Business Credit Card Offers

Monday, June 11, 2012 at 3:55pm by Site Administrator

What’s Included in a Business Credit Card Offer?

Establishing a business means creating a public persona for the business separate from your personal life. A business credit card is a status symbol that projects the legitimacy and credibility of the business to vendors and customers, and it will offer several practical advantages. Accounting and management can be simplified by removing all personal accounts currently associated with your business. These accounts can also be used to build credit history for the business in a bid to remove personal liability in case of future problems.

When shopping for a business credit account, you will need to consider the options carefully. There are literally hundreds, if not thousands, of credit offers and lending institutions out there, and all of them are in business to make money. The following key areas will be found on every offer. Remember there is no best business credit card but there is a best one for your business.

Interest Rates

Credit offers can be tricky when presenting interest rates. The initial rate tends to be much lower and printed boldly all over the offer. After six months to a year, this initial offer will give way to the higher one found in smaller print on the offer. It gets even worse as the initial offer may not be available for all new card holders.

Your first task is to make sure the introductory rate applies to your business. After satisfying this, search the offer for the lender’s policy on rate increases. This policy should state the interest rate after the end of the introductory period and contain a formula for how rates may increase in the future. It will also contain rate penalties applied in case of late payments. The best offers will place a cap on rate increases.

Annual Fees

Many lenders use a lack of annual fees as a selling point. This can seem like a good deal going in, but you should realize that the lender is making their money in some manner even if not from annual fees. After all, they have to maintain the accounts, issue and replace cards, and handle customer service. An annual fee may mean better customer service, or it may be to cover special benefits. Keep in mind, the 2009 CARD Act passed by Congress only applies to personal credit cards. Business cards can adopt any type of fee structure at any time without restrictions outside the contract.

Late Payments

Whether the business is new or has been around for years, you do not want the black mark of a missed payment on the credit report. Late payments should always be avoided, but it is best to know exactly what the penalties are before signing the contract. Mistakes do happen, and some offers will include leniency while others will carry severe penalties.

As mentioned, interest rates can change dramatically because of late payments. Also look for fees attached to late payments. Some cards will provide a grace period for a set number of months. It is important to ask what will happen should the payment arrive three days late based off each credit offer.

Rewards and Benefits

These programs are always featured in bold print somewhere around the introductory interest rate. They may be cash back on purchases, points that can be applied to gift certificates, frequent flyer miles, enhanced bonuses with specific vendors, and so on. Before taking the bait, there are several questions to answer. Is this benefit one your business can use? Are there extra fees for participating in the rewards program? Are there limits to the benefits program?

These programs can make the card worthwhile from a purely practical standpoint. Some offer cash back rewards when the card is used to make routine payments, such as utilities and other overhead. Others are great options for businesses where travel is frequent. The variety of programs alone makes it useful to compare multiple offers.

Fine Print

Finally, get out the reading glasses or magnifying glass. The fine print must be read thoroughly before signing up for any business credit account. Pew Charitable Trusts surveyed credit offers and found that 93% contain an “any time” clause. This means the lender can change the terms of the contract at any time. This common phrase is often discounted by borrowers, but Pew found lenders raised interest rates on one-fourth of card holders, or 70 million accounts, between 2007 and 2008. The fine print should also be combed for monthly minimum charges, additional fees, and rules on rewards participation.

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