Small business credit cards are a great way to help new business owners get their business off the ground. Credit cards can be a tremendous benefit when used correctly, but many small business owners make mistakes when applying for their first card. Although small business credit cards are not as widely used as major credit cards like Visa or MasterCard, they still account for a large percentage of credit card sales. To help new business owners get the most out of their credit cards, we have compiled a small guide outlining the top five mistakes to avoid.
One of the biggest mistakes made by small business owners when it comes to obtaining new small business credit cards is procuring a revolving line of credit instead of a fixed rate. The best small business credit cards usually offer generous revolving line bonuses, big initial bonuses, 0% APR on balance transfers, or even $0 late fee quotes. Some even offer exclusive credit card partners with popular retailers and restaurants. An all-in-one credit card can be a great way to build an impressive credit history while also having access to a number of helpful features.
Another mistake made by many small business owners is failing to update their information on the business's credit profile. The three major consumer credit bureaus – Experian, Equifax, and TransUnion – keep your credit profile on file for up to seven years at a time. Not updating this information can result in penalties, which may include a decrease in credit limits, or an increase in interest rates. While updating your credit profile is not difficult, it should be among your top priorities when it comes to small business credit cards.
Many business owners choose not to use their business credit cards to purchase additional lines of credit because they believe these additional financing options are expensive and do not fit their cash flow needs. The truth is that these types of financing options are more expensive and do not fit most business owners' cash flow needs. Most business owners already have existing lines of credit – they just do not use them. A credit card provides businesses with cash flow options that they did not have before. However, business financing options do vary widely, and a business owner should consider all of their options. If a business currently has a revolving line of credit, it may be time to consider a new line of credit – it may even be a good business idea to close the account and transfer the balances to the new card.
Of course, the above reasons were just some of the common mistakes made by small business owners. Perhaps some of the worst reasons for not using business credit cards is that small business owners do not view them as tools necessary for running their business. Even though small business financing options are extremely effective, many small business owners still do not believe that these funding options are important and necessary to run their businesses. The fact of the matter is that owning a business is much more than simply buying equipment and making sales. A small business owner must have access to a variety of capital resources that are needed in order to grow a business, make sure the business gets profitable, and allow a business owner to make personal payments to vendors and employees.
If you own a business and do not currently have any lines of credit, you may want to give American Express business credit cards a try. These business credit cards have been established to help business owners make the most out of their available credit. Unlike most business financing options, these cards come with no annual fee, provide unlimited rewards, and provide a great interest rate. The best capital one business owner can get is capital that comes from sources they control. With American Express business credit cards, a business owner gets that type of capital from the company they work for instead of a third party lender.
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