Business Credit Card FAQ

A business credit card is both a convenience and an effective way to track expenses. Cash transactions burden your accountant who is trying to make all of this work for tax purposes.

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

You might pay as much as $150 a year for cards with more bells and whistles.  But if you just need to get credit for basic purchases, look for a card with an “introductory 0% APR.”

That means you pay no interest for a stated period, which can be 6 months up to a year or more. This is great for a new business when so many expenses occur in the first year.  It’s 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, not the next day or the day after.  Late fees can run as high as $35 or more for each late payment.

If you have a variable rate APR, you’ll find that the credit card company will kick up 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 to fit your situation.

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

If you got stuck with a variable or high rate card that’s getting painfully expensive, look for a new card with a free introductory transfer of balance offer. Moving your debt to the lower rate card saves you 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. 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 - at least a major portion of the business day.

Don’t go overboard applying for a business credit card if you’re operating as a small business entity such as a DBA.  The credit will be built under your social security number, so you want to make sure you’re able to effectively manage the debt.