit cards have no annual fee. Most card issuers will also charge a per-transaction fee that will apply if you go over your credit limit, fall behind on payments, or are late with a payment. In addition, you may be assessed a late-payment fee if you fall behind on your payments for a month or more.
After you’ve been approved for a business credit card, you can use it just like you would any other card. For example, you can make purchases using the card as you would with a credit card. You can also make payments as you would with a credit card, and you can transfer funds between your corporate account and your personal account. You can also make cash deposits and take cash advances when needed. There are even some ATM fees that are included in the charges for these services, depending on the provider.
Whether you use your business credit card to help you build credit, or you use it to help you manage your finances, you’ll need to carefully manage the debt. A lot of people make the mistake of thinking that once they’ve built a good financial cushion with their corporate account, they can then apply for personal credit cards at will. Unfortunately, there are some very serious dangers associated with that approach, and you could end up damaging your credit score and your financial future. So, stick to the traditional methods of building financial stability – such as establishing a saving and investment fund, taking out a home equity line of credit, and opening a few credit cards – and then you can gradually increase your access to them.
