You must be surprised that business has its own credit cards too right. Yes, no credit cards were created for both businesses and individual customers but the difference is, they have different functions. At first, credit card was a consumer-oriented product but credit card companies found out there’s a potential of developing a line of business credit cards.
There are some distinct differences between consumer credit cards and business credit cards that are important to know:
Impact on Credit History
Your business credit will get affected if your business has business credit cards. Not to forget, it will affect your personal credit too. You as the business owner are the signer of your business credit cards so you will cover or the debt if there’s any. That’s a guarantee. Some small business credit card issuers will report your payment behaviour to consumer and commercial credit bureaus.
Business credit cards receive different rewards from consumer credit cards. The purpose is to make businessmen believe that they can save on many products and services that are business related. Usually the rewards are in terms of discounts when businesses use credit cards to buy products in bulk. Discounts might include discounts on office supplies, Wi-Fi service, and phone bills. There’s also the promise of travel-related awards that can be earned and then turned into a great vacation.
Payment Window and Terms
Business credit card holders have less time to make payment and no same due date to pay bills like consumer credit card. This means there is a need to pay more attention to the bill when it comes and staying on top of payments. This would be a time when it helps to receive your statement online so you get a notification in your inbox that the bill is there and ready to be paid.
Payments tend to be applied differently by the issuer of a business credit card with the amount that is applied to the lowest interest rate balance while the higher priced portion collects even more finance charges. That’s why carrying a balance on a business credit card in an expensive proposition.
Accounting Purposes and Expense Management
Every year, specifically at the end of each year, business credit card issuers will assist you with an accounting report. In this report the issuer will break down your business credit card expenditures for the year. It is very useful and helpful for your business as you can track down your consumption expenses and you can recheck your business budget.
Why Do You Need to Get a Business Credit Card?
Those who are trying to establish a business credit or looking for a higher credit limit to cover business expenses, you should consider business credit card. Depending on the type of business structure you have, it may be better to get a business card, especially if you are incorporated. Business credit card is very convenient way to get some type of credit. Sometimes the CEO, CFO, or the CMO will have their name be the name on the business credit card so that it will appear as a personal card. Despite all the advantages, please weigh all the differences before you make the decision to have a business card. Most importantly, make sure you are fiscally knowledgeable and responsible to have a credit card so you don’t negatively impact your business.