Having a business of your own is rewarding but there are times when you need an extra boost, especially with the funds. This is where business credit cards come into play. It is easy for large business owners to obtain and maintain such credit cards but the smaller ones often encounter difficulties especially during the application process. However, card issuers have now made small business credit applications easier to help start-ups secure routine working capital and a potent transactional tool. This truly is tempting but before you take any action regarding this, be aware of the following ways a business credit card differs from your personal card.
Issuing companies reserve the right to increase rates
Small business credit cards are very different from personal credit cards especially in terms of governing rules for cardholder protection. So before you venture into a small business credit application, you must understand that the laws applicable to your personal credit do not apply to your business credit card. For instance, the 2009 Credit Card Accountability, Responsibility, and Disclosure Act may not apply to your business credit card in certain instances. The issuing company may increase rates should it choose to do so, subject, however, to other regulations.
On the bright side, most card issuers have adopted the protections provided by such law so if you want the same rules that apply to your credit card, choose your business credit card company wisely.
Exclusive rewards and benefits
Like your personal credit card, business credit cards have key benefits as well. Some are similar to those offered to individuals but others are exclusively for companies. Such business benefits include baggage insurance when travelling, expense tracking, and access to airline and hotel clubs and exclusive lounges. So if you find a reward type particularly useful for your business and your employees, then make sure to opt-in for it while completing your small business credit application.
Distinct credit requirement
Card issuers usually issue business cards directly to the owners. As such, the business owner should meet the established credit requirements so the company may qualify for a business credit card. As far as the small business credit card application is concerned, either the owner or a senior-level officer offers a personal guarantee. Aside from that, any negative credit behaviour incurred using the business credit card reflects on both the owner’s personal credit and the company’s credit. So when in the process of a small business credit application, ensure that business credit accounts will remain in good standing. Otherwise, you risk jeopardizing both your personal and business credit.
Small business credit cards are great for establishing business credit, earning different kinds of rewards, and boosting business finances. However, you should always be cautious about your spending habits so you do not damage your personal financial status. Remember, that the purpose of your small business credit application is to help you grow financially, not to encourage improper spending habits.
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