5 Things to Know Before Getting a Credit Card for Your Business
In order to propel your business forward and make purchases that will help expand your company, you will most likely need to obtain a business credit card. Here are five things to consider when going through your options:
1. Business Credit Card Deals That Seem Too Good
Watch out for offers that seem too good….because they probably are. If you receive offers with tantalizing 0% rates, they will most likely get you with high rates elsewhere, or have the true details hidden in the very fine print.
2. Hidden Business Credit Card Fees
Read the fine print before you fully agree and sign a contract you won’t be able to get out of. There can be hidden rates, fees, and obligations hiding in the details of the terms and conditions.
3. Long-Term Contracts with Credit Card Companies
Watch out for gimmicks. You will probably face multiple credit card offers in the mail, each one with a more enticing offer than the next, such as a “free credit report.” If the offer seems too good, there are likely strings attached, and an involved, long-term contract. Don’t sign a long-term contract. This is a way for credit card companies to trap you into staying with their service even if you become dissatisfied. Don’t get locked-in, because if you really decide you want to cancel, there will usually be a large termination of contract fee.
4. Business Credit Card Benefits
Look for a card with the right benefits. If you will be spending thousands of dollars on your credit card, your company can stand to gain quite a few benefits, such as air miles or other points. There are sites available where you can compare hundreds of credit cards to see which one best benefits your business’ situation. Look for a low interest rate, annual member fee, and a good sign up bonus.
5. Your Business Credit Card’s APR
Don’t ignore the APR (this is your annual percentage rate). If you don’t pay off your card each month, you will be charged interest. The amount of interest you pay ties into your APR rate. You will end up paying less in interest if you have a low APR and strive to keep your balance low. If you have a high APR, expect to pay more in interest, especially if you have a high outstanding balance each month. This is where if a credit card company offers you a low or 0% interest rate but a high APR, it can affect the amount of interest you end up paying on your balance.
Deciding which credit card to get for your business is a big decision, with many variables that can affect your finances in the long run. Research and compare APR, interest rates, and benefits for your business, all while watching out for offers that may be too good to be true and reading the fine print.