Know The Terms Before You Choose A Credit Card To Fit Your Situation

Category: Finance, Financial Planning.

A business credit card is both a convenience and an effective way to track expenses. Whether a business credit card appeals to you for simplicity and convenience or because it provides good record- keeping, there is still more you need to know.

Cash transactions burden your accountant who is trying to make all of this work for tax purposes. The annual fee for business credit cards can be higher than for personal credit cards. But if you just need to get credit for basic purchases, look for a card with an introductory 0% APR. You might pay as much as$ 150 a year for cards with more bells and whistles. That means you pay no interest for a stated period, which can be 6 months up to a year or more. It looks like an interest free loan.

This is great for a new business when so many expenses occur in the first year. The due date on your billing cycle is the absolute last day your payment must be received by the company, not the next day or the day after. If you have a variable rate APR, you will find that the credit card company will kick up your interest rate as a further penalty for chronic late payments. Late fees can run as high as$ 35 or more for each late payment. Some cards, expect that you, like American Express will pay the balance each month or in full. The Annual Percentage Rate is the amount of interest you pay on the credit card balance. Know the terms before you choose a credit card to fit your situation.

Choose a fixed rate- not a variable. That is tough on your budgeting. Not only can the company hike the rate for late payments, but a variable rate can be changed at any time without warning. If you got stuck with a variable or high rate card that is getting painfully expensive, look for a new card with a free introductory transfer of balance offer. Late paying clients put every business in a bind. Moving your debt to the lower rate card saves you money. If you need cash to tide the business over, you can get cash advances immediately from some credit cards.

Save it for real emergencies. Be careful not to overuse this. The interest rate on cash advances is usually much higher than it is for purchases. Is your credit cards help system limited to web page FAQs, or can you connect with a live person? If you have a problem or need information fast, how can you get it? In shopping for a business credit card, contact the customer service number and see what kind of response you get. Do not go overboard applying for a business credit card if you are operating as a small business entity such as a DBA.

You want a credit card company that makes it easy for you to get support online or by telephone- at least a major portion of the business day. The credit will be built under your social security number, so you want to make sure you are able to effectively manage the debt.

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