So what exactly is the difference between a personal and business credit card and do you really need one? A business card is in your company's name instead of your own, and your company is responsible for the debt instead of yourself. While the issuing company may or may not check the business owner's own credit history, ultimately the credit card belongs to the company and not a single person. The advantages of having one are threefold: 1) if played right, you can truly reap great and relevant savings from credit card reward systems, 2) business spending can be controlled, i.e. use a card that only allows certain items to be purchased on it, and 3) some of the best cost-saving deals can be had on the Internet, and Internet shopping requires a business credit card. Before you fill out an online application, however, you should figure out regular expenses you or your company pays for.
For instance, do you regularly take clients out to dinner? There are cards that have reward systems tied in to certain restaurants. Do you travel a lot? How about air travel? A certain airline? There are cards tied in to certain airlines with reward systems based on frequent flyer miles. How about business services? Shipping? Office supplies? There are cards that give great savings for each of these as well. Before choosing a card based on a reward system, however, you really need to know if your company will be able to pay off its balance each month or not.
Why? As you're probably aware, credit card companies make their money by charging you interest when you don't pay off your balance in full each month. These interest rates, known as Annual Percentage Rate or APR, can be high. And this price can offset and indeed wipe out any savings you may have accrued through a reward system. So the short answer is this: if you can pay off your balance in full each month, then you can take serious advantage of rewards systems; if not, then you should ignore rewards systems and simply find a business credit card that has the lowest overall APR.
So knowing these three pieces of information you can easily decide what credit card is best for your business. First, if your company is of any appreciable size, you need a business credit card. Second, before filling out an online application, decide what services or regular expenses your company acquires to take advantage of rewards programs. But before doing that, figure out if you will be able to pay off your credit card debt each month or not. If not, go with a low APR card; if so, shop by reward system. Couldn't be simpler.
About the Author
Jake Everett is a contributer to the easy-to-use business credit card comparison site Web Biz Credit. Sort cards by APR or reward system and pick the best one for you company.