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How to Use a Business Credit Card Like an Expert

February 9, 2020 By Eric Goldschein 23 Comments

Once you start a small business, the offers start rolling in: this business credit card, that business credit card.

How to Use a Business Credit Card Like an Expert

It may not be obvious why using a card specifically for your business is such a useful tactic—and maybe you turn down most of what comes across your desk. 

The truth is, a business credit card is an excellent financial tool for small business owners, helping them:

  • finance large investments
  • build business credit
  • pay off existing debt
  • accrue useful rewards
  • protect their purchases

When used the right way, your card can help you reach a new level of effectiveness as a business owner—avoiding cash crunches, empowering employees, and making long-term financial decisions. 

To do that, you need to use your card like an expert. Here are seven tips on how to do just that: 

Table of Contents

  • 1) Use your card to separate business and personal expenses
  • 2) Choose a card that aligns with your current business interests
  • 3) Take advantage of a card with a 0% introductory APR
  • 4) Use a tool to track your spending and rewards
  • 5) Avoid enormous, regular purchases or expenses  
  • 6) Understand the difference between a personal and business card
  • The bottom line 
      • Eric Goldschein
      • Latest posts by Eric Goldschein (see all)

1) Use your card to separate business and personal expenses

First and foremost, business credit cards are, despite the similar name, a very different product than personal credit cards.

We’ll go over more of the specifics in a bit, but for now, recognize that using your personal credit card to cover business expenses is not the same thing as having a business credit card. 

Business credit cards offer higher credit limits and more lucrative rewards than cards branded for personal use.

But the most important thing a business credit card does for you is separate your business and personal expenses. 

Many new small business owners, especially sole proprietors, think they can get away with putting every expense on their regular card. This has two major drawbacks: 

  • Your business bookkeeping and accounting will become a nightmare as you try to comb your statements and declare certain expenses business-related and others as your groceries or movie tickets.  
  • You’ll lose corporate protections that can make you personally liable for certain debts and issues with clients by “piercing the corporate veil.”

The most financially responsible thing you can do as a business owner is to use your business card to only pay for business expenses.

All the other perks you get from using it are just an added bonus.

2) Choose a card that aligns with your current business interests

As you might have seen from all those business credit card offers you got in the mail, different cards offer different rewards, perks, and other unique benefits. 

Some credit cards come with no annual fee, while others offset any fees with rewards points based on spending in categories like travel or office supplies. How do you know which to pick? 

The answer is simple: What are your current needs? How do you spend your money, right now? 

If you travel around the country to meet with clients and broker deals, a travel rewards credit card is a must.

Do you need to pad your bottom line? If so, a cash back card is useful.

Looking to finance a major purchase? Seek a low-interest card. 

Not all credit cards are created equal, and you may not qualify for the cards with the very best offers at first.

But once you build up your business credit score, you will open up new options that will multiply the rewards potential of your purchases. 

3) Take advantage of a card with a 0% introductory APR

Some of the most elite business credit cards on the market come with a 0% introductory APR.

APR is “Annual Percentage Rate,” a holistic percentage that includes interest rate and any other fees that you might rack up in using a card. 

These cards typically give you 9–12 months where, as long as you make your minimum payments and stay in good standing, you don’t need to make additional payments on your purchases.

That’s an interest-free loan from your credit card issuer. 

This kind of offer is crucial if you need to make a major investment, such as a bulk inventory purchase or an upgrade to heavy machinery.

And don’t expect that you’ll be able to pay it off within a single billing cycle.

Some 0% intro APR cards even allow you to do a balance transfer, where you move existing debt from one card onto your new card.

This gives you a chance to pay off the balance without accruing more interest.

Once your intro offer expires, your interest rate will return to your agreed-upon rates (based on the market and your credit history).

But while it lasts, it’s an unmatched financing perk.

4) Use a tool to track your spending and rewards

One thing that a credit card company hates to do is tell you when your rewards points and perks are about to expire.

It’s not that they’re mean people—but if they can legally avoid giving you a discount or payout, they’re happy to do so. 

Don’t fall victim to letting your points expire and losing out on all the hard-earned extra money you’ve accumulated.

Use a tool like AwardWallet, which has both free and paid versions, for tracking all your corporate rewards.

Also use it to analyze your credit card spending for optimal use across various categories.

5) Avoid enormous, regular purchases or expenses  

It’s one thing to finance a few big-time purchases on a credit card, especially if you have a low interest rate (or a 0% interest rate during your introductory period).

But business owners can quickly get into trouble if they use their business credit card to pay for things they can’t afford at the moment. 

One of the main reasons why small businesses fail is that they run into cash flow issues.

Even successful businesses can overextend themselves and tie up too much money in certain initiatives or campaigns.

Suddenly, they need to cover things like payroll or emergency repairs not with cash, but their credit card. 

If you find yourself regularly putting major purchases on plastic, you are operating without enough working capital.

It’s time to investigate other low-cost financing options, such as a line of credit; or reworking your business model.  

6) Understand the difference between a personal and business card

As discussed earlier, there are major differences between your personal and business credit cards.

Business credit cards give you greater credit limits, better rewards, and so on. 

There are drawbacks to business credit cards, however, that you need to be aware of. For example: 

  • Balance payments are handled differently:

With personal credit cards, when you make a payment on an account with different interest rates, the issuer legally must apply the payment to the higher rate first.

Not so with credit cards—they could apply it to your lower rate, meaning you’ll continue to rack up higher interest rates. 

  • Consumer protection laws may not apply:

Laws like the Credit Card Act of 2009 that require personal credit card issuers to warn customers that their APR will change may not apply to your card.

You’ll have to be more diligent about checking in with your issuer about your terms and conditions.

Don’t just assume when it comes to your credit card. There’s too much at stake—namely, the success of your business—to not take the time to make sure you’re not paying more than you should. 

The bottom line 

As a business owner, you’ll need all the help you can get your hands on when it comes to managing your finances.

A credit card, when used expertly, is a major tool in this arsenal.

Just make sure you understand the power of what you’re wielding—because otherwise it goes from a springboard for your business to an anchor.  

 

Image Source: Pixabay by Michal Jarmoluk

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Eric Goldschein

Staff Writer at Fundera
Eric Goldschein is a staff writer at Fundera, a marketplace for small business financial solutions such as business loans. He covers entrepreneurship, small business trends, finance, and marketing.
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Latest posts by Eric Goldschein (see all)

  • How to Use a Business Credit Card Like an Expert - February 9, 2020
  • 5 Low-Cost Financing Options For Small Businesses - September 22, 2019
  • 7 Best Practices For Using User-Generated Content - March 12, 2019
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Filed Under: Small Business Advice Tagged With: business finances

Comments

  1. kshitija says

    May 4, 2020 at 1:18 am

    amazing

    Very interesting to know all this information.. thanks for sharing
    kshitija would love you to read ..Online Carrom Game Vs Carrom Board GameMy Profile

    Reply
  2. Arjun Singh says

    April 13, 2020 at 12:46 am

    Yes, you have provided a piece of full knowledge about business cards even I don’t know about this, I have very limited knowledge, but after reading your article I have learned quit good and impressive knowledge…

    Reply
  3. Edward brown says

    March 12, 2020 at 3:46 am

    Yep! It super important when running your own business is to learn the discipline of the purchases… I learn the hard way :/
    Edward brown would love you to read ..11 Best Immediate Laxatives [Buying Guide 2020]My Profile

    Reply
  4. John williams says

    March 11, 2020 at 11:51 pm

    hi, eric
    Thanks for sharing such an amazing article. a brief article on use of credit card. it really helps me to achieve my goals in the long term.
    John williams would love you to read ..How to build confidence to achieve your goalsMy Profile

    Reply
  5. RIMA SINGH says

    March 4, 2020 at 4:22 am

    which card i use for facebook marketing . i need to know that facebook advertising needed credit card , from bangladeshi user . how to support it from bangladesh .
    RIMA SINGH would love you to read ..Prime Minister Jacinda Ardern yet again pulls NZ First Minister Shane Jones into line :My Profile

    Reply
    • Gail Gardner says

      March 4, 2020 at 2:29 pm

      Hi Rima,

      This is more about people using separate credit cards and keeping their finances separate between their personal and business spending.

      Facebook provides information on the types of payment methods they accept by country.

      According to Facebook, Bangladesh accepted payment options for Facebook ads are:

      Credit cards or co-branded debit cards, including:
      American Express in one of their accepted currencies
      Mastercard
      Visa
      PayPal in one of their accepted currencies
      Gail Gardner would love you to read ..The Relevance of Storytelling in Brand Marketing [Infographic]My Profile

      Reply
  6. Brij Bhushan says

    March 2, 2020 at 2:52 am

    I didn’t know about business card and how to use it. i thought both are same business and personal

    Reply
  7. Cory Santos says

    February 24, 2020 at 11:54 am

    A 0% intro APR period is the number one perk in a business credit card. Not only can you use a card to conduct a balance transfer, as you mentioned, but a 0% intro period on purchases is ideal for anyone looking to invest in their company. Purchasing technology, updating software, or even buying much-needed office supplies and having the luxury of paying that back without interest over six, nine, or even twelve months can’t be understated.

    Great post!
    Cory Santos would love you to read ..CardWorks to Ally with Ally FinancialMy Profile

    Reply
    • Gail Gardner says

      February 26, 2020 at 5:02 pm

      Hi Cory,

      While I do agree with you, how usage affects credit scores is a very complicated topic. Small changes can make a big difference in credit scores which can then substantially change the cost of borrowing money in the future.
      Gail Gardner would love you to read ..Cold Email Strategy: How to Update Yours for 2020My Profile

      Reply
  8. carol says

    February 20, 2020 at 6:27 am

    Nice article I never new having a business credit card makes things so better thanks for sharing

    Reply
  9. vivek says

    February 19, 2020 at 6:22 am

    Nice informative information thanks for sharing.Good information about credit card.
    vivek would love you to read ..SEO khazana 2020: 257 Best Bookmarking Submission SiteMy Profile

    Reply
  10. Vahid sisi says

    February 17, 2020 at 12:56 am

    The “how to use credit card” training sessions need to be mandatory in the education system to prevent unwanted miss-use.
    Vahid sisi would love you to read ..Saskatchewan Express Entry(SINP)My Profile

    Reply
    • Gail Gardner says

      February 20, 2020 at 11:51 pm

      Hi Vahid,

      Yes, that would be best. But it will never happen because they don’t want people to know how to avoid getting ripped off.
      Gail Gardner would love you to read ..How Ethical is the Usage of Fear in the Marketing Industry?My Profile

      Reply
  11. alan says

    February 13, 2020 at 3:36 pm

    You have got me wanting a business credit card now lol

    Reply
  12. Adam Scott says

    February 13, 2020 at 5:04 am

    Yes, You are right ,As long as you use them properly, credit cards can have a number of advantages over debit cards and cash payments.I was really not aware about the rewards points expiration . Thank You For your details .

    Reply
  13. shivam gumber says

    February 11, 2020 at 10:58 am

    amazing article and nice post I am a new blogger these are helpful things thanks for sharing

    shivam gumber would love you to read ..Best CMS Platforms in 2020My Profile

    Reply
  14. tanish chopra says

    February 11, 2020 at 10:34 am

    Interesting Facts. I was confused about how to use business and credit cards.
    Thanks
    Best Wishes
    tanish chopra would love you to read ..Plugin Hanging LightMy Profile

    Reply
  15. Ravesh Kumar says

    February 11, 2020 at 9:26 am

    I like the article but as per my point of view when u have a credit limit either intentionally or not you spend money.

    Reply
    • Gail Gardner says

      February 11, 2020 at 2:58 pm

      Hi Ravesh,

      Only those who really learn to use their credit wisely can be successful in life. Credit is the ruin of many people in both business and personal lives.

      They are particularly critical in small business. Further reading:

      • Lenders Look at Personal and Business Credit Scores, Both
      • What’s a Good Credit Score for a Small Business Loan?
      • How to Qualify for a Small Business Loan
      • What Are Business Credit Cards and How can Small Businesses Use Them

      Gail Gardner would love you to read ..How to Attract Organic Links and Mentions with ContentMy Profile

      Reply
  16. mustafa says

    February 11, 2020 at 3:25 am

    oh great information… I was really not aware about the APR… I had just been issued the credit card and I was just using it for my over expenses.. but great that you shared a detailed review..

    Reply
  17. Pru says

    February 11, 2020 at 2:00 am

    Interesting Blog about the use of business credit card. you need know about market research company will guide you better.

    Reply
  18. Midfold says

    February 11, 2020 at 1:01 am

    Very useful post, I’m holding multiple business credit cards and got to know if we use it wisely, it will help us lot.
    Midfold would love you to read ..Easily Create a Website in 2020My Profile

    Reply
  19. Suchot says

    February 9, 2020 at 8:59 pm

    This was interesting – I didn’t know the difference between business credit cards and personal. I would like to know how the interest rates differ.
    Suchot would love you to read ..The Yummiest Paleo Banana Bread That Will Blow Your MindMy Profile

    Reply

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