Are you a business owner who's just dipped their toes into the world of business credit cards, or are you on the verge of applying for one? Either way, you're in the right place! In this guide, we’ll walk you through the essential rules for using business credit cards, making sure the experience is smooth, rewarding, and hassle-free.
Rules For Business Credit Cards Table of Contents
1. Choose the Right Card for Your Business
To start things off, it's essential to find the perfect business credit card that caters to your needs. Compare different cards' interest rates, fees, rewards, and perks. Look for the one that:
- Aligns with your business's spending habits
- Offers rewards and perks that directly benefit your company
- Has reasonable fees and interest rates
A. Look for Introductory Offers
Many business credit cards offer sign-up bonuses and introductory interest rates to entice customers. Capitalize on these opportunities to save money and earn points, but be mindful of when the offer expires and the standard rates kick in.
B. Decide on Cashback or Travel Rewards
Do you travel often for business? Or would you prefer cashback on office supplies or other purchases? These factors will determine which type of business credit card is most suitable for you.
2. Make Timely Payments
To maintain a solid credit score and avoid unnecessary interest charges, always pay your credit card bills on time. Missing payments can lead to higher interest rates, diminished credit score, and late fees.
A. Automate Payments
Setting up automatic payments is a simple way to ensure your bills are paid on schedule. Set it and forget it to maintain a healthy credit score and avoid late payment fees.
B. Keep Track of Your Spending
Monitoring your expenses helps keep your credit card balance in check. It also flags fraudulent purchases or discrepancies and helps identify areas where spending can be adjusted.
3. Maintain a Sensible Credit Utilization Ratio
Credit utilization is the percentage of your total available credit that's currently in use. Most experts recommend keeping your credit utilization ratio below 30%. Doing so helps manage cash flow, maintain a healthy credit score, and avoid maxing out your credit limit.
4. Don't Mix Personal and Business Expenses
It's crucial to keep personal and business expenses separate. By doing so, you:
- Streamline expense tracking
- Simplify tax preparation
- Protect your personal credit and finances
5. Establish and Enforce Company Credit Card Policies
If employees are authorized to use your business credit card, establish clear policies on card usage and accountability. Set spending limits, require approval for specific purchases, and routinely review expenditure reports to monitor employee card usage.
Rules For Business Credit Cards Example:
Jane is a small business owner who recently obtained a business credit card to manage her company's expenses. She does her research and chooses a card with travel rewards due to her frequent business trips.
Before issuing cards to employees, Jane establishes clear policies on card usage and requires employees to submit expense reports for review. By tracking her spending, automating payments, and keeping her credit utilization ratio below 30%, Jane takes control of her finances and reaps the benefits of her business credit card.
Now that you know the rules, you're well-equipped to make business credit cards work wonders for your business. If you're ready to explore other resources and personal finance tips, the Flik Eco blog has you covered. Don't forget to share this article with fellow business owners to help them navigate the realm of business credit cards.