How to Finance Your Business with Credit Cards

Many successful small business owners have been able to start their operations with the help of business credit cards. In the past, only business loans are used to finance a business but recently, business credit cards have been introduced in the market.  These credit cards are especially designed to provide financial assistance for entrepreneurs.  On this post, let us discuss tips on how you can use a business credit card more effectively:

Choose a low rate card.  Just as it is important to choose a personal credit card with a reasonable interest rate, you should also choose a business credit card with a low APR.

Pay your balance in full.  Paying your monthly balance in full enables you to save money by eliminating the interest rate fee.

Pay on time.  It’s very important to submit your payment on or before your due date, not just to avoid the late fees but to protect your business credit history as well.

Ensure credit reporting.  Sign up with D&B to start building business credit history.  Make sure that your chosen issuer reports to the major business credit trackers like Dun & Bradstreet and Experian (Business) as it is the only way you can build business credit.

Don’t take out cash advances.  Although small business credit cards are equipped with cash advance features, cardholders must avoid this option as much as possible.  This is because cash advance transactions are not covered by the grace period so you are automatically charged with interest rate the moment you withdraw cash from the ATM.  Furthermore, most issuers charge a higher rate on cash advances.

Use a business credit card for short-term financing.  Business credit cards can be used to cover for short-term expenses.  For instance, if one of your machines need repair, you can charge the service fee to your business credit card to avoid delays or interruptions with your operations.  However, for long-term business costs, the traditional method of business financing is still recommended.

Combine credit card financing with leasing.  If you have a small capital, you can use different business financing methods to meet your needs.  For example, instead of using your business credit card to buy new or second-hand equipment, why not apply for a business equipment lease?  By leasing equipment, you can obtain the equipment you need right away and pay for it in small instalments.  This leaves your business credit line free so you can reserve it for emergency expenses.

Earn rewards from your spending.  If you can pay your monthly charges in full, consider acquiring a reward business credit card.  Popular reward programs for business credit cards include Cash Back, Gas Rewards, and Travel Rewards.  Look for a reward program that fits the needs and spending style of your business.  Also, choose a reward credit card that is affiliated with merchants and suppliers that your prefer.  This way, you can enjoy exclusive discounts and earn bigger rewards out of your spending.

Leave a Reply

Your email address will not be published. Required fields are marked *

ADVERTISER DISCLOSURE

* If we like a product and that product has an affiliate program, then we will link to that product using an affiliate link. Using an affiliate link means that, at zero cost to you, We might earn a commission on a product if you buy something through our affiliate link.

**See the online credit card applications for details about terms and conditions of credit card offers. Reasonable efforts are made to maintain accurate information. However all credit card information is presented without warranty. When you click on the "Apply Here" button you can review the credit card terms and conditions on the credit card issuer's web site.