Are business credit cards a good idea?

A business credit card is something every business should have. Why? Is it to fund your company needs? Is it to pay your payroll? No, a business credit card should be used for one thing, to establish legitimacy and credit for your business.

If you are going to use a credit card to finance any part of your business, a business credit card, not a personal credit card is the way to go. However, using a credit card to finance a business is a horrible idea. There are much better loan options out there that will cost you much less. Of course, they are harder to qualify for than a business credit card, but the savings are worth it.

Business credit cards are definitely an option as far as a way to secure cash and purchase necessary supplies for your company, and can be used if you are in a tight spot, but should not be used to buy things for your business unless you know you can pay them off. Why? The rates are insane, and will cost your business far too much.

Having a business credit card helps you to establish a business credit score. So, if for no other reason than to better be able to qualify for other business loans, get a business credit card, just be sure to use it wisely so that you do not end up hurting your credit instead of building it.

Most business credit cards have lower interest rates than personal credit cards and they have a larger credit limit typically $50,000 or more. So, they are certainly a better option than buying business equipment then a personal card.

Having a business credit card can help your company's bookkeeping efforts by keeping the credit card holder responsible for the charges they collect, as well as keeping track of what is spent where. Using a business credit card can also improve your company's cash flow, because it frees up money for thirty days and you can float the costs of whatever you buy on your card. However, since all expenditures for the month should be paid at the time of the end of the billing cycle, you have to be able to come up with that money as well. If your company pays the full bill each month, no charges will be implemented, and a business credit card can be great.

If you have timely payments and do not misuse the card, a business credit card can be invaluable in helping establish a good business credit score. Establishing a good credit score in turn is invaluable to the growth and expansion of your company.

Additionally, and possibly, most importantly, a business credit card can also help to establish your company image. Having a business credit card shows a perceived legitimacy to your organization not only to those you do business with but also to your employees.

As an added benefit, rewards from business credit cards can be really great, and can include shopping sprees, travel rewards, etc.

So, a business credit card is a good idea, but if you are using a business credit card to fund payroll, or anything similar, it is good to know that there are better options than a credit card. So, consider such options before you use a credit card to purchase needed supplies on time, or use it as a loan. Instead, an unsecured line of credit is a great option, or a small business loan. You will get better rates, and are likely to get higher approval amounts than you get with a credit card, thus you have more working capital available, and pay less for it.

Get a credit card for your business, just be careful how you use it.