Prepaid Business Credit Cards

Wednesday, June 13, 2012 at 3:22pm by Site Administrator

Is a Prepaid Business Card Right For You?

One option for businesses that wish to obtain a business credit card is the prepaid business card. Many people may wonder if a prepaid business card is right for them. With a prepaid business credit card, the business owner places funds into the credit card account prior to making purchases on the card. The credit limit is determined by the amount of funds placed on the credit card in advance.

Prepaid business credit cards are normally purposed for individuals with poor credit who do not qualify for a regular business credit card. A pre-paid business card enables the card holder to experience some of the benefits of having a business credit card without having a standard business card.

Benefits of a Prepaid Business Credit Card

  • Easy to Obtain
  • The first and foremost benefit of a prepaid business card is that the individual does not need to have an excellent credit history to obtain one. Prepaid business credit cards are provided to individuals with a poor or no credit history. However, an individual with good credit may also find that a prepaid business card has advantages over a standard business card or utilizing their own personal credit cards for business use.

  • Keep Business and Personal Expenses Separated
  • One benefit of a prepaid business card, even for those with a good personal credit history, is the ability to keep business expenses separate from personal charges. Having a business credit card is an asset to a business because it makes tracking business expenses easier, too. With any business credit card, record keeping for the business is simplified.

  • Limit Business Spending
  • With a prepaid business card, your spending is limited to the amount that is funded to the account. There is no way to exceed the credit limit. Therefore, there are no over-limit fees and no chance that an employee can charge an unapproved amount over your credit limit on the card. Limiting spending protects the business owner whose employees have access to their business credit cards.

  • Employee Credit Cards
  • As with other business credit cards, employers are able to obtain employee credit cards on their prepaid business card account. Many prepaid business card providers offer employers the option to allow or disallow employee card holders access to cash. Prepaid employee cards are often available with or without PINs. A prepaid card with a PIN allows the card holder to get cash with a purchase or from an ATM, just like a debit card. Prepaid cards without a PIN may be used for charge purchases only.

  • Maximum Balances Allowed on Prepaid Business Cards
  • Most credit card providers that offer prepaid business cards place a cap on how much the business may fund to the account. Businesses are able to control spending with the maximum balance in place. In addition, limits are often placed on the daily spending amount and the amount for daily cash withdrawals. Such limits protect the business owner from fraud and credit card theft, as well as help them control spending on the card.

    For many prepaid business cards, the business owner is also able to set limits on the card, such as daily, weekly or monthly spending limits. Business owners are provided with tools to assist them with tracking employee spending, as well as setting limits. Some prepaid business card providers also allow business owners to set alerts to notify them about employee credit card usage.

  • No Interest Rate or Late Fees
  • The prepaid business card does not charge interest or late fees for using the card. Because the card is prepaid, there is no bill and no chance that the bill is paid late. No interest is charged because the business is essentially utilizing their own funds for purchases and cash advances.

Possible Drawbacks for Prepaid Business Cards

There are a few drawbacks to prepaid business credit cards, including:

  • Application Fee
  • Most prepaid business cards charge an application fee and these fees may often be significant.

  • Other Assessed Fees
  • Fees are charged for lost card replacement, PIN charges and other transactions. In addition, the prepaid business card provider may charge a monthly maintenance fee for the account.

  • Employees and Others May Still Make Unauthorized Charges
  • Though prepaid business cards provide protection against unauthorized charges, there is always the possibility that employees or credit card thieves may make unauthorized charges on the card.

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