Credit Card Options for Your Business Needs
When it comes to choosing a card that will pay you back for money spent on travel expenses, don’t count yourself out if you don’t travel a lot. Attending conferences and other out of town meetings can translate into big savings.
We’re going to assume travel costs are some of the highest expenses your business acquires. This means you should choose a card that provides the greatest amount of travel rewards return based on general spending.
If you frequently travel for business, we suggest pursuing the Chase Ink Business PreferredSM Card. To maximize rewards on this card, you’ll need to spend $5,000 in your first 3 months. This nets you 80,000 bonus points.
What does 80,000 points translate to? $1,000 in travel rewards. As you continue using the card, redeeming points through Chase Ultimate Rewards® increases the value of your points by 25 percent.
Cash flow is the life blood of a startup. Unless you have investor funding or a large loan, you’ll need to carefully manage your cash flow to keep suppliers and vendors at bay, as most won’t offer good credit terms to a new business.
A card with a 0 percent APR can help your business grow during its early stages. Rather than eating through cash flow to fund growth, you can put expenses on your credit card and not incur interest fees. This requires financial discipline so things don’t spin out of control. You should also have a solid plan of how to pay off the balance once the intro APR expires. You don’t want your new business to suddenly become over-leveraged in debt.
Molly Day, VP of public affairs for the National Small Business Association had this to say about the need for debt and delicate balance of just enough for growth, “Credit card debt instability is a huge problem for smaller businesses,” said Day. “If entrepreneurial people can’t garner the capital to launch a business, we’ll see fewer start-ups, which means slower employment growth and less innovation.”
For startups, we’re choosing the Chase Ink Business CashSM Card. You’ll get a 12-month 0 percent APR. Keep in mind, this is an intro APR and after 12 months the balance will need to be paid in full to avoid additional fees.
Another great benefit for startups is the fact that this card has no annual fee. You’ll also earn cash back with your purchases.
There’s a $300 cash back bonus if you spend $3,000 within your first 3 months. After that intro bonus, you’ll earn 5 percent cash back up to your first $25,000 in spend when you spend in the following categories:
- Office supply stores.
- On internet, cable and phone services.
For gas stations and restaurants, you’ll still earn 2 percent cash back up to $25,000 in spend each year. All other categories will earn 1 percent with no limits. Points don’t expire either.
Looking at a few practical scenarios on points, if you spend $10,000 per year ($833/mo) in the 5 percent category, that’s $500 cash back. For the 2 percent category, $5,000 per year ($416/mo) equates to $100 cash back. That’s a total of $600 and very practical for most startups.
Low or Bad Credit
If your credit score is low, and you are constantly being turned down for credit cards, secured cards are a great option. They can help rebuild your credit. Or, if you are a new business having trouble establishing credit, these cards will help build your credit history.
The Wells Fargo Business Secured Credit Card has a $25 per year annual fee and credit limits of $500 to $25,000. Secured cards do require a deposit, which is set on a business by business basis.
Wells Fargo will periodically review your account for a potential upgrade to an unsecured card. With responsible use, you can be eligible for an unsecured card, likely landing a larger credit limit.
This card does come with a rewards program. In fact, you have the choice of choosing cash back or rewards points. For cash back, you’ll earn 1.5 percent for every $1 spent. Rewards points are 1 point for every $1 spent. You also get a 10 percent bonus when you redeem points online.
Make Your Choice
Choosing the right credit card based on where your business puts most of its activities and spending can net the greatest return. We’ve examined three different business cards that fit three very different business types. Keep in mind that as your business needs change, you’ll continue to reap the best return by changing your business credit card along with your business needs.
Editorial Note: Any opinions, analyses, reviews or recommendations expressed in this article are those of the author's alone, and have not been reviewed, approved, or otherwise endorsed by any of these entities.