8 Reasons to Use a Business Credit Card
8 Reasons to Use a Business Credit Card
Credit cards are fast becoming a business necessity. They’re flexible, easy to use, convenient and offer users the ability to make purchases instantly, anywhere in the world.
We’ve spent some time analysing credit cards aimed at businesses and have put together a list of our top 8 reasons to use a company credit card.
Easy tracking of expenses and purchases – Using a credit card for business purchases makes it easier to track expenses. The majority of credit card providers offer comprehensive expense reporting (both online and off) which can save you countless administration costs and a lot of hassle.
No more petty cash – Petty cash used to be the most popular way to pay for small, incidental purchases but the days of the petty cash tin are well and truly over. These days it’s more common for companies to make purchases online or over the phone. Providing key staff members with a credit card that’s attached to a business account means you can make instant purchases and reconcile expenses quickly and easily. 3. Rewards and incentives. The majority of business credit card programs offer rewards and incentives for users. Organisations can save money on a variety of goods and services from petrol to air travel, insurance and other professional services.
Build business credit – One of the most important reasons for applying for a business credit card is to build your business credit. This will come in handy if you need to take out a business loan in the future. Responsible use and a consistent payment history will be great assets to your credit rating.
Separate business and personal finance – If you’re a small business owner you’ll know how important it is to separate business and personal finance. Having a business credit card will help with this division and will come in especially handy around tax time. Remember to keep your accounts separate and don’t be tempted to make personal purchases on your business credit card (or vice versa).
Large purchases or unexpected expenses – There may come a time when you need to buy supplies, make a one-off payment or pay a large bill. Business credit cards help you to make these one off payments quickly and are more convenient than applying for a business loan.
Embrace the quiet times – Cash flow is a major concern for all businesses and even more so if you have employees or creditors that rely on your payments. A business credit card can help you cover the quiet times and the seasonal lulls.
Say goodbye to cash – Having cash on-site or carrying it around with you is not a good idea. Business credit cards reduce the need for ready cash making your business less of a target for theft or loss.
If they’re used responsibly, business credit cards can help you run your business better and even save you some money.
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Credit Card Rates Climb Again, Latest Industry Shakeup Adds to Uncertainty
Credit card rates rose for the fifth straight week, according to the IndexCreditCards.com weekly Credit Card Monitor. In addition, the latest step forward in the Bank of America/MBNA merger, coupled with Wachovia’s announced plans to begin issuing its own credit cards, promised to keep industry averages unsteady.
“In a few months, the credit card landscape will look significantly different than it did just a year earlier,†says Justin McHenry, Research Director of IndexCreditCards.com. “Bank of America will likely have swallowed MBNA, Chase has already acquired Bank One. That’s major consolidation among the largest credit card issuers. At the same time, Wachovia has the potential to become a major player if it so chooses. The danger of too much consolidation could be balanced with the emergence of a large new issuer — it’s hard to know at this point what it will mean for consumers.â€
This week MBNA shareholders voted to approve a merger with Bank of America. For a number of years, MBNA has been the issuing bank for Wachovia-branded credit cards, meaning Wachovia credit card customers are actually served by MBNA. In a related announcement on the same day as the MBNA merger vote, Wachovia and MBNA agreed to end their partnership next year, and Wachovia will begin issuing its own credit cards in January of 2006. Current cardholders of Wachovia-branded credit cards will become MBNA customers unless they switch to the new cards issued by Wachovia.
This week’s credit card averages:
“Top-level†consumer credit cards averaged a 9.76% Annual Percentage Rate (APR), up from 9.74% last week and up a full quarter-point in the last month. The Capital One “Prestige†Platinum MasterCard offered the lowest published rate at 5.9%.
The top-level business credit card average rose to 9.95%, from 9.91% previously. Both the Advanta Platinum BusinessCard and the Chase Platinum Business Card offer a 7.99% APR.
IndexCreditCards.com uses “top-level” to describe Platinum or similarly designated credit cards that generally offer the lowest interest rates to eligible cardholders.
Also:
Consumer reward cards rose to an average 10.92% APR, up from 10.89% last week. MBNA offers a number of cards in this category with a published rate of 7.9%.
Business reward credit cards rose to an average 11.67% APR, up from 11.64% last week and 11.31% a month earlier. The significant jump in business reward cards versus standard business credit cards can be attributed to the fact that standard cards are more likely to offer fixed rates, while reward card rates are likely to be variable. The Advanta Platinum BusinessCard referenced above was the lowest rate business reward credit card at 7.99%.
Student credit card rates increased again, to an average 14.91% APR, up from 14.85%. The Wachovia Student Visa and the Sovereign Bank Student Card (both issued by MBNA) offer eligible students a 9.9% rate.
“These averages are based on the lowest rates published by the card issuers,†said McHenry. “If you don’t have excellent credit, add 2% to estimate your rate. Those with poor credit will be offered even higher rates.â€
Financial institutions represented in the survey include Advanta, American Express, Bank of America, Capital One, Chase, Citi, Discover, MBNA, National City, Providian, Pulaski Bank, U.S. Bank, Wachovia, Wells Fargo and more.
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