There are also cards that give you extra rewards points or higher cash-back rates for purchases in a certain category, such as travel, gas, dining and entertainment. Take a cash-back credit card for one example: If it pays 2% cash back on all purchases, the savings can quickly add up. Choosing a credit card presents business owners with good credit opportunities to reap various rewards. There are often sign-up bonuses, cash-back rewards, and rewards points that you can redeem for travel, retail, and entertainment. The credit card industry is competitive, so issuers offer a lot of perks for signing up with them, whether you’re looking for a personal or business card. If your enterprise can’t pay the debt on your business credit card, the credit card company can come after your personal assets. Business owners with lower credit scores tend to pay a higher APR, and those with poor credit may only qualify for a secured card. The issuer wants to know that you can pay it back if it extends credit to you, so the higher your score, the easier it is to obtain credit. Business credit card characteristicsīefore approving your business credit card, the card issuer looks at your personal and business credit scores, as these indicate your creditworthiness and credit history. Some prepaid debit cards can be reloaded, and the reloadable amounts can vary from a few dollars to thousands of dollars. Instead of withdrawing money from a checking or saving account, you supply a cash deposit to use this type of business debit card. According to the United States Department of Agriculture, an EBT card works like a debit card and can be used to purchase food items from authorized retailers. Electronic benefits cardĪ business wouldn’t have an EBT card, but it may accept one as a form of payment. A PIN is also required to use the debit card. Types of debit cards for businesses to choose from: Standard debit cardĪ standard debit card can be used in the same way as a personal debit card, but funds are withdrawn from your business’s checking or savings account. Before you can make the final determination, you have to delve deeper into the pros and cons of both. Knowing the difference between a business credit card and a business debit card is the first step in figuring out what’s right for you. You also don’t have to worry about the APR, since there is no interest. You don’t have a credit line with a debit card, so whatever is in the bank account is what you can spend. The money to fund it is directly deducted from your bank account. What is a business debit card?Ī debit card is tied to your bank’s checking account and serves as a payment card. These types of cards also usually don’t have preset spending limits. With this type of card, money isn’t removed from your business’s checking account. Business charge cardĪ business charge card is a type of unsecured business credit card. Many startups or businesses with poor credit choose secured business cards to build up their credit score. It allows you to use the funds without going over budget. Secured business credit cardĪ secured credit card is backed by a cash deposit. Reward cards may also give cash back on purchases. The business owner may be able to collect airline points for travel or to use toward hotel bookings. Rewards business cardĪ rewards business card provides special incentives for business owners. A standard card may also have a predetermined spending limit. Also, you may not have to pay an annual fee. However, a standard business credit card may provide a lower interest rate than other types of cards. With this type of business card, you won’t earn extras like airline points. The following are examples of types of business cards you can secure to manage company transactions: Standard business credit card The balance transfer APR is the rate charged on debt transferred from another credit card or line of credit.Īlso, many business credit card issuers offer loyalty programs that give users cash back or rewards points on purchases.The purchase APR is the interest rate you pay on all purchases.An introductory APR is the promotional interest rate you pay for a set amount of time.The APR is the annual total cost of borrowing and comes in these varieties: In exchange, you pay interest and fees on your balance, known as the annual percentage rate or APR. What is a business credit card?īusiness credit cards give you access to a revolving line of credit that you can use to make purchases. Before you can make an informed decision about using a business debit card or a business credit card, you have to understand the differences between the two – and there’s a lot of them.
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