Questions You Should Ask Before You Apply For a Credit Card For Your Business

Before you stop at the bank or go online to apply for a credit card for your business, you should first understand the advantages and disadvantages of using business credit cards.  The potential advantages are clear, in that a business credit card can help you manage your business finances in a more organized way, but how can you avoid the potential disadvantages?  Here are questions you should ask before you sign an application for a business credit card to help you avoid any disadvantages of using credit for your business:

How Much Will I Pay In Interest With This Credit Card?

If you are comparing several different credit cards for your business, you want to apply for a credit card with the best interest rate available to you.  Knowing how much you are charged to carry a balance from one month to the next is important to deciding whether or not you need to always pay your card off in full at the end of the month or if you can sometimes give yourself some breathing room by carrying the balance forward a month or two.

How are the Interest Rates Calculated?

When comparing cards, you need to know more than the advertised interest rate to get a complete picture of what you’ll pay.  How many days are in the billing cycle and how is the interest rate calculated on new purchases, old balances and/or cash advances?

Can I Benefit From a Rewards Program?

As a business owner, you may not realize how much you could benefit from a credit card rewards program.  Talk to a customer service representative of credit cards offering rewards programs to find out if they would benefit you based on how you are likely to use the card.  If you are a frequent traveler, you’d want to look at cards with travel based rewards programs.  If you purchase office supplies regularly, find rewards credit cards that give you cash back or discounts on those purchases. If you’re unsure, you might benefit from a generic rewards program that just gives you cash back or points towards merchandise.  Be wary of any rewards program that is going to cost you a higher annual fee to join – unless your rewards will generate more benefit than the cost of the program, it’s not worth the fee.

What is the Promotional Period and What Happens When it Ends?

It’s common to apply for a credit card under a promotional period.  Promotional periods offer low or no interest for a temporary time period, but you need to know what happens once that promotional period of 6 months or a year comes to an end.  Look at what interest rates will be on your purchases after the promotion, and make sure the permanent rate is still competitive with other credit cards you might apply for.  If you apply for a credit card for your business to transfer a higher-interest balance under a 0% balance transfer promotion, find out what the interest rate will be once the promotion ends.  It could be you would save more money just keeping your balance on the higher-interest card and paying it off rather than paying a balance transfer fee and a potentially higher interest rate on any balance remaining after the promotion is over.