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Find the Right Business Credit Card for Your Needs

Credit cards are an incredibly easy way to finance business purchases, and there are many cards specifically designed for businesses. If you want to apply for and use a business credit card, you’ll want one tailored to the unique needs of your organization. Let’s explore the advantages and disadvantages.

Advantages of Business Credit Cards

Business credit cards can be great for your finances if they’re used properly.

Free up Your Cash Flow

We strongly recommend building up a cash buffer in your business. But if you haven't been able to do that yet, business credit cards can be a helpful stopgap measure. You can use them to plug short-term holes in your business finances — though interest costs can easily build up over time if you do this for too long.

Improve Your Business Credit Score

Your business has a credit score that banks use to decide if they want to lend you money. One of the best ways to boost your credit score is to get a business credit card, keep your credit utilization low and make every payment on time.

Get Cash Back and Other Incentives

Many credit cards have reward and cash back schemes built in. Used well, these programs can provide you with a small boost to your finances, which can be very useful for fledgling businesses.

Disadvantages of Business Credit Cards

Of course, it’s not all sunshine and roses — business credit cards need to be carefully managed too.

Treating Credit as “Invisible” Money

Because you’re not seeing money come out of your bank account right away, it’s easy to treat credit cards as free or “invisible” money. Of course, this isn't the case — they still need to be repaid. You should pay as much attention to credit card purchases as any other business payments, and work them into your budget and profit margins accordingly.

Only Making Minimum Payments

The great “con” of all credit cards is the attractiveness of only making the minimum payment due every month. Although this might seem like a good idea in the short-term, over the medium- to long-term you will pay far more in interest. Always try to pay off the full balance owed every month (or at least as much as you can afford).

Paying Too Much in Interest

Minimum repayments and high interest rates can really increase the amount you pay overall and eat into your profitability. Keep a close eye on how much you’re paying in interest, and pay your loans down ASAP.

Not Making Payments or Making them Late

Whatever you do, always make your payments every month. Failing to pay or making delayed payments can have a dramatic impact on your business credit score.

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